Tuesday, December 16, 2008

Difficult times for Thai auto workers lie ahead

Alfred The Hla

Tis the season to worry about shrinking bonuses, nagging bills to pay and the ability to put food on the table.

Amidst a wave of 900,000 jobless, some have the luxury to opt for early retirement to see the world and catch up on quality time with children studying abroad.

The writer is happy he's still writing.

But for those employed by the auto industry, the harsh reality of the global recession - vehicle market contraction, production cuts and cost-down measures - has already emerged in Thailand.

On a global scale Honda pulled out of Formula One racing, Subaru's done with the World Rally Championship (WRC) and GM parted with Tiger Woods.

Earlier CNN reported a sceptical Congress hearing out the Big Three's CEOs who displayed a potent image by flying in on private jets to plead for US$25 billion, then US$34 billion, later reduced to US$14 billion before talks collapsed over union wages.

It's now up to the country's US$700 billion financial bailout fund.

Scaling down to Thailand, Toyota cut production, GM laid off temps, Ford froze its hiring while embattled SEC Auto Sales and Services Plc saw its chairman Sompong Witthayaraksan skip town along with 476 premium rides.

As we speak, a skittish premium automaker is coercing local staff to resign, and reapply to a new business unit under the facade of cost reduction; whilst the unexpressed motive is to save costs in severance pay and fringe benefits.

And this is only the beginning of the end despite our economy being experienced since the 1997 financial crunch.

Take the key people who inspired the masses into fighting for a cause which saw off two prime ministers, claimed innocent lives, limbs and the tourism sector - I never, even once, saw the key people at the front lines.

Likewise, why aren't annual appraisals reciprocated bottom-up in lieu of top-down only? Go figure.

The fall guy is always the small guy.

The business community would be better off if auto companies put a premium on local staff.

High-priced expats come and go, but training new people costs more unless you keep, train and instil confidence in your local team.

The chagrin of top management notwithstanding, they should be taking pay cuts - instead of 10% cuts from bonuses - which can be compensated when the economy rebounds. Management can also try giving up acting royal such as travelling with entourages, flying Business Class, golf club memberships and hotel suites.

It's a given that monthly salaries of a rank-and-file employee probably pales in contrast with the travel expenses of managers.

A few years ago I got off the 13th floor of the Times Square building on Sukhumvit to pay personal income tax.

A messenger sitting next to me unloaded a batch of tax forms belonging to executives of a certain car company.

The official started stamping the documents as I heard him say: "Ten, eleven, twelve... eighteen," he stopped at 18.

He was reading out annual salaries! The numero uno of the local subsidiary was taking home 18 million baht (about US$514,000) before taxes.

Total payroll for nine managers added up to a grand total of 126 million baht!

You can pay annual salaries for over 500 workers at 25,000 baht per month.

Contrary to conventional business practice - shareholder value can be created if people who have a higher capacity to influence results ensure that those with a lower capacity are served first.

Rewarding rank-and-file before moving up the management hierarchy is an investment for loyalty, productivity and share-holder dividends.

Er, does anyone know how much an editor makes?

Alfred Tha Hla covers the auto industry for Motoring Section, Bangkok Post.

No comments: