Flooding, wages top concerns
Local manufacturers need to change their business models by focusing on automation and high-value products to cope with rising labour costs and the implementation of the Asean Economic Community (AEC) in 2015, says the president of the Thai-Japanese Assoc
Kobkarn Wattanavrangkul, who is also chairwoman of Toshiba Thailand, said the government’s ability to manage floods would be another factor concerning manufacturers, especially those from Japan.
“We are keeping a very close eye on the government’s measures to handle the flooding situation. The high price of insurance for natural disasters such as flooding will be another concern raised by producers,” she said.
Kobkarn, who is also chairwoman of Bangkadi Industrial Park, said the estate, which occupies 1,222 rai (196 hectares), had started to construct a 9.5-kilometre-long concrete dyke surrounding the complex at a cost of Bt580 million. The dyke is designed to protect the industrial park if it is hit by flooding again this year.
She said the flood that hit the park last year forced Toshiba and other companies to shut down their facilities temporarily. However, they have recovered 50-60 per cent of their full production capacities.
Kobkarn said Toshiba was still committed to stay and invest in Thailand for the long term. The group has no plan to relocate to other countries.
“We will next year invest more than Bt1 billion in a new plant for manufacturing high-value parts in Thailand. Its annual capacity will be about 2 million units,” she said.
Kobkarn said the new Bt300 minimum daily wage would have different impacts on local manufacturers and other stakeholders throughout the supply chain, including small and medium-size enterprises. It will lead to increased prices of products, as will the cost of raw materials, which has risen significantly because of higher oil prices. The shortage of labour, especially at the operational level, is still a severe problem faced by manufacturers.
Toshiba Thailand employs about 15,000 people. Labour accounts for 10-30 per cent of total business costs. She added that manufacturers needed to adjust their business models to focus on the manufacture of high-value products. They need to prepare themselves to benefit from larger market opportunities in the region under the AEC.
“At Toshiba, we have looked at the Asean market for a long time as import duties set by Asean members have been reduced gradually. Thailand also has been recognised by the company for producing and exporting Toshiba products to serve not only Japan, but the Asean region as well.”
