Toyota Motor Thailand (TMT) plans to terminate 350 short-term workers' contracts out of 5,500 across its Thai operations as it prepares for falling worldwide demand for its vehicles. The company this month revised down its Thai vehicle production forecasts for next year from 500,000 to 450,000 units, compared with a planned 570,000 units in 2008.

TMT confirmed that its 8,000 permanent employees will be unaffected by the cutbacks and said the redundant temporary workers will get on average three months salary in compensation, as dictated by Thai law.

Toyota has also eliminated overtime and is currently implementing production cuts to prevent inventory build-up in the final two months of the year. The cuts so far have mostly affected pickup trucks and large cars.

After growing by 9.9% in the first half, Thai domestic vehicle sales declined by 12% to just under 140,000 units in the third quarter of 2008 - mainly as a result of lower demand for pickup trucks. Pickup truck sales fell by 30% in October to 26,089 units. Toyota's pickup truck sales in Thailand dropped by 14.7% to 115,836 units in the first ten months of the year and exports have also begun to weaken.

The cutbacks are part of a broader review of Toyota's global operations, as the company prepares to weather the global economic downturn. In Japan, Toyota is reducing its temporary workforce by 50% to 3,000 people and deep cutbacks have also been announced at its US operations.

Toyota expects the overall Thai vehicle market to contract by 20% next year and overall exports by 30% from current levels. Vice-chairman Ninnart Chaithirapinyo said that the situation is being constantly monitored and forecasts are being revised weekly.

Tony Pugliese

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