In 2004 the Thai government set a goal of producing 1.8 million vehicles by 2010, to become one of the world’s top 10 automotive manufacturers. With production of more than 900,000 vehicles, doubling production would be no easy task. With a solid foundation and the government’s priority on further industry development, Thailand would outline a policy centered on an open foreign investment strategy to further promote auto parts manufacturing and achieve its goals of becoming a top 10 player
Thailand’s open foreign investment strategy -
- • Offered support in the form of credit lines extended by state-sponsored financial institutions.
- • Set in place very liberal investment policies to pose no export requirements, no foreign equity restrictions in manufacturing, no local content requirements, and no location requirements• Kept the costs of setting up business in Thailand relatively low. Bangkok (Thailand’s capital) consistently ranks as one the least expensive cities in Asia. According to Mercer HR Consulting
- • Established Free Trade Agreements that Thailand currently has with a number of countries which encouraged growth for the automotive industry, increasing market access of local investors abroad
Thailand now hosts assembling operations for Ford, GM, Toyota, Isuzu, Honda, Nissan, Mitsubishi, BMW, Daimler Chrysler, and Mazda. Today, the automotive industry is the third largest industry in Thailand, employing an estimated total workforce of more than 400,000 employees. At its peak, Thailand would produce over 1.4 million vehicles
Global Economic Crisis
Thailand was well on its way to becoming the “Detroit of Asia”– a term coined back in 2004. Unfortunately, its once promising auto industry is now following the U.S. city down a similar precipice, and workers now face a growing risk of losing their jobs
Thailand Automotive Industry's sharp downturn -
- • The Automotive Industry Club forecasts expect production to fall by 25 percent in 2009 to slightly over one million units from 1.4 million last year In January, alone, production was cut by 40 percent, while domestic sales fell by 30 percent. The Federation of Thai Industries has forecast auto exports to slide by as much as 25 percent this year
- • 80,000 jobs are likely to be lost in 2009 which constitute about 20% of the industry’s overall workforce
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