How Thailand Can Become The 'Detroit Of Asia'

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AUTO TALK

How Thailand can become the 'Detroit of Asia'

Pattanadesh Asasappakij

The Nation

BANGKOK: -- Most people in Thailand believe that the country's potential in every sector will help it become the largest auto-producing nation in the region.

Thailand has been referred to as the "Detroit of Asia" for many years, although the basic foundation of the country was never planned to serve the expansion of auto production in the long term.

During the past several years, labour wages in Thailand have risen according to the higher cost of living, which is normal in a free global economy. But there has been a shortage in the workforce below the bachelor degree level because mistakes have been made in the planning of the national education system, which is not in harmony with the development of the country. There are also other factors, including a split in society due to politics.

Corruption by government officials at every level, the inability to effectively deal with natural disasters that are growing stronger each year, as well as the announcing of a free-trade area that allows tax-free imports in many areas, all come together in lowering Thailand's importance as an auto production base. There has even been talk recently about relocating the production bases for automobiles and parts to other countries in the region.

Initially, Vietnam was considered an important competitor to Thailand, but I’ve always said that Vietnam and the Philippines - that used to be a production base many years ago - are still far away from being able to compete against Thailand even in the near future.

However, the country we should be looking at the most is Indonesia. Almost every major auto manufacturer has an assembly plant in Indonesia, and though they are mostly joint-venture companies with local shareholders, the pattern was seen before in Thailand. There are chances that the brand owner may decided to increase its stake in these operations, which is not difficult these days since trade and investment barriers are more difficult to put up.

The benefit of relocating production from Thailand to Indonesia is that brand owners do not have to start from scratch in terms of investment, especially major Japanese auto-makers that have long been present in Indonesia.

According to the JAMA (Japan Automobile Manufacturers Association), Toyota has invested in Indonesia since 1971 and Mitsubishi entered that country in 1973. Other Japanese companies such as Hino, Honda, Isuzu, Nissan and Suzuki have all invested in Indonesia.

At the same time, the political situation in Indonesia has become more stable, unlike in Thailand where more and more conflicts are taking place, and there seems to be no quick solution. Indonesia's corruption problem is also improving, but corruption in Thailand is bound to become worse. There have been accusations of corruption in every government project, even the country's national disaster-relief projects.

Another important factor for investment is the sales figure in each country. Being able to sell thousands of vehicles in the home country dramatically helps lower production cost due to a larger economy of scale. This makes vehicles more price competitive when exported.

According to the sales figures of JAMA members in the Asean region in 2011, Thailand is the largest market with sales of 746,000 vehicles, followed by Indonesia with 728,101.

Malaysia is a distant third with 399,946 vehicles, followed by the Philippines with 135,296, Vietnam with 45,042 and Singapore with 16,883.

You can see that only Thailand and Indonesia have the same level of sales.

But Indonesia has a much larger chance of growing than Thailand. The 250 million people in Indonesia are enjoying increased income every year, and this will help accelerate auto sales there as compared to the 65 million people in Thailand.

As a Thai citizen who wants to see continued growth of automobile production in Thailand, the region's leader, I also want to see authorities make an attempt to improve the foundation in every sector so it is in harmony with growth.

This means supporting the auto-parts industry, having a long-term energy plan that is trustworthy, clear tax policies and development of skilled workers for factories that need to be improved urgently.

Otherwise, the phrase "Detroit of Asia" would just be a joke and Indonesia will eventually grab the title of the largest auto producer in Asean.

-- The Nation 2012-04-11

[rogerdee123]

Who wants to imitate Detroit ??? !!!!

[driedmango]

Detroit is crazy, its a ghost mega city, polluted and crime ridden.

The big car compaines only care for profit and will destroy anything they need to, including a country or city.

[bangkok101]

Detroit is an urban slum and officially bankrupt.

[Stevenredd]

Thank you, fellow Thai Visa lurkers, for jumping on this one. Has anyone ever BEEN to Detroit? It's a pit, a cesspool, a polluted, desolate, abandoned ghost city of nothingness. Now, having said that, it's given us some fine music, automobiles and food. But, hey...it's like the guy says, auto companies will eat anything in their paths to feed the company, a city, a country....be careful what you wish for.

[Thaddeus]

Oh this is too easy.

First, have the entire country in the vice like grip of a one family owned company with a snazzy name like Omni Consumer Products, then make sure that the police force is controlled by said company, then get some one untouchable to shoot a police man, then have the dead police man return as a cyborg who kills all the bad guys.

So, nearly there.

[kerryk]

Thank you, fellow Thai Visa lurkers, for jumping on this one. Has anyone ever BEEN to Detroit? It's a pit, a cesspool, a polluted, desolate, abandoned ghost city of nothingness. Now, having said that, it's given us some fine music, automobiles and food. But, hey...it's like the guy says, auto companies will eat anything in their paths to feed the company, a city, a country....be careful what you wish for.

Might want to include the UAW.

[heatherm]

Funny, I think buying a house is cheaper in Detroit than in Thailand, but I bet it is safer to rent a jet ski.

[kerryk]

The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject.

Edited April 11, 2012 by kerryk

[WhizBang]

You think they could have gotten a bigger photo? Sheesh.

Hmmmm... I think I smell a hub coming on.

[Javabear]

Everyone likes to blame the unions for the downfall of the US auto industry but they are only part of the problem. In the 70's. 80's, and early 90's everything coming out of the big 3 was a piece of junk. They had foresaken quality for short term profits and lost much of their market share as a result.

[rotary]

Heck most of the DETROIT cars are made in Mexico or Canada, thanks unions for ruining another industry!

[belg]

thailand is already the detroit, if it comes to crimes, corruption, lawlessness

[TackyToo]

Detroit is an urban slum and officially bankrupt.

Isn't that what lies ahead for LOS? Is "MATCHBOX" expanding and in a desperate need of unskilled 300 baht workers?

[Stevenredd]

thailand is already the detroit, if it comes to crimes, corruption, lawlessness

Yeah, considering the manufacturing has moved south and the place is an empty shell of it's former (manufacturing) self.....but don't blame it all on Thailand. Corporate entities are feckless and have no faith or loyalty. They'll go where prices allow and abandon entire economies in favor of 2 baht savings per piece. Watch 'em.

[Javabear]

Heck most of the DETROIT cars are made in Mexico or Canada, thanks unions for ruining another industry!

Unions can't take all the blame here. The corporations themselves put bean counters in charge instead of anyone that actually knew anything about the cars or the manufacturing process. Complete lack of innovation and massive cost cutting led to <deleted> quality but the short term profits were great and those in charge at the time got big bonuses. Then came NAFTA and everything went to Mexico.

[kerryk]

I don't know if anybody knows this but Henry Ford didn't make a very good car. All in all he was not a very nice guy. He did have one good idea. He made a car that his workers could afford to buy.

That's why Detroit took off. It was a built in market. You work for Ford and buy a Ford.

The more Fords you buy the more workers he employed. I'm not kidding you. I worked for Ford in Detroit.

The unions killed the business, the dumb managers killed the business, the dumb steel bosses killed the business and Macarthur killed the business because he rebuilt Japan so well and allowed monopolies to run the business.

See, in Pittsburgh they had old steel mills. In Japan they had new steel mills. In Japan they had one family who owned the bank, steel mill and the auto factory. That would have been illegal in the USA. It is a big unfair advantage.

I also worked for Ford in Thailand. When they have a problem and demand slows down, the managers talk to the employees and the employees take a couple of weeks off. Everybody helps each other. They don't strike. They agree on a compromise. Ford pays a little of money and the employees take some time off and have a cheap holiday.

If they can continue to do this Thailand will be a force in the market. Imagine, management cooperating with workers!!!! Do you remember what country even had strikes during WWII (talk about unpatriotic pricks!)

[AZBill]

Really? Ever been to Detroit? But again, no one will ever blame the Thais for being overly ambitious! If they find they can't make their own copy they are welcome to the original - 20 Baht!

[unanimosity]

Whoever wrote the headline has never been to Detroit because Thailand has already become the Detroit of Asia with calls to prayer ringing in the streets daily.

[kerryk]

In the USA the industrial Midwest is on the Great Lakes supplying steel and all the materials to make autos. Thailand's East cost has the same advantage along with the oil and gas refineries of Rayong.

[FritsSikkink]

The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject.

Not true $28 an hour:

http://mediamatters.org/columns/200811250012

[kerryk]

The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject.

Not true $28 an hour:

http://mediamatters....ns/200811250012

Did you figure in the pensions of all of the workers who have retired? No I suppose not.

What that $70 figure (or $73) actually represents is what it costs GM in total labor expenses, on an hourly basis, to manufacture autos.

Edited April 11, 2012 by kerryk

[FritsSikkink]

The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject.

Not true $28 an hour:

http://mediamatters....ns/200811250012

Did you figure in the pensions of all of the workers who have retired? No I suppose not.

What that $70 figure (or $73) actually represents is what it costs GM in total labor expenses, on an hourly basis, to manufacture autos.

So the worker doesn't make that amount of money like you stated but they are total labor cost. There is a big difference

[kerryk]

The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject.

Not true $28 an hour:

http://mediamatters....ns/200811250012

Did you figure in the pensions of all of the workers who have retired? No I suppose not.

What that $70 figure (or $73) actually represents is what it costs GM in total labor expenses, on an hourly basis, to manufacture autos.

So the worker doesn't make that amount of money like you stated but they are total labor cost. There is a big difference

I wrote"The average Detroit Auto Worker, makes 17,000 baht per day (if they paid in baht). I wonder if that has anything to do with the demise of Detroit? Can you say I got a great union.

Edit. Actually that is not really true. I think Toyota only gets $48 bucks an hour. And new hires in Detroit get a lot less. It is a very complicated subject."

I know you want to start a fight but the above is what I said. And, "What that $70 figure (or $73) actually represents is what it costs GM in total labor expenses, on an hourly basis, to manufacture autos.."

A good response would be to find out what Thailand pays in total labor expenses on an hourly basis. Then you could compare and know how the UAW ripped of America and its members. You might also want to investigate the adversarial nature of the worker and management relations in Detroit. Contract talks were like a war every 4 years and always during deer hunting season.

[khaowong1]

Well, if they really want to be the 'Detroit of Asia' they need to trash up Bangkok a little more and immigrate some of the barrio population of the real Detroit. That should do the trick.

[khaowong1]

Thank you, fellow Thai Visa lurkers, for jumping on this one. Has anyone ever BEEN to Detroit? It's a pit, a cesspool, a polluted, desolate, abandoned ghost city of nothingness. Now, having said that, it's given us some fine music, automobiles and food. But, hey...it's like the guy says, auto companies will eat anything in their paths to feed the company, a city, a country....be careful what you wish for.

Yes sir, Detroit was the king of music, muscle cars and fine food. Now, nobody wants to go there, not even the people who live there.

[chiang mai]

In the 1970's Detroit was the classic donught city, a small mostly hollow centre that was downtown and then a large ring of African Americans, mostly poor, many unemployed and many into drugs/crime. Over the years that larger ring expanded, pushing the caucasian population further out into the suburbs and any associated businesses with them. Sucessive governments failed to revitalize downtown until eventually Detroit was a poor black unemoployed community from the core, all the way seven miles out. So many opportunities missed to make Detroit a great city, if government would only have sucessfully renewed the downtown area it had a chance, independent of the car industry, but they didn't. I lived in Detroit for many years and worked in one of the few banks that still had offices in the core.

[anterian]

Detroit of the East, Silicon valley of the East, sex capitol of the East, Venice of the East, what comes next?

[Payboy]

Many candidates in LOS for the Son of Detroit title.

[kerryk]

I think the thread was about how Thailand can become the Detroit of Asia. I think it already is, no? Isn't Thailand the largest exporter of light trucks in the world?