GM and Toyota to cut Thai output amid weak sales

Business Materials 20 November 2008 14:11 (UTC +04:00)

U.S. car giant General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) announced a two-month shutdown at its Thai plant on Thursday, the latest move by global automakers seeking to slash costs in the face of weak sales and deepening economic gloom, reported Reuters.

GM Thailand said its 130,000-unit-a-year factory at Rayong would close for two months from mid-December, and it planned to cut 258 jobs at the plant 150 kms (90 miles) southeast of Bangkok.

"We plan to close the plant to help control costs and our 2,000 workers will be paid 75 percent of their monthly salary during the shutdown," director of public relations Chartchai Suwanasevok told Reuters, without giving details on the production impact.

The plant produced about 100,000 pickup trucks, SUVs, sedans and compact cars for Thailand, Southeast Asia and Australia in 2007, representing only a fraction of the Detroit-based firm's global output of 9.28 million vehicles last year.

But the shutdown was the latest measure taken by an international auto firm to stave off the impact of a massive slowdown in sales due to the global economic slowdown.

General Motors and its U.S. rivals, Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler LLC, are seeking a $25 billion U.S. government bailout to avoid bankruptcy, but the prospects for a rescue package this week appeared dim.

Last week, GM's South Korean unit said it would halt production for two weeks, due to sluggish demand.

The company had no plans to halt production at its vehicle manufacturing ventures in China, a spokesman said, despite slowing growth in the world's second-largest auto market.

Japanese automakers, many of which had enjoyed steady to rapid growth in recent years, are also scaling back production and workforce in many markets due to a sharp, broad-based slide in vehicle sales.

Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz) also planned a cutback at its 200,000-unit-a-year plant in Thailand, a company spokeswoman said, without giving details.

Japan's top automaker is also seeking early retirement for 340 of its 1,850 temporary workers at the Gateway plant, which builds the Camry, Corolla, Yaris and other cars for Thailand and markets in the region.

Toyota is the top brand in Thailand, but its sales dropped 21 percent in October compared to a year ago, worse than the market's 15 percent slide due to a slowing economy and a long-running political crisis eroding consumer confidence.

"There are signs of a slowdown not just in Thailand, but in the markets of export destinations," the spokeswoman said.

Most of the world's major automakers have plants in Thailand, which produced 1.29 million vehicles last year, of which 690,000 units were exported worldwide.

The total value of Thai vehicle exports last year was 306 billion baht ($8.7 billion), and the auto sector is a major contributor to the country's export-dominated economy.

Japanese truck maker Isuzu Motors Ltd (7202.T: Quote, Profile, Research, Stock Buzz), Thailand's No.2 brand, said it was constantly adjusting production levels to match sales performance and that it had no immediate plans to reduce its workforce or take any extraordinary steps.

Japan's Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz), which has two plants in Thailand with a combined capacity of 240,000 units a year, said it had no plans to trim production or staff in the country.

India's Tata Motors Ltd (TAMO.BO: Quote, Profile, Research, Stock Buzz) said last month it was going ahead with a planned Eco Car project, and seeking to buy land to build a factory.

In Japan, Mazda Motor Corp (7261.T: Quote, Profile, Research, Stock Buzz) said on Thursday it was not renewing the contracts of about 70 percent of its combined temporary workforce at two local factories, leading to a reduction of about 1,300 workers by the end of this year.