General Motors on Thursday said it would suspend production in Thailand in December and January to counter falling global demand, putting 2,000 workers on paid leave.

“Less than 2,000 staff will be granted paid leave during the period, as the plant reduces production levels to avoid oversupply,” Steve Carlisle, president of the carmaker’s south-east Asia operations, told GM workers on Thursday.

Thailand has made itself a regional centre for automotive production in Asia, specialising first in attracting pick-up truck manufacturers and latterly more environmentally friendly and fuel-efficient small cars.

Surapong Phaisitpattanapong, the head of the automobile section of the Federation of Thai Industries, expects total production for the year to hit its target of 1,427,000 units – a little under double its production of just five years ago – with a strong first half of the year offsetting the weakness of the past months.

But the global economic environment is starting to bite. Along with GM’s warning of future slowdowns, Toyota, which is expected to produce some 570,000 cars this year, has warned that it is unlikely to exceed this next year.

Ford Motor, which has a joint venture in Thailand with Japan’s Mazda that produces pick-ups and sport utility vehicles, said it had no plans to cut production – which is running at about 175,000 cars a year, some three-quarters of which are exported. The company is in the middle of a $500m expansion to add production capacity for its Fiesta line.

Meanwhile, Japanese carmakers Isuzu and Honda have both said they are likely to cut production in Thailand as the global slowdown hits exports. However, both said they would try not to reduce the headcount.

Separately, Isuzu and Mazda on Thursday became the latest Japanese carmakers to cut contract jobs in Japan in response to the worldwide car market slump.

Isuzu said it had decided not to renew contracts for 1,400 temporary and part-time workers by the end of the year and would eliminate one shift at a truck plant south-west of Tokyo.

Mazda is to cut 1,300 jobs – 800 at its main plant in Hiroshima and another 500 at a factory in Yamaguchi prefecture.

Japanese carmakers have suffered sharp sales declines in the US, the largest market for most producers, while Japanese and European demand is also in decline. A sharp rise in the yen has compounded the pain by shrinking the value of repatriated overseas profits.

Toyota has also eliminated contract jobs in Japan and the US, while Nissan said last week it would cut four shifts at a plant in Japan to reduce production in the country by a further 72,000 vehicles this year.


Peugeot axe

PSA Peugeot Citroën said it was cutting 2,700 jobs in France in response to a drop in its fourth-quarter sales of about 17 per cent, writes John Reed.

The French carmaker will reduce its headcount under a voluntary redundancy programme and said some staff would be redeployed to plants making faster-selling cars.

Peugeot said it would reassign 900 workers at its Rennes plant, which makes slower-selling upper middle cars such as the 407, to factories elsewhere in France making smaller models.

However, Peugeot said the future of Rennes, one of its largest plants, was “not at all under question”, apparently in response to French media speculation that it might be closed.

French rival Renault is cutting 6,000 staff, mostly in France.

Peugeot said it expected its sales to fall by at least 10 per cent in 2009 and that the cuts were unlikely to be the last of the current downturn.

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