General Motors Finds Itself A Bright Spot In Thailand

Leaving behind a bleak picture of losses (some $10.1 billion during the first half of its operation in N. America), downsizing and long drawn shake-up of General Motors in the United States of America, the CEO arrived in Thailand where he is expected to publicize an expansion of G.M.’s manufacturing unit east of Bangkok for small cars and also the construction of an engine production unit for its Colorado pick-up truck. This move is an indication of the fact that General Motors is banking on the economic growth in Asia to offset its depressing sales in the U.S – down some 20% in the 2nd Qtr. This should also be heartening news for Thailand, which is now the centre for car manufacturers with their market aimed at the Middle East, South East Asia and Australia. Thailand is now unquestionably the 3rd largest exporter of cars preceded by Japan and South Korea.

General Motors faces a brighter picture in Asia, its sales having gone up by a solid 35% more that its performance in 2005. Riding the expanding front of the Asian markets, G.M.’s market shares have also slowly but steadily climbed up. Brightening up the balance sheets of G.M. are the overseas sales of its cars in Asia, Europe and Latin America. This is far more than its sales in the United States. Its overseas operations, in contrast to the losses in North America, earned the company a profit of $1.2 billion, including earnings of $123 million in Asia.

Though General Motors has marginally increased it s sales in Asia from 5.9% to 7% over the last few years, Toyota and other Japanese car manufacturers still dominate the Asian market. The market for G.M. is also better in North America when compared to that of its Asian market.

Coming vastly to the aid of General Motors is its small presence and also the lack of pension and health care benefits to its local employees. This makes its presence livelier. Adopting technology from Daewoo Motor the South Korean car manufacturer it acquired in 2001, G.M. is promoting itself as an environment conscious manufacturer with the production of greener, smaller and more fuel-efficient vehicles like the compact Aveo and the Optra models that are not going to add to the green-house effect.

Isuzu engines

Over the last ten years, General Motors benefited immensely from its partnership with Isuzu. G.M.’s pick-ups were powered by Isuzu engines. And Isuzu provided access to its suppliers. The joint venture with Isuzu was broken off a couple of years back and G.M.’s engines are going to be produced in its plant due to be made known now.

Over the decade, cost cutting was effectively carried out here in Thailand by reducing the number of emigrant managers from 40 to 10. The plant adopts the Japanese just-in-time production method and also the Japanese “Kaizen” formula of continuous improvement. Entry level employees make about 8,000 baht ($235) a month.

General Motor’s financial performance is paralleled by that of Ford Motors. Having lost some $1.3 billions in North America during the 2nd Qtr, Ford made a profit of $388 in S. America, $582 in Europe and $153 in Asia and Africa. In millions of course. And Ford is planning to expand its operations in India, Thailand and China with an investment of $1.50 billions.