Pan Asia offloads land, plants
The Saha Group will sell more than Bt1 billion worth of non-performing assets, including land and factories, at its subsidiary Pan Asia Footwear as part of a downsizing process to increase its liquidity and cut costs.
The move is to tackle the footwear company’s over-investment in expanding its factories over the past decade and the withdrawal of major client Nike, which moved its sourcing arm from Thailand two years ago. About 90 per cent of Pan Asia Footwear’s total production was to serve Nike under the original equipment manufacturing (OEM) contract.
Pan Asia Footwear now supplies seven or eight small and medium-sized international footwear companies under OEM contracts.
Boonchai Chokwatana, president of Saha Pathanapibul, who has been in charge of restructuring the loss-making footwear company since March last year, said the company would consolidate scattered factories for footwear parts operated currently by Pan Asia Footwear, reducing their number from more than 10 to only five this year. The company aims to reduce its operation costs by at least 5 per cent this year.
“The downsizing at Pan Asia Footwear will allow the subsidiary to enhance its management and accuracy in manufacturing, and increase efficiency and liquidity in its business operation,” Boonchai said.
He said the increase in the minimum daily wage launched in April had a significant impact on the labour costs at Pan Asia Footwear, which employs more than 7,000 people, about 30 per cent of whom are foreign workers, mainly from Myanmar and Cambodia. The minimum-wage rise adds about Bt10 million to labour costs each month.
“We will gradually reduce the number of foreign workers at our footwear company. However, the reduction will depend on the company’s sales performance, including the amount of orders from its footwear clients.”
Pan Asia Footwear achieved more than Bt4 billion in sales last year, mostly from export.
Boonchai said Pan Asia Footwear had suspended its plan to set up a factory in Cambodia, waiting for local business problems to be solved.
“We have already bought about 10 rai of land in Cambodia for our new footwear factory. The factory will cost more than Bt100 million and will help the company ease its labour problems.”
