Sunday, November 15, 2009

AFG looks at counting pennies

Courtesy of Doc Iain Corness and by kind permission of the Pattaya Mail, please find below the report on the AFG Meeting from Friday 13 November:




The Automotive Focus Group (AFG) invited representatives from General Motors and Ford to address the members on the subject of “Thailand outlook for the auto industry in 2010 and beyond.”
Frank Holzer, a genial GM style Aussie was the first speaker, but unfortunately Reiko Webster from Ford got lost and arrived a little late, so her address will be deferred to another meeting of the AFG group. (It really is time that FoMoCo had Satnav as standard equipment!)

Frank Holzer began his very ‘frank’ address by stating that the current problems are actually future problems, so we (and GM) are not out of the woods yet. He cited the global economic crisis, international business issues and Thailand’s political issues as all factors which resulted in GM seeing a 59 percent drop in sales year on year.

Factors affecting the bottom line included wages which have doubled over 10 years, and he felt that government intervention was needed in the area of wage control, otherwise Thailand would lose its pricing competitiveness.




He saw the need for all businesses, not just GM, to have sound fiscal policies which would allow for rapid restructuring when necessary and said that Outsourcing did not allow for quick action and is a fixed cost to the manufacturer. A cost that perhaps the parent company cannot sustain in times of economic woes. He also said that corporations have to understand that maintenance of ‘market share’ does not necessarily mean maintenance of ‘profitability’. The pennies have to be counted.

Frank also stated that in the auto industry, keeping large stocks to supply dealers was no longer a viable plan, and ‘build to order’ was much more financially appropriate.

Domestic recovery is expected by 2011, with the one tonne pick-up market still dominant in domestic sales, but the export market will be driven by small, fuel-efficient cars.

In his summation he mentioned the need for political stability in this country and the need to develop and educate the workforce, otherwise China, India, Malaysia, and Indonesia will take over Thailand’s (tenuous) hold on being the ‘Detroit of Asia’.


By Dr Iain Corness