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GM dumps Thai factory expansion

Back then: GM CEO Mary Barra and president Dan Amman visits the company’s Rayong plant in Thailand amid big plans for expansion. Eleven months later, the plans have been dropped.

Thai ‘eco car’ factory plan dropped as GM takes the axe to Asian car production

General Motors logo3 Mar 2015

GENERAL Motors has walked away from plans to build a new Thai factory to produce a global small car that potentially could have been exported to Australia as a Holden.

The American company has also announced it will scale back its remaining Thai factory at Rayong by axing production of the Sonic (Barina) small car by June, while at the same time closing its Indonesian manufacturing operation.

The moves were confirmed by GM Southeast Asia operations president Tim Zimmerman who said: “GM is focused on becoming a more customer-focused and operationally efficient company. We must accelerate the transformation of our operations.”

With GM Holden’s Australian factories due to close in 2017, GM’s only major manufacturing centres in Asia will be in China and South Korea. And the latter has been subject of plenty of speculation about restructuring due to escalating manufacturing costs that are now said to rival those of Japan.

The decision not to go ahead with the enlarged “strategic hub” for GM manufacturing in Thailand comes less than a year after the company announced the plan with great fanfare at the Bangkok motor show, just a week after a visit to the Southeast Asian kingdom by GM CEO Mary Barra and president Dan Amman.

At the time, GM was one of 10 global manufacturers to announce plans for new factories under Thailand’s Eco Car Phase 2 government incentives.

As recently as October last year, GM was confirmed as one of five companies to get the Thai Board of Investment (BOI) for incentives for a new factory that – under government rules – had to produce Euro 5-compliant cars capable of consuming less than 100 grams per kilometre of carbon dioxide.

 center imageLeft: General Motors Southeast Asia operations president Tim Zimmerman.GM’s new $A400 million factory was supposed to slot in next to the existing Rayong plant and build an unnamed, all-new Chevrolet model for global markets.

The new-generation Chevrolet/Holden Spark – also known as the Opel Karl and Vauxhall Viva – seemed to fit the bill for the factory, but GM recently confirmed that the model would be produced at GM Korea for all markets, including Australia.

So, not only will the expansion not go ahead but GM is planning to downsize the existing plant’s workforce of 3200 by an unknown number in a “voluntary separation program for staff” once it ends Sonic production.

It also confirmed that the current production capacity of 180,000 units a year will be scaled down, but it did not say by how much.

The Chevrolet/Holden Colorado – and its related SUV called Colorado 7 in Australia and Trailblazer elsewhere – is expected to remain the main focus of the plant, and so the moves will have little immediate effect on Holden which gets most of its imported four-cylinder cars from South Korea and – increasingly – Europe.

Although GM did not announce a reason for its Thai cutbacks, the decision comes after a year of political turmoil and ongoing economic recession.

GM sold fewer than 26,000 vehicles in Thailand last year for a three per cent market share.

In Indonesia, GM last week waved the white flag after 80 years, announcing it will close a plant that makes a mini people-mover called Spin from completely knocked-down (CKD) parts imported from Brazil.

GM blamed the cost of the logistics, saying the low volume did not make it viable.

The Indonesian factory – employing just 500 people outside Jakarta – will shut in June.

Reuters reports that GM is planning to re-enter the Indonesian market with its Chinese partner Shanghai Automotive Industry Corporation (SAIC) under its cheap Wuling sub-brand.

Along with GM and others, SAIC made an application for Thai Eco Car 2 factory incentives, but it was not included in the five approvals last October.

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