Thursday, November 27, 2008

Thailand's Aapico auto part maker could lay off 30% of staff

NAREERAT WIRIYAPONG

The SET-listed auto parts maker Aapico Hitech Plc (AH) said that up to 30% of its 4,000 existing staff may have to be laid off if the global market recession leads to a sharp reduction in its revenue next year.Chief executive Yeap Swe Chuan said the company remained on track to achieve total revenue of 10 billion baht this year, an increase of 5% from 2007, but its five-year target of 20 billion baht is being reviewed. More than 90% of AH products are supplied to local vehicle assemblers such as Toyota, Honda, Isuzu, Nissan and AutoAlliance Thailand (AAT), the Ford-Mazda joint venture. Many of these have cut back production as the export outlook dims.

The Thai unit of General Motors (GM), which last week announced a two-month closure of its Rayong factory, had earlier decided to delay by one year buying new products from AH, Mr Yeap said.

''We are now projecting that sales next year could be 25-30% lower than this year. If the market falls that much, we might have to cut the number of staff by the same level starting from subcontracting workers,'' he noted.

Of the total workforce, around 30-40% are subcontract workers, who are employed on an annual basis. About 400 subcontractors work at two factories in China, with the other subcontractors employed at its nine plants in Thailand.

AH also decided to lay off non-productive senior permanent staff as a bold decision to increase efficiency during the downturn.

Mr Yeap himself cut his salary by 30% starting this month while other Thai and foreign directors expressed willingness to follow suit.

''We have to prepare for hardships,'' he said, adding that the company terminated all outsourcing staff the 1997 crash.

Nonetheless, AH's two-billion-baht investment during 2008 and 2009 is proceeding as planned. It is scheduled to open three new factories in Thailand by 2010 or early 2011.

''We have yet to secure all the financing required for the new factories but I don't think we will have a problem getting loans from banks,'' said Mr Yeap, citing that the company has never missed a repayment schedule with creditors.

''Banks are willing to lend money to good customers like us,'' he added.

AH's debt to equity ratio is 0.5 times, with a capital base of four billion baht.

In the quarter to Sept 30, AH posted a net profit of 71 million baht, up 4.36% year-on-year, as revenue rose 6% to 2.59 billion baht. Nine-month income rose 37.3% to 329.9 million baht.

AH shares closed yesterday on the Stock Exchange of Thailand at 3.04 baht, down six satang, in trade worth 1.1 million baht.

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