Thursday, May 8, 2014

Thai auto sector slams on brakes as political crisis rumbles on

Via Chicago Tribune:

Thailand's auto sector, Southeast Asia's biggest, has fired more than 30,000 subcontracted workers this year and slashed production, as sales plunge after months of political unrest that threatens to drive some manufacturers offshore.

The lay-offs are the latest sign that the auto industry, accounting for about 11 percent of Thai economic output, is being hit hard by the prolonged power-struggle between the Bangkok-based royalist establishment and the mainly rural supporters of ousted former Prime Minister Thaksin Shinawatra.

The crisis deepened on Wednesday, when a court ordered Prime Minister Yingluck Shinawatra, Thaksin's sister, to step down after finding her guilty of abuse of power, leaving a caretaker government to press ahead with plans for a July election.

As a regional production and export base, Thailand's troubles have major implications for top manufacturers such as Toyota Motor Corp, Nissan Motor Co and Ford Motor Co, which may be forced to shift some production to cheaper bases such as Indonesia, the region's second-biggest auto market.

"As political instability continues, we are concerned that automakers may reduce their exposure to Thailand to diversify their risk," said Kovit Wongkolkitsilp, chairman of the auto parts group of the Federation of Thai Industries (FTI).

Honda Motor Co said it was considering delaying the start-up of a new $530 million manufacturing plant in Thailand by six months to a year, as the economy teeters on the brink of recession and political turmoil prompts automakers to rethink their investments.

"It's critical especially in the auto sector. We have seen a big lot of layoffs, about 500 to 700 staff, several times in recent months," National Congress of Thai Labor President Panus Thailuan said.

Toru Hasegawa, Nissan's Indonesia chief, said that "because of the political uncertainty, total industry volume is a bit affected", but he added that Thailand remained a key market for the company.

"They are also a big market and still growing. For Nissan, Southeast Asia is very much important," Hasegawa said.

Rival Toyota said at the start of the year it planned to sell 400,000 vehicles in Thailand this year, but in the three months to March saw sales there drop 33 percent to 84,000.

Toyota Executive Vice President Nobuyori Kodaira told reporters in Tokyo on Thursday that the car maker might have to consider cutting its sales outlook for Thailand as a result.

"Thailand is one of our very important strongholds globally and we have no change in our stance to make vehicles and conduct business there," he said.


No comments:

Post a Comment