January 13, 2014 00:00 By Erich Parpart
In an exclusive interview with The Nation, Arak Suksawat, managing director of East Coast Furnitech Plc, a manufacturer of rubberwood and particleboard furniture, said last week his company plans to expand production capacity by 20 per cent and spend Bt16
This year, ECF targets growth of 15 per cent and investment of Bt60 million in the first two quarters to expand warehouses, launch a domestic brand named "a7" via its modern retailer called Mega Home, open an Elega showroom inside Index Living Mall outlets, and introduce a line of products within other brands such as Costa, Muse in Tesco Lotus, Fur Direct in Big C and Leaf in Home Pro.
For the last two quarters of this year, if everything goes to plan, ECF will consider investing Bt100 million on new machinery to lower production cost through the trimming of its workforce and to speed up its production rate.
"We will use the proceeds from our initial public offering and the profit from 2013 to increase our production capacity in order to cope with the increase in domestic and foreign demand," he said.
ECF earned Bt19.37 million on Bt292.86 million in revenue in the third quarter of last year, which is an increase of 20.6 per cent from the same quarter in 2012.
"Our continuous growth is largely based on the expansion of clients by our domestic and foreign buyers, which increased their demand for our furniture. Our main buyers are from abroad, which accounted for 60 per cent of our revenue. Our best selling product is furniture made from particleboard, which accounted for 70 per cent of our total revenue," he said.
ECF’s main buyers are from Japan, the United States and Europe. The biggest increase in demand was from Japan but business from the US and EU is also increasing due to their economic recovery.
"Japan remains our biggest foreign client but orders are beginning to pick up from the US and the EU, especially from Italy after a long period of silence due to its economic crisis in recent years," he said.
Demand across Thailand is stable and ECF is planning to open more stores and showrooms near border areas in the future since many neighbours are crossing over to buy furniture here due to the high quality of the products.
ECF is also planning to expand in Asean, the Middle East, India and Africa. The Philippines is one of its main targets since there are no wood manufacturers in that country and demand has been increasing from this region.
ECF is not worried about the potential increase in competition with the opening of the Asean Economic Community in 2015 because of the high quality and innovative design of its product line along with the abundant raw materials within the country.
Most of the competitors in Asean and China are concentrating on quantity, not quality, and most of ECF’s foreign clients are more concerned with high quality and the distinctiveness of the products, which competitors have disregarded.
"ECF’s clients, especially from the US and EU, want high quality products and this is our advantage over our competitors from China and Malaysia since Thailand’s wood furniture is more reputable than those countries," he said.