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Automobiles

Nissan's Thai unit to hire 2,000 employees to ramp up production

Automaker's global restructuring plan to benefit kingdom at Indonesia's expense

Nissan's Kicks hybrid electric SUVs, which are produced in Thailand. The automaker is set to cut its global production capacity by 20% from fiscal 2018's 7.2 million units. (Photo courtesy of Nissan)

BANGKOK -- Nissan Motor will hire about 2,000 new employees to increase car production at its Thai unit, as part of a global restructuring effort by the financially-battered Japanese automaker in which Thailand will be a major beneficiary.

Nissan has already stopped operations at its Indonesia plant and plans to withdraw completely from production there. It had tried to expand local sales by introducing low-priced models under the Datsun brand, but failed. As a result, Thailand will now be Nissan's only large-scale production base in Southeast Asia.

From this month, Nissan Motor Thailand will be gradually taking on new skilled workers at its plant in Samut Prakan province, located to the south of Bangkok, according to Ramesh Narasimhan, president of the unit.

As of the end of March, Nissan Thailand had 4,171 employees, according to data compiled by the parent company in July. The new hires will represent close to 50% of the current workforce, indicating that Thai production will increase significantly going forward.

"The increase of production comes on the heels of a growing export business, in particular for the Kicks [hybrid electric sport utility vehicles] and Navara [pickup trucks]," said Narasimhan. "Nissan's investment and additional job creation will positively contribute toward the automotive supply chain and the Thai economy," he added.

Nissan workers at its Indonesia factory in 2014. The automaker plans to close the plant, making Thailand its only large-scale production base in Southeast Asia.    © Reuters

And within Thailand, Narasimhan said the company was seeing strong demand for the Almera sedan and Kicks models.

In November 2019, Nissan had announced a plan to invest 10 billion baht ($320 million) over the three years from 2020 to ramp up the production of so-called e-Power technology, the company's hybrid electric system, in Thailand.

However, Nissan had been expecting production increases to happen a lot sooner.

Back in 2012, when the company announced it would build a second Thai plant at a cost of 11 billion baht, it said that once the two plants were in operation at full capacity, they would be able to produce 370,000 vehicles a year.

After the second plant started operations in 2014, however, production volumes in Thailand plateaued at about 167,000 units -- even in 2018 when production reached a peak for recent years.

Nissan had increased production capacity worldwide under the expansion policy of former Chairman Carlos Ghosn, resulting in increased fixed costs. This is believed to have been one of the reasons for the group's current poor financial performance.

By fiscal 2023, Nissan is set to shrink its global production capacity by 20% from fiscal 2018's 7.2 million units under its medium-term management plan 'Nissan Next'.

"We will consolidate the models to improve production efficiency" in some regions, said CEO Makoto Uchida when he revealed the management plan in May.

The company, which now has plants around the world with low capacity utilization rates, is expected to post losses of more than 600 billion yen ($5.7 billion) in the fiscal year that ends March 2021, the second straight year in which losses have topped that level.

As it closes plants in Indonesia and in Spain, Thailand is viewed as a global export hub. Its Kicks SUV, which launched in June in Japan, has been produced and exported from Thailand.

Due to coronavirus lockdowns, the company was only able to start its marketing campaign for the compact SUV in July, but according to Narasimham, sales of Kicks in Japan have already exceeded 10,000 units, while sales in Thailand rose to 879 units.

Additional reporting by Eri Sugiura in Tokyo.

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