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Metal Casting Technologies : September 2007
2007 OVERVIEW AsianFoundry www.metals.rala.com.au 36 THAILAND By Dr. John Pearce Industrial growth still expected to be 5% In spite of political concerns and worries over the strengthening of the Thai Baht against the US Dollar the automotive industry and automotive foundries in Thailand have continued to make progress. In 2006 Thailand produced 1.16 million vehicles and 2.08 million motorcycles. The electrical and electronic appliance exporters have also continued to do well, Thailand is the main exporter of electronic appliances and is second only to China in exporting air conditioning units. The exchange rate has fallen from around 37 Baht to the USD down to 33-34 reducing export profits such that labour intensive low productivity companies in the textile, footwear and furniture industries are now facing difficult times. Engineering and cast metals do not appear to be too badly affected. The strength of the Baht should encourage some foundries to upgrade where they need to buy equipment from overseas. Current predictions estimate that growth in the Thai industrial sector overall for 2007 will be around 5%. The region's strength in manufacturing was reflected in the record attendance at the recent InterMold exhibition in Bangkok which covered 35,000 m2 with 600 exhibitors from 25 countries and some 45,000 visitors. In fact, the main manufacturing concern at present is the shortage of skilled workers especially in the auto industry. One new scheme to tackle the skills shortage is being set up to increase cooperation between Japanese and Thai SMEs in the foundry, diecasting, forging, pressings and heat treatment sectors. The plan has resulted from discussions between the Thai Industrial Promotion Department and the Japanese Ministry of Economy, Trade & Industry. The future for the auto sector is promising since it has been predicted that over the next few years nearly half of the growth in the world automotive industry will be in Asia. For example, Honda recently announced that it was spending around 27 million USD on the expansion of its motorcycle R&D centre in Thailand. The centre was established in 2004 as Honda R&D Southeast Asia to be the region's design hub for motorcycles. Honda is also set to expand the size of its car assembly plant in Ayuthaya to raise the annual production capacity to 240,000 vehicles by 2008. Following the export successes of Thai built pick up trucks the present Thai government wants the main export vehicle in the future to be a fuel efficient 'eco-car". To gain an eco-car manufacturing licence, which includes tax breaks and tariff reductions on imported equipment, the specification to be met is: engine capacity not greater than 1300cc, able to achieve 20km on a litre of fuel plus a minimum production rate of 100,000 cars by the fifth year of operation. Strong small car competition will come from India which also intends to be a global small car supplier. Around the world the health of the castings industry is tied to that of the vehicle builders since some 67% of world castings are for the auto industry. However, following a number of regional and bilateral free trade agreements, Thai metal casters supplying auto-parts must be aware that they will have to meet increasing competition from foreign suppliers. Thailand's tool and die industry has an estimated value of USD 2,632 million and is expected to double to more than USD 5,000 million by 2013. The expansion of foreign direct investment in the automotive and the electrical/electronics industries is a major demand drivers for the tool and die industry. With these industries targeting the world market, they require quality tool and die to manufacture products that meet global standard. Local tool and die manufacturers are only able to partly meet such demand, leaving a significant part of the market to higher quality tool and die imports from foreign manufacturers. Tool and die imports are expected to increase at double digits annually into the next several years. Imports in 2006 totaled USD 666 million, with Japan, Taiwan and Korea sharing 71%, 10% and 9% of the market respectively. Export opportunities exist for tool and die manufacturers that are able to provide quality products at competitive prices and with shorter lead-times. Tool and die manufacturing know-how also has export potential, as the Thai manufacturing industry must improve its technological infrastructure to benefit from the expansion and development of its major industries.