bad year looms for exporters

The Nation

Thailand's electrical- and electronic-goods industries are facing big difficulties next year due to sluggishness on the export front.

Since November, many manufacturers of electrical and electronic products have cut overtime and outsourcing as immediate measures to reduce costs, said Dr Katiya Greigarn, chairman of the Electrical Electronics and Allied Industries Club of the Federation of Thai Industries (FTI).

"To cope with sluggish export orders, some manufacturers are looking to reduce operation time at their factories as well as stopping some of their production lines," said Katiya, who was speaking at the roundtable discussion held recently by Krungthep Turakij newspaper.

Katiya said local manufacturers of electrical and electronic products had reduced production by about 20 per cent by cutting overtime payments to reflect the smaller volume of export orders.

He said Thailand's exports of electrical and electronic products and parts were expected to increase from Bt1.5 trillion in 2007 to only Bt1.6 trillion this year. The actual growth is expected to be much lower than the projected 10 per cent envisaged earlier this year. The industry employs about 580,000 people.

Katiya said the US, which used to be the largest export market for Thai electrical and electronic goods, had drastically reduced orders this year.

Demand from the US has dropped dramatically from 20 per cent last year to about 14 per cent today. The US has been overtaken as the largest export market by the European Union, Asean and China.

Nattaphong Areekul, vice president of Toshiba Thailand, said the company would lay off employees only as a last measure.

"We have been reducing outsourcing contracts to reduce costs," said Nattaphong.

"During this time of difficulty, we have a greater need for quality people," he said.

Nattaphong said that com-

pared to the 1997 financial crisis, which affected only big com-

panies that relied on overseas

loans, this time the economic turmoil had widely impacted ordinary people.

"What we have been doing at this time of recession is to seek new potential channels of distribution and new marketing initiatives and creativity to increase sales. We will, however, set a lower sales target as we want to keep our people," he added.

Nattaphong said the private sector should think positively and boost the country's confidence, not relying on support from the government but standing on its own legs.

GFK Marketing Services (Thailand) estimated that the market for electronic goods would face a tough time next year.

"We estimate total domestic demand for electrical appliances will see a significant drop of 5 per cent next year," manager Chaiyarit Piyabootr said.

"We are, however, quite optimistic about the future of Thai-

land as we see the light at the end

of the tunnel. The country has got

a new prime minister. All stakeholders, including economists,

have put their heads together to find the best solution to the crisis," he said.

Power Mall, the home-appliances and electrical-products department of The Mall shopping centres, posted growth of only 2-3 per cent in the first 11 months of this year, said Apichart Assavapokee, chief merchandising officer at The Mall Group.

The mall operator had expected Power Mall to post a sales increase of 5-7 per cent to Bt7.45 billion this year, but now it expects to miss that target.

"We have also set a flat target for Power Mall next year," he said.

Apichart said vacuum cleaners, microwave ovens and washing machines had become indispensable and many suppliers had launched attractive promotions such as 10-month instalments at zero interest. Today consumers

are smarter and prefer products that promise value for money, he noted.

Boonyong Tansakul, sales and marketing director of Singer (Thailand), said the company was seeing quite a different trend from the industry as a whole.

"At any time of economic recession, instalment business sees growth," he said.

Boonyong said Singer would focus on people as part of its corporate social responsibility programme.

"We see this crisis, when many factories are laying off staff, as an opportunity to recruit quality salespeople," he said.

The company will open a Singer Academy next year to recruit and train sales staff.

"We at Singer have made ourselves a lean organisation. We are today concerned about the bottom line and reducing unnecessary costs and risks," said Boonyong.