Thai economy faces upheaval due to factory closures and cheap Chinese imports

BANGKOK, July 15 (Reuters): When Chinese electric vehicle maker BYD opened its first Southeast Asian factory in Thailand earlier this month, the nation of 66 million people basked in the limelight and won praise for its industrial vision.
What, however, received less attention was an announcement by another big automobile manufacturer - Suzuki Motor - just a few weeks earlier that it will shutter a Thai factory that produced as many as 60,000 cars a year.
The Japanese automaker's move mirrors those by scores of other companies in Southeast Asia's second-biggest economy which is bearing the brunt of cheap imports from China and a slide in industrial competitiveness due to factors including rising energy prices and an ageing workforce.
Thailand has witnessed nearly 2,000 factory closures in the last year, upending its manufacturing sector that contributes nearly a quarter of its gross domestic product (GDP).
It is weighing on the $500 billion economy and on workers such as Chanpen Suetrong.
The 54-year-old spent nearly two decades at the V.M.C. Safety Glass factory in central Samut Prakan province, checking the automotive and building products that rolled off the production line.
Chanpen said she was unexpectedly told in April that the factory was shutting down, leaving her without a job.
"I don't have any savings. I have hundreds of thousands of baht of debt," said the sole breadwinner in a family of three that includes an ailing husband and a teenage daughter. "I'm old, where will I go to work? Who will hire me?"
Monchai Praepriwngam, a director at V.M.C. Safety Glass, declined to comment on why the factory closed.
The manufacturing sector's woes have left Prime Minister SretthaThavisin, who took power last year, struggling to fulfil his promise of bringing average annual GDP growth to 5 per cent over his four-year term, up from 1.73 per cent in the past decade.
"The industrial sector has slumped and capacity utilisation has fallen below 60 per cent," Srettha told parliament last week. "It is clear that the industry needs to adapt."
SupavudSaicheua, chairman of the state planning agency National Economic and Social Development Council, said Thailand's decades-long manufacturing-driven economic model is broken.
"The Chinese are now trying to export left, right and centre. Those cheap imports are really causing trouble," Supavud told Reuters.
"You have to change," Supavud said, arguing that Thailand should refocus on making products that China wasn't exporting while strengthening its agriculture sector. "No ifs or buts."
ADAPT, OR CLOSE
The factory closures between July 2023 and June 2024 increased 40 per cent from the preceding 12 months, according to the latest Department of Industrial Works data that has not been previously reported.
As a result, job losses jumped by 80 per cent during the same period, with more than 51,500 workers left without work, the data shows.
The number of factories shutting down in Thailand is rising, and the gap between the number of newly opened and closed factories narrowing. From July 2023 to June 2024, more than 50,000 jobs were lost from closed factories.