This year, more Thai factories are expected to close than in the past two years due to a weakening manufacturing sector and ongoing economic challenges, as reported by the Kasikorn Research Center (K-Research).
The think tank observed that for two consecutive years, the monthly rate of factory closures exceeded 100. The most affected were small and medium enterprises (SMEs), primarily due to their limited financial resources.
In 2024, the average registered capital of companies that closed their factories was significantly lower, at 3.8 times less than that of those that did so in 2023.
Last year, the total registered capital of companies that shut down their factories amounted to 47.8 billion baht, a sharp decline from over 180 billion baht in 2023.
Between 2021 and 2022, there were 4,855 factory shutdowns contrasted with 1,818 new openings, resulting in an average net closure of about 127 plants per month over that span.
From 2023 to 2024, the figures show 4,302 factory closures against 3,034 openings, with an average net closure rate of approximately 53 plants per month.
Industries such as furniture, electronics, garments, automotive, and steel experienced the highest number of shutdowns during this time, according to K-Research.
The center highlighted several internal and external factors influencing these closures, including sluggish economic growth in Thailand, fragile consumer spending, and persistent structural issues in the manufacturing sector, which further eroded the competitiveness of domestic SMEs.
Additional challenges arose from US-China trade tensions, reduced global demand, and intensified competition from both local and international markets, undermining the competitiveness of Thai firms.
Despite these challenges, K-Research noted that new factory openings have provided some employment for workers displaced from closed facilities, although there has been a trend toward reduced working hours and overtime pay.
On average, each new factory provided jobs for 36 individuals, whereas the closure of a factory resulted in an average of 52 job losses.
Additionally, the center reported an increase in the number of workers experiencing reduced working hours. In the first half of 2024, the count of factory employees working less than 40 hours a week climbed to 457,000, marking an 11% increase from the previous year.
“This impacts low-income employees in the manufacturing sector, weakening their purchasing power. We anticipate more factories will close this year than last,” noted K-Research.
This outlook is consistent with a decline in the country’s manufacturing index, which fell by 2% in the last quarter of 2024 compared to the same period the previous year.
