Wednesday, December 17, 2008

Isuzu aims to avoid Thai layoffs

Jobs are safe unless exports fall over 20%

The Thai unit of Japan's Isuzu Motors hopes to keep all of its 4,000 employees amid a tough year in 2009, but says it is crucial that export orders fall no more than 20% from this year.

Phaibool Poocharoen, senior vice-president of Tri Petch Isuzu Sales, said exports were expected to reach 60,000 units this year after 55,000 units had been shipped in the first 11 months.

But it could be difficult for Isuzu, Japan's largest truck maker, to export as many pickups from Thailand next year as global demand has shrunk, he said.

''We will do our best to prevent exports from dropping by more than 20% next year in order to avoid cutting staff,'' he said.

''So far, we have cut overtime work and that has reduced the production volume at the Samrong plant by 20%.''

Isuzu currently employs about 4,000 people in Thailand, including in its auto parts unit. The Japanese automaker operates two assembly plants here. It has recently scrapped a plan to expand annual production by 100,000 units at its Gateway factory, which produces 10,000 heavy trucks, said Mr Phaibool.

''Now the global market looks so poor that I don't think anyone would dare to proceed with such a big investment,'' he said.

Meanwhile, almost 50,000 people working in the automotive parts industry could lose their jobs next year as exports slow in a global slump for the automotive industry, said the Auto Parts Club of the Federation of Thai Industries.

In the aftermath of the eight-day closure of two Bangkok airports last month, the club's chairman, Thavorn Chalassathien, said 14% of the industry's current 350,000 workers were at risk of being laid off.

The number is twice an earlier forecast of a 7% contraction in staff in 2009.

The local auto-parts industry, which includes almost 2,000 manufacturers, anticipates export growth of only 5-10% next year, compared with 20% growth expected this year.

Exports rose 23% in the first nine months of this year to 260 billion baht. But with slowing orders in the last quarter, Mr Thavorn said they may not pass 300 billion baht for the year.

''Unquestionably, 7% of the existing workforce will be made redundant in the first quarter of next year. Another 7% are at risk, depending on the severity of the global recession,'' said Mr Thavorn, a vice-president of the Thai Auto-Parts Manufacturers Association (Tapma).

He said the country's political chaos had deepened the sector's downturn. Before the airport closures, carmakers had already cut production, prompting parts and component suppliers to cut overtime work and reduce production shifts.

Toyota Motor Thailand and the Thai unit of General Motors (GM) have already announced plans to cut production from this month to early next year.Mr Thavorn said this year the industry was expected to roll out 1.4 million vehicles but next year the volume could be 1.1 million, at best.

He called on the new government to introduce measures to stimulate consumer spending by extending its campaign of free travel on buses and trains. He also asked the government to maintain price caps on diesel and to allow reduced contributions to the Social Security Fund.

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