released on May 2009
In 1997, Thailand was faced with an economic crisis that resulted from over-investment in real estate and a liberal financing policy. The domestic interest rate had risen to about 10% — roughly 5% higher than foreign interest rates — and negatively impacted the country's export volume. That July, the Thai baht suddenly depreciated from 26 to 53 against the U.S. dollar, causing both the Thai stock market and most local businesses to drop approximately 75% in value.
Toyota Motor Thailand Co., Ltd. (TMT) subsequently encountered huge losses and undertook several actions to overcome the crisis. First, it requested and received two capital injections from Toyota Motor Corporation, totaling US$200 million. "Since the automotive market was down by about 75%, we reduced the number of work days and hours to match the reduced production output," says TMT Vice Chairman Ninnart Chaithirapinyo. Adamant about its "no lay-off" policy, TMT sent 200 idle associates to Japan for training, while others were sent to assist local dealers.
To avoid further loses, TMT focused on 100% localization of parts and taking advantage of export opportunities. Several business reforms were instated, such as online management of vehicle supply and demand and the formation of project teams in finance and marketing to boost new vehicle sales. For dealers and suppliers, TMT granted credit lines and short-term loans.
When the King of Thailand became concerned about possible unemployment among TMT associates, he granted a purchase order to TMT to produce a Toyota Soluna (Vios) in order to prolong the working period of Thai workers. Instead of selling the vehicle, TMT presented it to the king as a gift, who in turn granted 600,000 baht to TMT to help establish the Rachamongkol Rice Mill, a project spearheaded by Chaithirapinyo. As an ongoing TMT CSR (corporate social responsibility) activity, the mill still helps rice farmers maintain their crop prices and benefits TMT associates and the overall community to this day.
Ten years later, TMT's then-President Mitsuhiro Sonoda decided to share this journey of recovery with all TMT associates, so that the younger generation could learn from the past and become better prepared for a future crisis. In August 2007, approximately 4,000 associates attended a TMT conference that looked at TMT's past return to profitability as a source of motivation and inspiration.
TMT overcame the crisis of 1997 by strengthening its competitiveness and improving communication among top management and all of its associates. "With the global financial crisis affecting Thailand in 2009, TMT has established 'Challenge the Change' committees that will utilize their knowledge of TMT's past crisis and implement means that lead to a timely recovery," says Chaithirapinyo. "We hope that if everyone can 'Challenge the Change' and turn the crisis into an opportunity, Toyota will once again emerge stronger and more successful than before."
TMT Vice Chairman Ninnart Chaithirapinyo (center), joined onstage by TMT associates, shares his experiences in helping the distributor and manufacturer to overcome the financial crisis of 1997 at a TMT conference, August 2007.
TMT Vice Chairman Ninnart Chaithirapinyo
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