American automaker General Motors (GM) said that it is cutting over 15% of its workforce in Thailand that would reduce 350 jobs at two plants it owns in the country. GM’s coordinator for Labor Relations Group for Eastern Thailand, Boonyeun Sookmai, informed Reuters that contractors and employees who were affected by the cuts were informed last week.
A change in Thai markets
Thailand is an important manufacturing hub for the Southeast Asian region. Therefore, cutting jobs in the market is a significant event for the company. The company in a release said that it is cutting jobs because it wanted to “right-size” its Thai operations. The statement also highlighted that the company is taking adequate measures to support the recently laid-off employees. Each employee will be paid severance pay, depending on the time of their employment with one month of pay.
“There is no change to our ongoing business in Thailand – we continue to build and sell world-class trucks, SUVs, and engines for Thailand and the world.”
The company has two plants in the eastern Thai province of Rayong where it conducts vehicle assembly services. Another plant focuses on engines and powertrains. The first operation for vehicle assembly began in 2000. The second operation started in 2011. With about 1,900 employees, GM produces about 180,000 units of vehicles each year for both the domestic and international market, with Holden and Chevrolet nameplates.
Problems in the Thai market
Thailand is one of the most significant regional vehicle production bases in Asia that also acts as an export hub. Harley-Davidson, Honda, and Toyota are some of the top names in the auto industry who have set up base in the country. Interestingly, the presence of top manufacturers has helped the auto industry represent 10% of the Thai economy. At a time when exports are already falling, it has been one of the few growth drivers of the country.
However, the Thai auto industry isn’t as robust as it used to be. Domestic auto sales fell in June and July 2019. According to current data, sales are down by 1.1%. The local lending firms are now adopting stricter measures for auto lending, which has led to market contraction.
General Motors Thailand is suffering from a decline in financial performance. Cutting its manpower expenses and operating costs could help it curtail some of the issues. Bangkok Post reported that the company is not following a regional restructuring plan. It just wants to keep its costs in check to survive in testing times.