Thursday, October 30, 2008

Vietnam's labourers in automobile industry losing jobs

12:58' 29/10/2008 (GMT+7)

VietNamNet Bridge – Many automobile manufacturers in Vietnam have to cut jobs and halt production as they are facing many difficulties.


Markets falls, enterprises restructure manpower


Ford Vietnam said that it is carrying out a program on personnel restructuring to adapt to the new circumstances. It is estimated that some 20% of administration staff will be the subject of the program.


Michael Pease, General Director of Ford Vietnam, said that the global economic recession has had impacts on all the economies in the world. The recession has forced Ford Vietnam, in the urgent situation, to take necessary actions to create a suitable business model, which allows the manufacturer to operate well with reasonable costs with the current fierce competition of other automobile manufacturers.


Sources said that the slowdown in car sales and the forecast of a further decrease in car sales in the upcoming months have prompted Ford Vietnamto cut jobs. Statistics showed that in September, Ford Vietnam could sell 278 cars only, and that figure is expected to be lower in October.

The decrease in car sales is not only the problem of Ford Vietnam. Honda Vietnam also saw slow sales in the last month. In September 2008, the manufacturer only sold 121 Civics. Sources said that the manufacturer now have large stocks of the Civic model, estimated at 600 units. Currently, the production chain assembles only five cars, a very small number if noting that 35 cars were assembled a day at the end of 2007 and early 2008.


Toyota Vietnam now assembles 70 cars a day, while the figure was 105 units a day at the end of 2007.


The import stock of local automobile manufacturers is expected to increase further, since the imported sets of car parts are still arriving under the import orders, while the sale of cars has been going very slowly.


Pease said that Vietnam’s automobile market saw an impressive growth rate of 83% in the first half of 2008 over 2007, while it had decreased by 33% by September.


Truong Hai Automobile Corporation has 500 workers staying home, receiving 70-100% of salaries due to the stagnant production and slow sales. The corporation now has some 4,000 workers.


Tran Ba Duong, General Director of Truong Hai Automobile Corporation, said that with the current difficulties, which are forecasted to last in to 2009, Truong Hai may also have to cut jobs. The truck market has dropped by 60% over the last few months. Truong Hai can now sell 500 units a month, while it has large stocks of over 4,000 units.


Vinaxuki also said that the sales of trucks have been moving slowly. It is selling 300 units a month, while the sales normally should be higher at the end of the year. Vinaxuki sold 600-1,000 units in the last months of 2007.


With large stocks of 3,000 units, Vinaxuki is working instinctively with one shift in every two days instead of one shift a day as previously.


Bui Thanh Xuan, Deputy General Director of Vinaxuki, said that the number of buyers has decreased dramatically because they cannot borrow money from banks as the result of the policy on tightening the monetary policies.


“If the situation cannot be improved, we will have to restructure our production which will result in many workers losing their jobs,” Xuan said.


Car importers have also been facing great challenges. Nguyen Thi Vinh, Director of Hai Phong-based Vinh Hoang Company said that the imported cars have been unsalable.


Shifting to other business


Vinh said that other car importers are all suffering heavy losses due to the unsold cars. The importers now accept to sell at a loss of $2,500-5,000 for every Toyota Camry in order to clear the stocks and get money to pay bank debts.


Many importers said that they will shift to other business after clearing the big stocks as car trading proves to be unprofitable any more.


Meanwhile, Hyundai Motor Vietnam said that it is trying to develop a new business: importing specific vehicles, including ambulances and money-carriers.


Ha Minh Tuan, General Director of Hyundai Motor Vietnam, said that specific vehicles do not bear luxury tax, while the developing economy ofVietnam has the high demand of specific vehicles.


Tuan said that in 2007 and 2008, Hyundai can sell 700-1,000 ambulances and 500 money carriers. He hopes to sell 500 Hyundai Starex brand name money carriers and 700-1,000 ambulances in each of the next years.