VR Union seeking means to cut production costs
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VR Union Co, a Thai manufacturer of stainless steel faucets and other bathroom accessories, is planning to spend more than Bt100 million on automating its production process in order to cope with the rising cost of labour in the next four years.
“After the minimum daily wage had to be increased as per government policy, the company’s labour cost of Bt14 million a year rose by 40 per cent, so we need to boost our production capacity and seek alternative means to cope with this challenge,” managing director Chanida Hathaipantalux said.
Early this year, the company tried to reduce its production costs by adding new machinery to cut down on waste by 50 per cent.
The company is also looking into how it can reduce its workforce by 500 to 800 people in the next four years and replace it with machinery, she added. Chanida said the company was also considering increasing its retail prices by about 7 per cent because the cost of labour and transportation had risen following the wage hike.
The company is hoping to achieve Bt650 million in sales, up 20 per cent from last year. It expects 70 per cent of the revenue to come from domestic consumption and the rest from exports.
In order to boost local sales, the company is planning to use both modern and traditional trade channels as well as 700 distributors of construction materials nationwide. It will also be launching four new product designs this year to celebrate its 40th anniversary.
The company will focus on its branding strategy in Asia first before it expands into Europe and South America. VR Union is also looking for agents in Asean countries such as the Philippines and Singapore once the region opens up to become a single market in 2015.
