Some Japanese workers fly back home

Some Japanese companies in Thailand have started to send their Japanese staff back home, in what is a first cost-cutting step as they struggle to maintain their local operations in the current economic crisis.

The global economic downturn has prompted Japanese companies here to focus on reducing production and labour costs amid deteriorating sales and profits this year, the head of the Japan External Trade Organisation (Jetro) Bangkok said yesterday.

A joint Japanese Chamber of Commerce (JCC) and the Jetro survey just released reported that Japanese firms in Thailand expected lower sales and earnings this year due to several factors.

It said the major factors affecting the Thai economy are the continuing political turmoil, recessions in Japan, the United States and the European Union, and stagnation in both consumption and investment in Thailand.

Japanese companies here have started to cut costs in respect of the number of local workers, Japanese staff and overtime.

"They are reducing both production and labour costs. In particular, some companies have already sent back their Japanese staff to Tokyo. This is the first cost-cutting measure to decrease expenses amid a tough [environment for] business growth this year," Munenori Yamada, president of Jetro, said yesterday.

Yamada said some small and medium-sized Japanese enterprises in Thailand had already released their contract labour after experiencing a drop in income.

Businesses facing this problem are mostly subcontract small and medium-sized firms engaged in the electronic parts, auto parts, transportation machinery, chemicals, steel and non-ferrous metals sectors.

Yamada said many firms had also reduced costs by not renegotiating new contracts with existing staff or by providing early-retirement programmes. Other measures being used to maintain business activity are cancellation of overtime and cutting working days to five or even three days per week.

Moreover, foreseeing obstacles to business growth this year, some companies are considering laying off full-time employees. However, in such cases, all Japanese firms will consult the Labour Ministry and ensure that statutory compensation is paid to those laid off, he added.

Japanese companies are the largest group of foreign investors in the Kingdom, with up to 7,000 firms established in the country. Most of them are involved in the automotive, auto parts, electronics and steel industries.

Based on a questionnaire sent to 1,285 JCC members and collected on December 1, Japanese investors' expressed deteriorating business sentiment for the first half of this year. Most industries - in particular, non-manufacturing such as trading, retail, finance, construction and civil engineering, and transportation and communication - had weak sentiment.

"It clearly shows that this economic crisis is worse than the 1997 crisis. The survey of Japanese corporations showed dramatically deteriorating sentiment among Japanese businesses in Thailand," said Yamada.