Sunday, November 25, 2007

New plant to boost Siam Motors exports

Siam Motors Group is investing Bt400 million in Siam NSK Steering Systems to build a second plant in Chachoengsao to produce steering racks for passenger cars and trucks.

Published on November 24, 2007

President Dr Phornthep Phornprapha said that Siam NSK, one of 67 companies under the group's wing, will serve as a production base for NSK globally, with production to be raised from 80,000 sets per month to 120,000.

Phornthep said that after the completion of the new plant in nine months, NSK's total exports to the US, Europe, China and India would account for 50 per cent of total sales, from the current 30 per cent.

Phornthep said the Thai business sector should be ready to adapt to fluctuations in the foreign exchange rate, and an economic slowdown in 2008, instead of depending on the government for help. He also said that the economic scenario was not guaranteed to improve next year despite the upcoming general elections.

"First we need to see the faces in the new government as well as the stability of the government. Hence, the business sector should focus more on improving the management in their own organisations as well as look for suitable outsourcing from low-cost investment areas to lower the risks in doing business," he said. He cited the fluctuating value of the baht, competition from low-priced products, and increasing oil prices

as future negative factors.

Phornthep said Siam Motors Group is a good example of how local companies should adapt. After two years of losses, certain companies within the group are becoming profitable again.

Among them are Daikin air-conditioners, Hitachi elevators, Komatsu trucks, which has boosted the Group's income with a 60-per-cent growth thanks to a surge in exports, GS battery with a 10 per cent increase in production, and the recently renovated Siam Country Club.

"Even sales of Nissan cars have become profitable this year due to the introduction of new models," he sad.

Phornthep added that the Thai economy is entering a period when it would face the reality, whereas in 2006 the economic and consumption growth was a result of market stimulation.

"Now, one year after the coup everyone has learned how to consume wisely and the government is teaching the people about sufficiency economy," he said. "The scenario will remain the same next year. Personally, I think that although domestic consumption will decrease, this is a good immunity for the country and a long-term realistic economy."

Phornthep opined that many businesses had to shut down due to management failure, while businesses that sought help from the government were those that saw their profits sliding.

"When the exchange rate was Bt25 to the US dollar, we were profitable, and when it became Bt50 to the dollar, we were profitable. So now, when the rate is Bt32-33 to the dollar, why can't we still be profitable?" he posed.

Phornthep said Thai businesses needed to adapt in terms of labour. "We need to bring in more automation and raise logistics to a new level while sunset industries need to be moved to neighbouring countries like Laos and Cambodia where labour is cheap."

He said that the Thai industrial sector has entered a third phase in its evolution. "Initially we were just hired to assemble but then we grew into producers and now exporters. We are a part of the globalisation process so it is important to adapt to changes with the right management systems," he said.

Phornthep said that after talking to Japanese investors he found out that they understand the nature of Thai politics and localisation of investment will continue in 2008. He cited the fact that in the automobile industry, all major producers have chosen Thailand as their production base.

"The domestic and export markets are highly competitive and this will spur the development of new models with higher technology on a continuous basis. What will follow is the investment by automotive parts manufacturers in which additional machinery and high technology will be brought in. More investments will then follow," he said.

The Nation

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