Honda to suspend 700 workers to survive recession

Due to a sharp drop in car sales, Japan’s Honda Motor Co. needs to cut costs. In an attempt to survive the dropping market rends, the company will temporarily suspend 700 contract workers at its new plant in Thailand next month.

The workers, who were hired for Honda’s second plant as part of a plan to boost annual output to 240,000 units in Thailand, will receive 75 percent of their salaries until the market picks up again. The company had initillay planned to boost production but has decided to standby it’s plans until the global situation turns a bit favourable.

Honda, Japan’s No. 2 carmaker, currently produces about 140,000 units a year at its two plants in Thailand. It employs more than 4,000 staff, including contract workers.

The scene is no different in Thailand at the home front. The country, world’s biggest producer of one-tonne trucks and an exporter of vehicles to the Asia-Pacific region, is expected to produce 1.4 million units this year. Some analysts expect that figure to drop to 1.2 million units in 2009. Thai auto sales fell for a sixth consecutive month in November, and analysts expect further weakness in the months ahead as consumer confidence plumbs record lows. Automakers everywhere are reeling from a sharp downturn in sales due to a global recession and tight credit.