Big Star set to build factory out of Thailand
Big Star might set up its first overseas factory in a neighbouring country, either Myanmar or Vietnam, as high labour costs in Thailand make its Gambol footwear uncompetitive in markets abroad.
“We want to look for a new overseas factory, which will be our base in exporting to markets with potential, especially Asean, which will serve the opening of the region as one single market, especially when the Asean Economic Community (AEC) is fully effective in 2015,” Surachai Kitkamjai, deputy managing director, said last week.
The criteria include human resources and labour conditions, as well as the overall economic situation and political stability in the country. Vietnam, for example, can offer cheaper labour at about US$100 (Bt3,075) per month.
The foreign factory is expected to cost Bt100 million-Bt200 million and will be set up in a couple years.
The Thai government will implement its Bt300 minimum-wage scheme throughout the country early next year, forcing many labour-intensive manufacturers, such as footwear and apparel makers, to relocate their facilities to countries with cheaper labour.
The company’s factory at Rama II Soi 100 was constructed in 1989 on 31 rai of land. With about 3,000 staff, of whom 30 per cent are from Myanmar, the factory can produce 40,000-60,000 pairs per day. About 70 per cent is for the domestic market and 30 per cent for export.
Close to 70 per cent is for other brands and 30 per cent for its Gambol and Kito brands.
The company is contracted to make footwear for international brands like Bally, Converse, Puma, Fila, De Fonseca and Hush Puppy.
Big Star supplies its Gambol footwear to more than 10 markets around the world, including Dubai, India, Hong Kong and Asean.
“With a higher minimum wage and shortage of qualified labour in Thailand, we want to protect ourselves by looking for a new location for our footwear facility, which has cheaper labour. The move will serve the company’s future expansion in both domestic and export markets,” he said.
“With the implementation of the AEC in 2015, we want to reduce the friction or pressure from price competition by relying on low production costs, especially for labour,” he added. Big Star aims to increase its sales by 20 per cent to Bt1.4 billion-Bt1.5 billion this year.
Papat Kitkamjai, brand manager, said the company would expand production at its Rama II plant by 20 per cent next year by relocating the warehouse and sales department to another location on the same road.
Big Star was founded over 40 years ago as a small trading company by members of the Kitkamjai family.
