GM ready to enter export top ten
October 20, 2000
GENERAL MOTORS is set to become one of Thailand's top 10 largest exporters next year, with revenues of US$550 million (Bt22 billion) from the shipment of its Safira minivans to all parts of the world, said William Botwick president of GM's operation in Thailand.
GM's production facility in Rayong, which has only been in operation since May, will turn out 8,000 to 8,500 Safiras this year. But once additional shifts are introduced next year to increase production capacity, GM is aiming to produce 50,000 to 55,000 Safira units a year, Botwick said.
About 500 new workers will be employed at the plant, bringing the total workforce to 1,200, he added.
The plant at Rayong is designed to produce 130,000 cars a year when operating at full capacity to meet future demand, he said.
IBM is currently Thailand's largest exporter with annual hard disk drive exports worth approximately Bt50 billion.
Most of the seven-seat Safiras made here will be shipped to Europe, Singapore, the Philippines, Indonesia and Chile.
The $500-million plant located on the Eastern Seaboard was initially designed to become the company's export hub for the region. But due to the economic crisis in Asia, GM has shifted its export focus to European markets.
Apart from the company's Eisenach plant in Germany, it is the only other GM plant in the world making the Safira.
"The Germans may not like to hear this but the quality of Safiras produced at the Thai plant is better," said Botwick.
He said that despite the high shipment costs to Europe, he expects GM to make good profits from Safiras produced here.
"What I can say is that it is good business for GM [running a manufacturing plant in Thailand to supply Europe]".
GM, Ford, DaimlerChrysler and BMW have all established a presence in Thailand to take advantage of the relatively large local market and liberal government policies that supports the auto industry.
Thailand has been dubbed the "Detroit of Asia".
Botwick said GM is going ahead with its plans in Thailand despite predictions that the market may experience a slowdown and Malaysia's decision to postpone implementing tariff cuts under the Asean Free Trade Agreement (Afta) to protect its local auto industry.
"We don't have to rely on the Asean market for a few years because of the high demand from Europe," he said.
Although it was GM who successfully lobbied the Thai government to scrap its 54 per cent local content requirement for auto assembly. The GM plant here is using 38 per cent local content by value. And Botwick said this will be increased to 42 per cent next year.
He said domestic sales are higher than predicted thanks to some unique features on the Safira, which has a Bt1.1million price tag. He added that GM has boosted local sales from 700 to 1,200 to 1,300 units.
Botwick said that GM is considering low-volume production of a second model at the Thai plant intended just for the local market. However, the plan will depend on the market situation next year.
He said that after the upcoming elections, he expects the new government to maintain Thailand's good track record of stable auto industry policies and remain committed to Afta.
"We do not expect dramatic changes in policy," he added.
BY PICHAYA CHANGSORN and