The aftermath of the 1997 crash reduced stock-market speculators to sandwich peddlers while others suffered even more drastic consequences.
Over the following year, Thailand's automobile industry was but a shadow of its former self with annual sales of 144,065 vehicles _ down from the record of 589,126 set just two years earlier.
Tri Petch Isuzu sales president Morikazu Chokki faced the financial crunch as a company vice-president back in 1998. He explains what Isuzu learned:
"Customer satisfaction has been one of our main policies since long before the crisis took place in 1997. It is part of our corporate culture.
The toughest-ever crisis has taught me that steadfastly fulfilling the customer's needs with both pre- and post-sale services is the winning strategy that enabled our sales to recover fully from the slump by 2003, one year earlier than the overall market did."
Like all other brands, Isuzu invested heavily after positive projections stemming from the sales record set in 1996. However, unlike others, Isuzu only erected a building at its Gateway facility without installing heavy machinery and production lines.
After the baht was floated and the vehicle market contracted to 363,156 units sold in 1997 before dropping to 144,065 in 1998, Mitsubishi Corporation injected about eight billion baht into Tri Petch Isuzu Sales at the end of 1998 to help its dealers and boost operations.
"We are customer-focused because satisfied customers are the key to a profitable business," Mr Chokki stressed.
"It is obvious that the customer's voice is so loud that you might have to pay an extremely high price if appropriate attention is not paid."
Indeed, Isuzu was one of the few brands spared the embarrassment of being paraded on public roads by disgruntled customers, some of whom smashed the windshields of their own vehicles in January 2005.
Honda Automobile Thailand director Pitak Pruittisarikorn shared similar sentiments about events of 10 years ago.
"After 1997, we didn't downsize or lay off employees but instead we implemented several measures aimed at enhancing the importance of Thailand on a regional scale by developing human resources, investing in production capacity and establishing a Honda R&D Asia-Pacific centre," he said.
The top executives of the top three carmakers share reflections on how they steered their operations through turbulent times after the crisis knocked the local industry off the road
Chokki: Customers must be kept happy
Pitak: Plans went beyond copying with the crisis
Sonoda: Suppliers and dealers helped out
"I must say that the current situation, when compared with what happened back in 1997, is totally different.
In 1997, the combination of private-sector debt, an overrated baht exchange rate, the government's efforts to fend off baht speculators and the flotation of the currency itself all contributed to a sudden increase in private-sector debts.
"Lay-offs were rampant, consumers stopped spending and the automobile industry suffered.
Honda also experienced problems but we chose to implement measures unlike the rest of the competition.
We didn't just want to get past the crisis but we wanted to lay the foundations for Thailand to gain a prominent regional role as well".
Honda Thailand's five core activities are: sending employees to be trained abroad, increasing automotive exports, doubling production capacity to 120,000 vehicles, establishing a 379-million-baht training centre at the Bang Chan industrial estate capable of accommodating 12,000 employees annually, and the 2.4-billion-baht Honda R&D Asia-Pacific centre.
Rounding out Thailand's Big Three is market leader Toyota Motor Thailand, which increased its registered capital more than eight-fold, from 520 million baht to 4.52 billion baht, in 1998 before raising it to 7.52 billion in 2001.
The move, coupled with other cost-reduction activities such as staff rotation and voluntary reductions of working hours and certain benefits, enabled Toyota to withstand the financial crisis and maintain its leadership, with a 41% market share to date.
"We were able to maintain our human resources under normal conditions without salary deductions or layoffs by imposing other measures to decrease costs," said president Mitsuhiro Sonoda.
"Moreover, we supported our suppliers and dealers to help keep them in business.
We prepared each work unit to ensure it was ready when the economy showed signs of recovery. Our efforts during the crisis led us to our success, with the IMV project, strong dealerships, supplier network and quality products."
Toyota currently has a production capacity of 550,000 vehicles per year, with 13,000 personnel, 119 dealerships and 289 showrooms.
There was no stopping Bangkok Alloy Enterprise (BAE) in early 1997. The outlook was wildly positive for this first-tier automobile supplier.
Management had just spent 190 million baht on 145 rai of land and a state-of-the-art factory in Chachoengsao, part of the Board of Investment's Zone 2, at Km 64 near the Suwintawong area in order to take advantage of five years of tax-free incentives _ and to embrace a glorious era of growth and unprecedented demand for engine blocks.
Like a tsunami, the financial crisis of 1997 hit BAE without warning as it claimed innocent victims without discriminating by nationality or business sector.
After the Chavalit Yongchaiyudh government floated the baht, the exchange rate against the US dollar gradually picked up momentum from 25 to 48 to the dollar, peaking at 56 in early 1998.
Formed as a trading company in October 1991, BAE was built on two pillars. First was the demand of Japanese automobile companies for first-tier suppliers. Second was the BoI's policy to spread investment into the provincial areas.
"Before the crash, the most important factor was that foreign banks were so eager to lend us credit _ no guarantee, no business plan, just a statement.
BAE took out loans of about 150 million baht when the baht was 25 to the dollar," said chairman Praphan Dejsuwanachai.
BAE's land purchase cost 60 million baht while the factory cost 30 million baht and leased machinery 100 million.
BAE opened its new factory in April 1997, which according to management, there were "no signs of a crisis".
"We got wind of it through government channels but we believed in our customers [Japanese automobile companies] because monthly orders of five million baht came from them. So the project went on as planned."
On July 2, 1997, the Bank of Thailand floated the baht. "We had no experience.
All we knew was the exchange rate jumped from 25 to 30 then 40. Our advisers (Japanese) said things would improve but we needed to pay our debts," he said.
A forwarding system was introduced as a means of repaying loans via fixed rates at a small premium.
BAE's creditors included seven banks and it had incurred severe losses after forwarding its loan payments at a rate of 48 baht to the dollar even as the exchange rate went to 42.
Simply put, many companies just went bankrupt and closed operations in 2000.
On the other end of the spectrum were a series of cash injections from Japanese parent companies.
Praphan: No signs of crisis seen
BAE itself became a non-performing loan (NPL) in 1999, with debts of 200 million baht. But in 2003, it left the NPL list after renegotiations with creditors.
From the brink of defeat with 1.5 million baht in revenues per month, BAE today generates monthly revenues of 50 million baht from cylinder casings for Honda power products, barrels, and motorcycle hubs. Its workforce has more than doubled to 350 from 150.
"Do we want to invest more?" Mr Praphan asks rhetorically. "I am scared because of the political uncertainty. The baht is stronger and that is bad for exports. We'll see after the elections. All we want to do is maintain our volume."
For now, BAE has allocated 100 rai of land out of its total 145 rai to cultivate rice. "We want to make use of the land."
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