Many Factories Close as Cheap Imports Flood the Local Market

Many local factories producing electronics, steel, and plastics have closed down this year due to declining orders and the influx of cheaper imports in the Thai market, according to the Industry Ministry.

The factories were ranked according to their investment values at the time of closure.

Industry Minister Pimphattra Wichaikul stated, “The factories producing electronic parts and printed circuit boards that closed had the highest investment value, totaling 2.29 billion baht.”

In second place were the closures of steel and iron factories, which had investments totaling 1.45 billion baht, with plastic manufacturers coming in third, valued at 930 million baht.

From January through May, 488 factories from various industrial sectors ceased operations, Ms. Pimphattra reported, citing data from the Department of Industrial Work.

The total investment in these closed factories amounted to 14 billion baht. During this five-month span, various companies laid off a total of 12,551 employees.

Ms. Pimphattra explained that a primary cause for these layoffs and factory closures was the lack of competitiveness against foreign producers exporting to Thailand.

Local manufacturers, unable to compete with lower-priced imported goods, have chosen to relocate their production to neighboring countries to benefit from free-trade agreements, she noted.

The EAF Long Product Steel Producers Association earlier reported that many local steel producers are expected to close this year, overwhelmed by the surge of cheap imports from China.

Imports of Chinese steel have reduced the operational capacity of Thailand’s steel industry to 28% in January and February, setting a new low, according to the association.

The Office of Industrial Economics predicts that Thailand’s Manufacturing Production Index will either remain stable or increase by 1% year-on-year in 2024, a revision downward from earlier estimates of 2-3% growth.

The Industry Ministry reports that entrepreneurs in certain sectors, notably food, animal feed, and fertilizer, are moving forward with new investments.

These sectors have established 848 new factories with an investment of 149.8 billion baht from January to May.