Huge new auto production planned

Ford Motor Company of the US and Mazda Motor of Japan on Tuesday announced plans to invest $500 million to expand their joint production facility in Rayong, shifting from mostly pick-ups to exporting perhaps 275,000 autos per year.

The Ford/Mazda investment in their jointly owned Auto Alliance Thailand (AAT) production facility will shift the two companies away from one-ton pickup truck manufacturing into the small passenger car market, targeting Southeast Asian consumers.

"By entering the passenger car segment more aggressively and being able to compete in what we think is clearly going to be the biggest passenger car segment in Thailand, we think this is a key step in the right direction," said John Parker, Ford's executive vice president for the Asia/Pacific.

Ford and Mazda will both be producing B-cars, or small energy efficient passengers cars, in Thailand, by the year 2009.

Parker brushed off concerns about Thailand's political instability this year, noting that the two companies were looking at the "ten-year horizon and not a one-year horizon."

Thailand had a coup d'etat last year and is scheduled to hold a general election on December 23, this year.

Parker added that it was crucial for them to enter the competitive small car segment in South-East Asia quickly.

"Getting in at the beginning of a profit cycle was a critical aspect of our decision analysis," Parker told a press conference.

An estimated 80 per cent of the 100,000 passenger cars produced at the AAT joint facility will be exported to the Association of South-East Asia (ASEAN) and other markets, said Robert Graziano, executive vice president of Mazda Motor Corp.

Graziano acknowledged that the 19 per cent appreciation of the Thai baht currency against the US dollar over the past two years posed a challenge for the Thai-based production.

"Clearly the appreciation of the Thai baht means we're going to have to work harder on maintaining our costs, and drive as an efficient program as we can for exports to the other markets in ASEAN," said Graziano.

Ford denied that the expansion of their Thailand production would lead to a closure of their facilities in the Philippines.

"It doesn't imply any change in strategy towards the Philippines," he said.

In a unique show of cooperation in the automotive industry, Ford and Mazda set up a joint production plant in Thailand in 1995 to manufacture one-ton pickup trucks for the domestic and export markets.

The two firms have already invested 1 billion dollars in AAT, which produced its one-millionth unit earlier this year. (dpa )