Cheaper labour: Leave Thailand or not?

Good reasons to stay in Thailand even though 300 baht minimum wage makes production more expensive here.

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Economics

Staying put and thinking big

A Bangkok textile company is bucking the trend of relocating abroad in search of cheaper labour
30/10/2012
Nanchanok Wongsamuth

While textile and garment manufacturers have been driven to invest in neighbouring countries to tap low-cost labour, a medium-sized Thai company has found ways to stay afloat without thinking of relocation.

Founded 20 years ago by his father as solely a textile manufacturer, TTH Knitting (Thailand) Co has no plans to relocate its factory from Bangkok, although the daily minimum wage rose 40% to 300 baht earlier this year, says 31-year-old Kittipong Ruayfuphan, the company's marketing manager.

With slightly more than 220 workers compared with 400 employed in most medium-sized ventures in the industry, TTH has invested heavily in machinery since Mr Kittipong had a say in the management team after graduating with a business administration degree from California State University seven years ago.

We want to be something modern like a one-stop service company that provides everything from weaving and sewing textiles, producing digital prints and 3D embroidery to designing patterns and sending them to our customers," said Mr Kittipong, adding that the company does not have a limit on the minimum amount of orders.

While the old business model involved hiring subcontractors for different types of work, TTH produces its own fabrics and stocks them in order to create a fast lead time of 25 days at the earliest - a figure Mr Kittipong claims is the fastest in the industry's medium-sized businesses.

The company currently has fabric worth 20 million baht in stock.

"The only thing we aren't involved in is the dyeing process, as Bangkok has strict regulations regarding the release of waste water," said Mr Kittipong.

Around 10 years ago, the company produced licensed shirts such as those featuring Doraemon, Sailor Moon and Pokemon, but faced losses due to copycats.

After years of developing new ways of doing business, the company is now making a profit.

Now a made-to-order company, TTH's products include polo shirts, T-shirts, uniforms, pants, jackets, hats, towels and other textile products under the Mixprint brand.

Shirts and polo shirts account for 60% of production, uniforms make up 30% and the remainder are other products such as aprons, towels and hats.

The company also produces value-added T-shirts such as the ventilator Mix-Tech, which costs 30 baht more than normal shirts.

Apart from the various services they provide, TTH also puts emphasis on advanced machinery with a combined value of 200 million baht.

This has enabled the company to not only improve the quality of its products but also employ fewer workers. For instance, the printing section used to have around 150 workers, but now 15 work together with three machines. If a worker in the packaging section, for instance, is away, another employee can easily replace him or her by only pressing buttons, said Mr Kittipong.

Despite Mr Kittipong's reluctance to use foreign labour, who make up 30% of the company's workers, he said the turnover for Thai employees is high. Both Thai and migrant workers receive wages of at least 300 baht per day, with a minimum of 330-350 baht per day for skilled workers.

The government's policy to increase minimum wages has so far led costs to increase by 12-18%, said Mr Kittipong.

The company is currently looking for a plot in Bangkok's neighbouring Samut Sakhon province to construct a new factory at a cost of 200 million baht. The new facility is expected to triple production capacity from the current 900,000 units per month, as the existing factory on a three-rai plot cannot be expanded.

"I have not thought about expanding to other countries, as some who have invested in Laos and Cambodia have already pulled out due to labour costs and poor infrastructure," he said....

(Source: Bangkok Post, Economics, Staying put and thinking big, A Bangkok textile company is bucking the trend of relocating abroad in search of cheaper labour, 30/10/2012, Nanchanok Wongsamuth, link) 


Textile Industry and Offshore Business Relocation Vocabulary

staying put - not going to another place
thinking big - having big goals (difficult to achieve), having ambitious plans

staying put and thinking big

trend - what everyone is doing; a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
bucking the trend - not doing what everyone else is doing

relocate (verb) - move to another location ย้ายไปตั้งอีกที่หนึ่ง
relocate  factory

has no plans to relocate its factory from Bangkok

relocating abroad - moving out of the country to a foreign country
relocation (noun)

search - to look somewhere carefully in order to find something ค้นหา
in search of cheaper labour

a Bangkok textile company is bucking the trend of relocating abroad in search of cheaper labour

textile - material used to make clothes by weaving or knitting, cloth สิ่งทอ (See Wikipedia)
fabric - Same as "textile"

sew - เย็บ, เย็บผ้า
sewing textiles

weaving - การทอ

embroidery - การเย็บปักถักร้อย, งานเย็บปักถักร้อย
3D embroidery

garment - clothes
textile and garment manufacturers

tap - use
tap low-cost labour - start using low-cost labour (to save money and make more money)

driven to - forced to do something, made to do something
driven to invest in neighbouring countries to tap low-cost labour

afloat - floating on water ลอยอยู่ในน้ำ
stay afloat - 1. stay in business; not fail; 2. stay on top of the water and not sink (go under water)

found ways to stay afloat without thinking of relocation

solely - only one thing (doing this one thing or being this one thing)
solely a textile manufacturer

founded -  started a company or organization
founded 20 years ago by his father as solely a textile manufacturer

wage - an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
daily minimum wage - the lowest wage that can legally be paid to workers for one day of work

employ - to have someone work or do a job for you and pay them for it ว่าจ้าง, จ้าง
employ fewer workers

the number of workers employed in most medium-sized ventures in the industry

employee (noun)

venture - a business
medium-sized ventures

business administration degree - a 4 year college degree from a university

one-stop service - only have to go to one place or one company to get this service done for you
a one-stop service company 

limit - a highest or lowest amount
does not have a limit on the minimum amount of orders

hiring - when a company formally gives a person a job (a contract is signed) การว่าจ้าง
subcontractor - a company hired by a company (the contractor) to do part of the work that it was hired to do
hiring subcontractors for different types of work

stock - to keep or store large amounts of something for future use
produces its own fabrics and stocks them in order to create a fast lead time of 25 days at the earliest

figure - an amount  จำนวน
a figure Mr Kittipong claims is the fastest

stock - an amount of something that you keep so that you can use it when you need it ที่เก็บไว้ในสต๊อก
in stock - has the good or product in inventory (available for sale or use)

currently has fabric worth 20 million baht in stock.

dye - changing the color of fabric and textile with chemicals (verb) ย้อม, ย้อมสี (noun) สีย้อม,  สารย้อมสี
process - a series of actions that you take in order to achieve a result แนวทางปฏิบัติ, กระบวน, วิธีการ
the dyeing process

release - to allow a substance to flow out from somewhere ปล่อย
release of waste water

strict - very careful and exact เข้มงวด
regulations - rules made by the government to control how some activity is done กฎระเบียบ ระเบียบ ข้อบังคับ   ระเบียบปฏิบัติ
strict regulations

strict regulations regarding the release of waste water

licensed - have official permission to make or use something owned by another (example: licensed by Disney to produce Mickey Mouse on shirts)
licensed shirts
produced licensed shirts such as those featuring Doraemon

profit - money that you make from selling goods and services after all your costs have been paid กำไร
make a profit
the company is now making a profit

made-to-order - made or produced specially for a particular customer, in the way that they require
a made-to-order company

brand - a type of product made by a particular company ตรา, ยี่ห้อ
sold under a brand

sold under the Mixprint brand

remainder - the part of something that is left after that rest have been considered, left, finished, etc. ส่วนที่เหลืออยู่
apron - (เอ'พรอน) ผ้ากันเปื้อนส่วนหน้าของร่างกาย โดยคาดไว้ที่เอ
the remainder are other products such as aprons, towels and hats.

provide - to give someone something that they want or need
services - บริการต่างๆ 

provide services - give people the services the services they want and need 
the various services they provide

emphasis - special importance or attention that is given to one thing in particular การเน้นย้ำ
puts emphasis on advanced machinery

improve - to make better ทำให้ดีขึ้น
improve the quality of its products

venture - company
medium-sized venture - companies not large, not small, middle-sized 
the number of workers employed in most medium-sized ventures in the industry

replace - to get rid of someone or something, and to put a new person or thing in its place เลิกให้และนำสิ่งใหม่มาใช้แทน หาคนมาแทน
can easily replace him or her

pressing buttons - กดปุ่ม

employee - someone who is paid regularly to work for a person or an organisation ลูกจ้าง
another employee can easily replace him or her by only pressing buttons

packaging - the container or covering for a product while it is waiting to be sold in stores
a worker in the packaging section

reluctance - feeling like you don't want to do something; not willing to do something ลังเล; unwillingness to do something ความไม่เต็มใจ,ความไม่สมัครใจ
reluctance to use foreign labour

turnover - the rate at which employees leave a company and are replaced by other people
the turnover for Thai employees is high

migrant - moving from one place to another อพยพ
migrant worker - someone who travels to another place or country in order to find work (an immigrant is someone who comes to live in a country from another country) ผู้อพยพ

wages - the amount of money earned per hour by a worker
Both Thai and migrant workers receive wages of at least 300 baht per day

policy - a plan of action to guide decisions and achieve outcomes นโยบาย (See Wikipedia)
The government's policy to increase minimum wages

plot - a piece of land used for a particular purpose
looking for a plot in Bangkok's neighbouring Samut Sakhon province

production capacity - the amount of something that can be produced ความสามารถในการ (ผลิต)

current - of the present time ปัจจุบัน
production capacity

triple - three times the number or size of something จำนวนสามเท่า
triple current production capacity

expected - believe will happen คาดว่า (จะเกิดขึ้น)
expected to triple current production capacity

facility - a building used for a particular purpose
The new facility is expected to triple production capacity from the current 900,000 units per month

infrastructure - the high-cost facilities that everyone in the economy shares (water, roads, electricity, trains) สาธารณูปโภค
poor infrastructure

some who have invested in Laos and Cambodia have already pulled out due to labour costs and poor infrastructure....