Thailand Auto Industry

[HarleyEarl]

Friday, December 23, 2005 Print this Comment on this E-mail this Car jobs in high demand in Thailand as output grows Chawadee Nualkhair and Chang-Ran Kim / Reuters BANGKOK/TOKYO - Joe Goh, a business development director at Thai auto parts maker AAPICO Hitech PCL , is facing challenges many competitors in the West can only dream of. "We've got to have more capacity," he said, describing plans to kick off a new plant in mid-2006 and possibly seek partners outside Thailand for more opportunities to expand. "We have to double our people." Goh's situation -- shared by many of his peers -- is fanning a boom for auto-sector workers in Thailand, a far cry from the picture in North America and Europe where thousands face job losses due to severe overcapacity at weaker car brands. Behind the healthy labour market is heady growth in domestic auto demand and Thailand's accommodating business environment for foreign automakers to manufacture vehicles for export. That has manufacturers from booming Toyota Motor Corp. to embattled Mitsubishi Motors Corp. rushing to add capacity and find the manpower to support growth. After more than doubling in the three years to 2004, vehicle production in Thailand is expected to expand by about 8 percent this year to roughly 1 million. Over the next few years, it will further balloon to 1.4 million units annually, predicts research firm Automotive Resources Asia. "Thai production is certainly booming and in most cases resulting in a commensurate increase in employment," said Ashvin Chotai, director of Asian automotive research at Global Insight. "Automotive jobs are rising and there is a shortage of skilled workers and professionals. Hence...job mobility is high and it's fair to say it is a bit of a sellers' market." No forecast is available for the resulting increase in the number of jobs, but analysts say a looming shortage of experienced auto workers looks certain to keep lifting wages. According to the Bank of Thailand, manufacturing workers now number 6.1 million, accounting for 17.25 percent of Thailand's working population -- up from 15.5 percent at the start of 2001. Hay Group, a U.S.-based global human resources management consultancy, estimates manufacturing salaries in Thailand grew by 6.5 percent this year and would continue to rise at a similar clip in 2006 on the back of sustained economic growth. "The Thai economy is currently highly competitive for employees with three to five years of work experience, and it is likely to stay this way for some time," Anuchit Veerasiriyanon, an official at Hay Group Thailand, said in a recent report. WELCOMING PRODUCTION CENTRE With a robust indigenous parts industry supporting assemblers, the impact of booming production runs deep and wide. "This is a very labour-intensive thing," AAPICO's Goh said, estimating that each new plant at his company employed about 1,000 people. Goh estimates the real hourly rate in non-unionised Thailand is just $10, a fraction of the estimated $76 at bankrupt U.S. auto parts supplier Delphi Corp. when loaded with pension, health and other liabilities. "America and Europe are not a place for manufacturing any more," he said. While successful brands such as Toyota are building more factories in the West to meet demand, U.S. giants General Motors Corp. and Ford Motor Co. are shuttering multiple plants and shedding tens of thousands of expensive workers. In Thailand, by contrast, even Ford is looking to boost output capacity by 30 percent to 200,000 units over the next few years at its joint-venture plant with Mazda Motor Corp. to fulfil export as well as domestic demand. The number of salaried workers will rise to 4,500 from 4,200. Research firm Global Insight estimates vehicle sales will total around 709,000 units this year, up 13 percent. By 2010, most forecasts put domestic vehicle sales at nearly 1 million vehicles, while the government is targeting production of 1.8 million vehicles that year. Thailand faces competition from China as the favourite production centre of global auto assemblers. But as long as the Communist nation retains its strict operational guidelines, cumbersome red tape and ambitions to create a formidable national car-making industry, foreign auto makers will continue to favour Thailand as the regional export base, experts say. Thanks to its policy of nurturing the local auto supplies sector, Thailand is the world's second-largest producer of small one-tonne pick-up trucks, behind only the United States, exporting vehicles to 140 nations. Vehicles and auto parts account for nearly one-tenth of total exports. Toyota, Thailand's top vehicle producer and supplier, expects to add 3,500 jobs to its headcount of about 9,000 factory workers by 2007, when output capacity is due to reach 550,000 units a year from 360,000 units now. Japan's second-largest auto maker Nissan Motor Co. will more than double its workforce to 4,000 from 1,800 by 2008, when annual production will quadruple to 200,000 units. Other players like South Korea's Hyundai Motor Co., which exited Thailand after the Asian currency crisis in the late 1990s, and India's Tata Motors Ltd. are also eyeing a manufacturing base in Thailand.