General Motors announced that it will suspend production at its Rayong plant in Thailand in December and January, as worldwide automobile demand continues to weaken. The plant has an annual capacity of 130,000 vehicles and produces primarily the Chevrolet Colorado and Isuzu D-Max pickup trucks for global markets.
The plant also assembles the Captiva SUV and Optra and Aveo passenger cars for sale within the Asean region. Most of the parts for these cars, including engines and transmissions, come from GM Daewoo in South Korea. GM’s widely reported financial difficulties in the USA and its application for government loan is not helping consumer confidence in its portfolio of brands worldwide.
Passenger vehicle production at the Rayong plant will cease for almost two months, from 29th November 2008 until 27th January 2009. Pickup truck production will be be suspended for over three weeks, from 20th December 2008 until 13th January 2009.
The Rayong plant produced 93,058 vehicles between January and October, with around 80% of output exported. The sharp drop in auto sales in recent months has meant that inventory throughout the GM distribution system has been building up rapidly. “By the time of the closures, we will have enough stock to see us through untill January,” says GM Thailand spokesman Chartchai Suwanasevok.
The plant’s 2,000 or so employees will be on 75% of pay during the closure, but their status will be unaffected. The company’s 1,000 or so white-collar administrative and sales staff will not be affected.
GM Thailand is also preparing for a tough year ahead, as it anticipates significantly lower production volumes in 2009. As a medium-term measure, it launched a voluntary redundancy programme earliern this month with a view to cutting 258 permanent assembly line jobs at the plant.
“Today (21st November) is the deadline for voluntary redundancy applications. We are optimistic that we will come close to our target of 258 applicants,” said Khun Chartchai. “A typical redundancy package for an employee with a 6-10 year work history is around 8 months salary, according by Thai law. We are offering an additional two months salary to voluntary applicants”.
Earlier this month, GM also announced a series of temporary closures at its GM Daewoo Automotive Technology (GMDAT) subsidiary in South Korea in response to falling global demand. It has been reported that GMDAT’s three plants may close for up to 45 working days between November 2008 and March 2009, following a 30% year-on-year drop in order intake.
Around 50% of GMDAT’s output goes to Europe and 17% to North America and demand in both regions has fallen sharply in recent months. It has been reported that GMDAT may be considering more permanent measures to reduce capacity. Ssangyong, another South Korean automaker now owned by China’s SAIC group, also announced temporary closures starting this month.