ASEAN adjustment pains

Cheap imported ceramics and glass flooded the market in 2010 with ASEAN free trade. End of LPG subsidies rocks industry once again.

Don't miss the companion piece for today's article, a profile of a major ceramics company in Thailand (Read article).

Photo above of some ceramics goods designed and manufacttured for a customer.

Read previous articles about government LPG subsidies: March 26, 2008; June 20, 2008 and July 02, 2008.

Click button to listen to Ceramics Industry LPG Problem to download

Ceramics fret on LPG prices by Nanchanok Wongsamuth

Thailand's ceramic and glass industry faces a growing threat from rising liquefied petroleum gas (LPG) prices, higher minimum wages and a flood of products from neighbouring countries.

Amnart Yasothorn, secretary-general of the Federation of Thai Industries' Ceramics Industry Club, said the Asean free trade agreement that went into effect in January 2010 flooded the market with products as tariffs were eliminated for ceramic products.

"In 2015 when the Asean Economic Community takes effect, it will not impact the industry since we're already flooded with cheaper products from Malaysia, Indonesia and Vietnam," said Mr Amnart.

It is apparent we have to adapt by increasing value and focusing on design. But in the short term we are more worried about increasing LPG costs and minimum wages.

The value of Thailand's imports of ceramics rose significantly over the last three years, from 13.96 billion baht in 2008 to 18.56 billion 2010.

Exports dropped to 19.87 billion baht in 2010 from 31.39 billion in 2008.

Anurak Napawan, executive director of Indra Ceramic, said a hike of LPG prices by 12 baht this year is a major burden for his company, in which fuel costs represent almost 20% of total production costs.

The company produces tableware, home decorative items and gifts with a capacity of 500,000 pieces or 250 tonnes per month.

With capital of 250 million baht and employing 600 workers, 75% of its products are exported to markets including the United Kingdom, Germany, Europe and the United States

Mr Anurak said the company, as well as many others in the Lampang Ceramic Association, are currently not accepting pre-orders.

"A gradual increase of two baht per year is okay, but an immediate 12 baht increase is causing us to raise product prices and slow production since we don't want to accept too many orders," he said.

At first we were planning to increase production lines, but now we have cancelled the plan and we are not hiring new staff due to the planned increase in minimum wages.

The Lampang Ceramic Association recently submitted a petition to the administrative court in Chiang Mai concerning the government's decision to raise LPG prices. It is awaiting a decision on its suggested injunction to delay the price increase.

Tepiwan Jitwatcharakomol, chief of the Thailand Center of Excellence for Glass under the Department of Science Service, said ceramics will be hit hard from higher production costs and stiff competition once Asean economic integration takes place.

"Glass at least is recyclable, and their scraps can be remelted. Demand remains relatively strong in several industries such as hotels, food, construction and automotives," she said.

Dr Tepiwan added the department is preparing a formula for reducing costs for the ceramic and glass industry while recommending they take their equipment more seriously.

"Thai operators need to see how their kilns run at full capacity. If the kilns are too old, they have to adjust or find new hardware," she said.

(Source: Bangkok Post, Ceramics fret on LPG prices, 26/07/2011, Nanchanok Wongsamuth, link)

ceramics - ceramics - cups, plates, dishes, sculptures and other objects and ornaments made from clay, a hard material made by drying and baking clay (See Wikipedia and Google Definitions) ศิลปะการทำเครื่องเคลือบดินเผา

fret - to worry วิตกกังวล
threat - a danger อันตราย
faces a growing threat - in a situation of increasing danger

subsidies - when the government pays part of costs of some good or activity (sometimes to gain political favour and votes)

Liquefied Petroleum Gas (LPG) - gasoline substitute, less common worldwide than CNG below, but more popular in Thailand because of cheaper vehicle conversion costs (See Wikipedia)

Compressed Natural Gas (CNG) - a substitute for gasoline, diesel, or propane fuel, more environmentally clean alternative and safer in the event of a fuel spill, natural gas is lighter than air, so it disperses quickly when leaked or spilled, used especially by taxis, buses, and trucks (See Wikipedia)

wages - the amount of money earned per hour by a worker
minimum wages - the smallest amount that can be paid a worker for one day's work

flood - a large amount or number of something จำนวนมาก
flood of products from neighbouring countries - large amounts of products brought in from other countries
flooded the market with products - large amounts of this products started being sold suddenly (so one would expect prices to fall sharply)

ASEAN - the political and economic organisation that unites and gives one voice to the 10 nations of Southeast Asia (See Wikipedia)
trade - the buying and selling of goods การค้าขาย
free trade - trade between countries (international trade) without tariffs (taxes on imports) and other barriers to buying and selling goods and services across borders (See Wikipedia and Google Definitions)

Free Trade Agreement (FTAs) -  an agreement between a  group of countries to eliminate many tariffs, quotas and preferences on goods passing between them (See Wikipedia)
Free Trade Agreement (FTA) -
ASEAN Free Trade Area (AFTA) - an agreement between Southeast Asian countries to lower tariffs and other barriers to trade in order to: 1. make the region as a whole more competitive, and 2. encourage Foreign Direct Investment (See Wikipedia)

went into effect - start to exist as a law 

tariffs - taxes on imports (to make foreign goods less competitive in a country) พิกัดอัตราภาษีศุลกากร
tariffs eliminated -

Asean Economic Community (AEC) - a plan for the economic integration of ASEAN states by 2015 with a gradual elimination of barriers to trade and investment in the region (See introduction and description)

impact - an effect or influence ผลกระทบ
impact the industry - have a negative effect on the industry
apparent - noticeable, visible; clear; able to be seen or understood ซึ่งเห็นได้ชัดว่า
adapt - change to meet new situation, different conditions or uses ทำให้เหมาะ, ทำให้เข้ากับ, ปรับ

significantly - in an important way อย่างสำคัญ

executive - the highest level managers in a company
burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ (See glossary)
fuel costs
represent - to act, speak or be present officially for another person or people เป็นตัวแทน
tableware -
decorate (verb) - 
decorative (adjective) -
home decorative items -
capacity - the highest amount of production possible if all factories and machines are used ความสามารถในการ (ผลิต)

capital - money invested in a business (See glossary)
pre-orders - a request for an order in the future (telling the manufacturer ahead of time so they can prepare)
gradual - moving slowly and steadily
gradual increase - a slow and steady increase over time

production lines - assembly line, in factory the series of steps in making and putting together (assembling) a product

hiring - when a company formally gives a person a job (a contract is signed) การว่าจ้าง
staff - employees of a company, people who work for a company พนักงาน
submitted - formally given to someone so that they can make a decision about it ยื่น ยื่นเอกสารเพื่อการพิจารณา
petition - to ask someone in authority to do something, make a formal request ยื่นคำร้อง การถวายฎีกา,การร้องเรียน

administrative court - a court that solves disputes concerning the exercise of public power and government administration, the same court system that ordered the closure ordered the closure of Map Ta Phut (See court website, history of Thailand's administrative court and Wikipedia on administrative law)

injunction - an order form a court that prevents someone from doing something คำสั่งคุ้มครองชั่วคราว, คำสั่งห้าม
delay - to make something happen at a later time than originally planned or expected เลื่อน

stiff competition - when two or more sides are trying very hard to get something that both want (example: customers, market share, etc)

integration - joining together into one unified whole; combining with others to create a single unit or system การรวมเข้าด้วยกัน, การผสมผสาน

recycle (noun) - process used things such as paper or plastic bottles so they can be used again
recyclable (adjective) - made of a material that can be recycled and used again 

scraps - small pieces of something that has already been used for some purpose and thrown away or discarded already (can be reused) เหล็กเก่า ๆ สำหรับหล่อหลอมและเปลี่ยนรูปใหม่,เศษเหล็ก,  เป็นชิ้นเล็กชิ้นน้อย

melt - make a solid (like glass) into liquid form by heating it (e.g. ice to water) ละลาย   
remelt - melt again
scraps remelted - scraps are heated again to make them into a liquid (that can be used to make something useful once again)
construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง

formula – a list of the things that something is made from, giving the amount of each substance to use สูตร   
operators - businesses doing this business

kiln - a very hot chamber (oven, furnace) for heating pottery and making it hard (See Wikipedia)
kilns run at full capacity - kilns are running all the time

adjust - to change something slightly, especially to make it more correct, effective, or suitable ปรับ