It is reported that General Motors will delay its USD 445 million diesel engine project in Thailand by at least 1 year and halt the introduction of new products in 2009. A groundbreaking ceremony for the engine project in Rayong took place in August 2007.
The deepening global economic crisis and local political unrest were to blame for the project delay.
Mr Steve Carlisle president of GM Thailand said that he hoped Thailand could weather the ongoing crisis and affirmed that GM would not scrap the project even if the situation got worse.
Engines produced from the Rayong plant were to supply Colorado pickup trucks, also built in Rayong. They would replace engines now supplied by Isuzu. The engine plant will now begin production in 2010, making 2.5 and 2.8 liter engines for pickup trucks with output of more than 100,000 units annually. It would initially employ 340 workers.
The facility, GM's first diesel engine plant in Southeast Asia, will be located next to the assembly plant that opened in 2000 and now employs 2,000 people.
GM announced earlier this month that it would halt production in Rayong in December 2008 and January 2009 but keep its workers on at 75% pay. It said vehicles already on hand would be sufficient to meet demand, which has been declining worldwide.
Mr Carlisle said that the economic slowdown, the need to conserve cash, lack of access to new financing and large financial losses were forcing car companies to shed employees for survival. He added that "I would like to tell you we are not affected in Thailand, but that is not true. But as I have said before, crisis also brings opportunities. We must stay robust and capitalize on any opportunities this crisis may bring."
GM is anticipating lower numbers in the second half than in the same period of 2007 due to the ongoing crisis, resulting in fluctuations in foreign exchange rates, unavailability of credit, increases in commodity prices and instability on the political front. All these depress consumer sentiment and lower demand.
During the market difficulty, GM plans to improve its volumes and labor efficiency, eliminate all forms of waste, reduce costs, support flexible manufacturing initiatives like job rotation and assignment changes, improve quality performance and delay unnecessary spending where possible.
