|Success Story Detail
General Motors Discusses its Continued Investment in Thailand
In 1993, GM decided to locate its regional production and export hub in Thailand because of the advantages that come with the country’s rank as the 12th largest automotive manufacturing county in the world. Producing almost 2 million vehicles a year and exporting 55% of them to countries in Asia and the Middle East, Thailand is the most strategic location for automotive manufacturers looking to leverage the world’s fastest growing markets.
When vehicle sales doubled in Thailand from 1991 to 1996, the company chose to locate its regional manufacturing site in Thailand, where a broad base of auto parts makers already was already in place to provide parts. In 1996, GM began construction of its assembly center, a $1 billion manufacturing plant equipped with new state-of-the-art technology, which made it one of the most advanced facilities in the Asia Pacific region.
“The decision to choose Thailand at the time was driven by factors like its market size, the availability of skilled labor, a comprehensive supplier base and infrastructure, and last but not least, there was a favorable investment climate," said Martin Apfel, President of GM Southeast Asia Operations, “Today, we source parts for more than $1 Billion every year in Thailand and work with 178 suppliers.”
Today General Motors Thailand employs around 4,800 people in the country, with 3,800 at its manufacturing center in Rayong Province where it produces vehicles for GM and its affiliates under the names Chevrolet, GMC, Holden and Isuzu. As a leader in eco-friendly cars and alternative energy technology, GM Thailand has also introduced Thailand’s first OEM natural gas powered sedan, the Optra CNG.
Over $1 Billion in Investment
In 2006, GM invested another $66 million to expand its production capacity and construct a new paint shop. And in 2010, GM invested $500 million on three major projects for GM Thailand’s existing facility in Rayong, which included GM Thailand’s first progressive diesel engine plant, next generation pick-up truck, and truck derived SUV.
GM also expanded its footprint in Thailand with a $200 million investment in a new state-of-the-art power-train facility, situated near its vehicle manufacturing facility in Rayong. This new facility is GM’s most important power-train investment in Southeast Asia, and the first in the world that makes Duramax four-cylinder diesel engines.
“Thailand has now become the center of our export program for Colorado Pick-Ups and Trailblazer SUVs. Since 2008, we have been a significant $1.3 billion investment plan that has led to the modernization and expansion of our vehicle and truck plants as well as the successful start of operations of our first southeast-Asian engine plant,” said Apfel, “Our employment in Thailand now exceeds 4,800 team-members and experts say that a job in automotive assembly actually supports more than 7 other jobs in the supplier and service industry.”
A Unique Partnership with the Thailand Board of Investment
The Thailand Board of Investment (BOI) has played a large role in GM’s investment and expansion decisions throughout its time in the country. The BOI worked with GM on a standard package of incentives, including tax exemptions on export earnings for the first eight years, followed by a 50% tax reduction for the next five years. And as a BOI-promoted company, GM did not have to pay income tax for eight years and is exempt from import duties on machinery and many parts.
“The BOI has always been a good counselor and interlocutor with multiple government ministries, offices and agencies to facilitate further investments and a long term engagement of General Motors in Thailand,” said Apfel.
In fact, the BOI responsed to GM’s requests over the years and lifted a requirement for all auto makers that 54% of the contents of a car built in Thailand be locally produced, a decision that now benefits many automotive companies operating in the country.
Uniting in Flood-Relief Efforts
When the flood hit Thailand in 2011, GM Thailand teamed up with Thailand’s National Special Welfare Unit to distribute fresh drinking water to hundreds of communities affected by the flood and assisted in various flood-relief efforts to help a country whose people had worked and invested in GM for so many years. The company even provided assistance to flood victims by using GM’s trucks to deliver disaster-relief supplies to communities affected by the flood.
“Last year’s record floods have tested the Kingdom and its people who have shown remarkable resilience in the face of adversity,” Apfel said.
But despite the setbacks of the massive flood, over 15 markets had record GM sales, including one of the largest year-over-year increases of 57% in Thailand. With minor setbacks from the flood behind them, auto manufacturers like GM are encouraged and confident that that sales and demand in Asia will continue to increase at record levels in the coming years.