Lay-offs may come soon at Honda unit

A top Honda executive who requested anonymity would not deny or confirm the retrenchment plan but did say about 700 of the company's subcontract temporary workers had been placed on standby at home.

These workers are being paid 75 per cent of their salary starting last week, he said.

Sources in auto-parts companies working with Honda said the retrenchment would be carried out in three phases, with about 1,000 workers laid off each time.

Workers will be given the option of taking either early retirement with six months' extra pay or a six-month work stoppage at 75-per-cent pay and re-employment to be considered later on.

If market conditions improved and demand for vehicles rose, workers on standby would be recalled to resume work.

Honda recently opened a second plant in its Ayutthaya complex, doubling production capacity to 240,000 units a year in preparation for the eco-car project.

The company has invested Bt6.2 billion in the scheme, with production due to start by the end of next year.

The global auto industry has been in the doldrums in recent months, due to the market slump in the wake of the global financial crisis.

As a result, Thailand, one of the top 15 automotive exporters, has been significantly affected, with export shipments expected

to drop dramatically next year.

Last month, GM Thailand laid off 250 employees and shut down its plant for two months, citing lower global demand.

The local unit of the US auto-maker has also suspended construction of a diesel factory. The US$445-million (Bt15.38 billion) facility would be the first diesel-engine plant in Southeast Asia, producing engines for Chevrolet models.

Toyota Motor Thailand, the Kingdom's largest carmaker, this month terminated the employment of 1,000 subcontract workers in three plants through an early-retirement programme. The programme covered its auto-assembly plant in Chachoengsao province and production plant in Samut Prakan's Tambon Samrong, as well as its Toyota Auto Works subsidiary.

Last month, the company terminated 350 subcontract workers.