40,000 auto parts jobs face the axe

Up to 40,000 permanent workers in the auto parts industry are at risk of losing jobs as car assembly production dropped by an estimated 40% this month, according to Damri Sukhotanang, the permanent secretary of the Industry Ministry.

After discussions yesterday between automakers and parts makers, participants estimated total vehicle production in January would only be 70,000 instead of the monthly average of 120,000. The reduction stems from shrinking demand and high inventories.

The talks also concluded that around 20% of the 200,000 workers in the auto parts industry were at risk of losing their jobs, especially those working in plastic parts, stamping, casting, trimming and machinery sectors.

There are 1,600 auto parts makers in the country. Mr Damri said parts producers had already cut down their outsourcing and overtime payments to lower costs, and the last measure is inevitably to cut permanent staff.

"Subcontractors were laid off late last year, so contract employees would be the next target," he said.

"It is expected that the severe hardship will be contained to the first half of the year with the industry picking up in the latter half. This possible [total of] 40,000 unemployed is only the result of a first-half slump."

To tackle the labour issue, the Industry Ministry will seek a budget of one billion baht to get 50% of the newly unemployed people into skill training courses so that when the economy picks up, they will be able to re-enter the industry, he said.

The remaining 20,000 workers are expected to be able to shift into other industries.

The budget will come from the six-billion-baht unemployment relief project, which is also a part of the broader 115-billion-baht stimulus package.

Vallop Tiasiri, director of the Thailand Automotive Institute, said the project would train 20,000 workers in a six-month period and each would receive a 5,000 baht monthly allowance.

He added that the forecast for total vehicle output, projected to drop 24% to 1.1 million units this year from 1.4 million last year, is still optimistic as some operators project the recession will take a larger toll on exports and the domestic market may sink below what was expected.

Pramote Vittayasook, the director-general of the Industrial Promotion Department, supports a skills-training programme, but he said he wanted to see a solid plan so that fruitful results can be expected.

He is also hoping a weakening yen will force Japanese automakers to relocate more work to Thailand as it would help ease the impact on labour.

The industry also proposed yesterday that the Finance Ministry consider a tax deduction for car buyers in a bid to spur domestic demand, said Somchai Sujjapong, director-general of the Fiscal Policy Office.

He said the office would take the proposal into consideration. However, he believes the measure would be more effective if it only allowed a tax cut for energy-saving cars.

The industry also asked the Finance Ministry to restructure import duties for vehicles and parts, saying the import duties for completely built units (CBU) is lower than for some auto parts.