Local diesel plant 'safe'

The local unit of US-based General Motors yesterday insisted it would proceed with its Bt15-billion diesel-engine plant project despite its parent's filing for bankruptcy protection.

GM, once the world's largest auto-maker, yesterday sought relief under Chapter 11 of the US Bankruptcy Act as it attempts to restructure its business collapsing from a heavy debt load and management mistakes.

Senior US officials said they hoped the rehabilitation process would be swift, allowing GM to emerge from bankruptcy as a new, leaner company in 60-90 days.

GM will enter the courtroom with billions of US dollars in government financing and agreements already in place to cut labour costs, swap much of its debt for equity and reduce its liabilities by half.

Officials said the process was expected to be similar to that of Chrysler, which is expected to emerge from bankruptcy protection this week after just over a month.

In Bangkok, Steve Carlisle, president of

both GM Southeast Asia

and GM Thailand, told reporters after meeting

with Industry Minister Charnchai Chairungrueng that Thailand remained a high-potential production base for future growth in Asean.

"We will not let the economic crisis affect our investment plan in Thailand. Even though GM in the United States will lay off some of its workforce, we have no such plan here," he said.

The company has opened talks with the Export-Import Bank of Thailand and local banks to secure financing for the diesel-engine project.

"We do not ask for any special conditions from the banks, and we will borrow just a part of the investment. We expect to get a conclusion within 60-90 days," Carlisle said.

Charnchai said there was no mention about special state support during his meeting with Carlisle, as the government preferred to treat every carmaker equally.

Carlisle said GM was also developing biofuel vehicles but such a project needed government backing.

"If the Thai government is ready to give support to E85-compatible cars, we are ready to make an investment, as well," he said.

GM has sharply cut its production in Thailand, from 100,000 units last year to only 40,000 units this year, due to slumping demand in the global market and troubles at the firm that has been seriously hit by the US financial meltdown.

"Our sales in the beginning of this year fell by 40 per cent, sharper than other auto-makers in the Kingdom, because buyers lack confidence in our parent company's financial status," Carlisle said.

However, orders started to pick up over the past two months, he said.

Carlisle will hold a press conference today to explain the implications of the parent company's restructuring plan and its marketing strategy in Thailand in a bid to restore confidence.

Thailand Automotive Institute director Wallop Taisiri said GM's restructuring plan should lead to a clearer business direction, so that consumers could feel more comfortable about GM's future here.

Earlier this year, GM Thailand terminated 300 subcontracted workers. Its headcount now stands at 1,000.

In the US, GM has already begun a major re-engineering of its operations that will "allow the company to move toward profitability even if the auto market recovers slowly", said senior administration officials.

The largest US auto-maker will close 11 plants and idle three others as it slashes its operating costs, in order to lower its break-even point 40 per cent.

The US government will provide an extra US$30.1 billion (Bt1 trillion) in financing to help GM revamp under court protection and receive a 60-per-cent stake in the new company. It has already extended $19.4 billion in loans.