The Office of Industrial Economics
Industrial Economic Status Report
February 2011
Summary of Industrial Economic Status
Industrial IndicesinJanuary 2011
-The manufacturing production index (MPI) in January 2011slipped1.1% m-o-mbut increased 3.7% y-o-y. Production has expanded in several industries over a year, particularly motor vehicles, electronics, sugar, air conditioners, and apparel.
-The average capacity utilization rate was 62.1% in January, down from62.6% inDecember 2010.
Industrial Economic Status
-Textile and Garment Industry
- Production is expected to go down due to the rising prices of raw materials and efforts to avoid the burden of high-cost production.
- Exports of textile products and garments should grow in all major markets, particularly in ASEAN under the free trade agreements and the integration of the ASEAN Economic Community.
-Iron and Steel Industry
- Flat-steel production in February 2011 is expected to expand from the previous year due to the growing demand of related industries, such as motor vehicles and parts and electrical appliances.
- Long-steel production is likely to decrease due to the amount of products in stock that manufacturers are holding.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
Industrial Indices
Manufacturing Production Index
December 2010=188.4
January 2011=186.3
Activities contributing to the decrease of the MPI:
- Hard disk drives (HDDs)
- Beer
- Canned and frozen seafood products
Capacity Utilization Rate
December 2010=62.6
January 2011=62.1
Activities contributing to the lower rate:
- HDDs
- Canned and frozen seafood products
- Beer
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
-The total MPI was 186.3 in January 2011, a 1.1% decrease from December 2010 (188.4)but a3.7% increase from January 2010 (179.7).
- The main activitiesthatcaused the m-o-m MPIto drop were HDDs, beer, canned and frozen seafood products, tobacco products, and petroleum products.
- The activities responsible for the y-o-y MPI increase were motor vehicles, electronics, sugar, airconditioners, and apparel.
-The average capacity utilization rate was 62.1% in January 2011, a slip from 62.4% in December 2010but an improvement from 60.3% in January 2010.
- The mainactivities that caused the average capacity utilization rate to decreasefrom December 2010 were HDDs, canned and frozen seafood products, beer, artificial accessories, and tobacco products.
- The industries contributing to the lower y-o-y figure of the average capacity utilization rate were motor vehicles, petroleum products, textile fibers, canned and frozen seafood products, and fabricated metal products used in industrial activities.
Industrial Activity in January 2011
-The Department of Industrial Works (DIW) reported that 296 plants began operations in January 2011, down3.90% from December 2010 (308start-up plants). The number of employed droppedby 16.79% m-o-m in January 2011, from 6,944to 5,778 people.Investment capital showed an increase of 137.09% m-o-m, from 18,342.64 million baht to 43,488.90 million baht.
-The number of plant openings increased 21.81% compared to January2010, when there were 243openings.Investment capital from the plant openings was 354.87%higher than the 9,560.65million baht invested a year earlier. The number of people employed went up21.67% from 4,749 in January 2010.
- The activitywhich had the most plants starting up in January 2011 was thegenerating or distributing of electrical power (42 plants), followed by the repairing and spray painting of motor vehicles (23 plants).
- The activity with the highest level of investment capital in January 2011 was the generating or distributing of electrical power(35,718.51 million baht), followed by the assembling of air conditioners (1,839.72million baht).
- The activitywhich had thehighest employment in January 2011was the generating or distributing of electrical power and the cutting and sewing of garments (685 jobs each), followed by the assembling of air conditioners (548 jobs).
-The DIW reported that 109plants closed in January 2011, up by 53.52% from the previous month, when 71 plants closed.The total amount of investment capital lost by the closures was 661.99million baht in January 2011, higherthan the 400.36million baht loss recorded a month earlier. The number of layoffs in Januarydropped over the month, from 1,519to 1,274.
-According tothe DIW, the number of plant closures represented a14.84% decrease from January 2010, when 128 plants closed. The investment capital lost due to plant closures in January 2011 was less than the1,738.42million baht loss recorded in January 2010. The number of layoffs represented a yearly decrease, as 3,235 layoffs were reported in January 2010.
- The activities with the most plant closures in January 2011werethe repairing and spray painting of motor vehicles (6 plants), followed by the digging and dredging of earth, gravel, and sand (13 plants each).
- The activity that lost the most investment capital due to plant closures in January 2011was the manufacturing, assembling, or repairing of agricultural or animal husbandry machines(251.34 million baht), followed by the manufacture of other rubber productsexcept tires for vehicles(47million baht).
- The activity from which the most employeeswere laid off in January 2011 wasthe manufacture of other rubber productsexcept tires for vehicles (130 layoffs).
-The Office of the Board of Investment (BOI) reported that in January 2011 there were 139approved investment projects, a 24.11% increase from the 112investment projects approved in January 2010. The investment capital totaled 22,300 million baht, a decrease of 38.57% from a year earlier, when 36,300 million baht was invested.
Shareholders of BOI-approved investment projects inJanuary 2011
Shareholder / Number of Projects / Investment Capital (Million Baht)1.100% Thai Shareholders / 60 / 8,900
2.100% Foreign Shareholders / 48 / 8,200
3. Joint Ventures / 31 / 5,200
- The activities with the highest level of BOI-approved investment capital in January 2011 were services and public utilities (8,000million baht), followed bymetal products, machinery, and transport equipment(5,000 million baht).
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
I.Food Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
The production and export value of the food industry shoulddrop after the New Year’s holiday. The overseas purchasing power should decline due to the consistent riseof oil prices, stemming from political turmoil in Arab countries. Domestic sales shouldimprove after increases ofincome and agricultural product pricesencourage consumers to spend more.
- Production
In January 2011, major products of the food industry (excluding sugar)went up 0.1% y-o-y but down 1.3% m-o-m.
Major products mainly for export:Canned pineapple and frozen/chilled shrimp saw y-o-y production increases of26.3%and 14.7%, respectively, due to the rising purchase order volume.
Products mainly for domestic market: The production of palm oil dropped27.3% y-o-y due to the dormant period and it being out of the production season,with distributionof only a small quantity of output to the market. The sugar production sector started its sugarcane pressinglater than in the previous year. Moreover, the material quality dropped, withproduction volumeshowing a 2.7%decrease compared to a year earlier.
- Sales
Domestic Market
In January 2011, the domestic sales volume of food and agricultural products went up0.3% y-o-y and 3.2% m-o-m as spending volume grew due to increases of the minimum wage and household income in the agricultural sector.
International Markets
The total export value(baht) ofthe food industry went up4.3% y-o-ybut down9.2%m-o-m. Products whose y-o-y export value increased were canned pineapple (33.9%), processed chicken (7.4%), and canned tuna (6.9%), due to the depreciation of the baht from the previous month. Sugar export value increased y-o-y in response to rising prices in the world market. The reason for the price increase was the lower inventory stock level after India and Australiareduced their export volume.
- Trends
Production and exports are forecasted to slowdown from the previous month due to decreased orders after the New Year’sholiday. Oil prices will continue rising due to political turmoil in Arab countries and this will also decrease the purchasing power of overseas customers. Domestic sales should improve after the increases of incomesand agricultural product prices, leading consumers to spend more, albeit to a limited degree due to rising product prices.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
II.Textile and Garment Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
Fluctuation in currency exchange rates and the rising cost ofproduction are factors that manufacturers need to be conscious of.
Source: IndustrialEconomicsInformationCenter,
Office of Industrial Economics
Source: IndustrialEconomicsInformationCenter,
Office of Industrial Economics
Source: Information and CommunicationsTechnologiesCenters,
Department of Trade Negotiations, Ministry of Commerce
- Production
In January 2011, the production of major textile products went up from the previous month, including fabrics (9.9%), bedding (7.1%), knitted-fabric garments (6.9%), and woven-fabric garments (9.3%). Textile fibers dropped 2.5% due to the rising prices of materials such as silk and cotton. Compared with a year earlier, textile fibers,fabrics, knitted-fabric garments, woven-fabric garments, and other textiles increased 5.5%,4.4%, 49.2%, 14.5%,and 10.9%, respectively.
- Sales
Most products for the domestic market saw m-o-mincreasesin January 2011, including textile fibers (3.0%), fabrics (5.8%), lace (1.2%), garments(15.4%), and knitted-fabric garments (33.2%).Woven-fabric garments slightly slipped over a month. The y-o-y sales of textile fibers, woven-fabric garments, and other textiles decreased 6.0%, 5.0%, and 10.8%, respectively.
Exportsoverall dropped9.3% m-o-m, including garments (10.4%), fabrics (8.9%), cotton yarns (23.6%), man-made filament yarns (1.8%), household textiles (18.7%), and synthetic filament fibers (1.1%). When compared with the previous year, exports went up 18.9%. Productsshowing y-o-y growth included garments (7.9%), fabrics (28.1%), cotton yarns (38.2%), man-made filament yarns (28.6%), household textiles (21.5%), and synthetic filament fibers (51.2%).The export markets showing a m-o-m decrease wereASEAN (15.4%), Japan (3.6%), the United States (4.1%), and the European Union (13.3%). By a y-o-y comparison, the major markets that increased were ASEAN (18.9%), Japan (40.0%), the United States (9.6%), and the European Union (7.1%).
- Trends
Production of the textile and garment industryis forecasted to decline due to higher material prices forcing reduced production volume. Exports should increase in major markets, particularly in ASEAN countries, thanks to the free trade agreements and the economic integration goal of the ASEAN Economic Community.Thaientrepreneurs should be aware of negative factors influencing the industry, including the labor shortage, rising material prices (particularly for cotton), fluctuation of currency exchange rates, and climbing production cost, part of which involves the increased minimum wage. Enhancing skilled labor will increase competitiveness in foreign markets.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
III.Iron and Steel Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
China continues to suspend issuing coal exploration permits to private companies until December 31, 2013, except for certain investments, after a temporary stop inits coal miningoperations. China’s central government will participate in selecting resourcesfor development.
- Production
In January 2011, the MPI of the industry climbed15.51% m-o-m to 134.99 points. The MPI of flat-steel productswent up 18.41%. Products contributing tothe increaseincluded tin plates (31.69%) and galvanized sheets (20.94%). Thai manufacturers were forced to knock down prices of their coated products in order to compete with low-price products imported from China. The MPI of long-steel productswas up6.92%, with increases by wire rods(17.48%) and steel wires(10.41%) to fulfill the growing purchase orders.
The y-o-y production declined2.51%.Flat-steel production went down0.83% due to decreases of tin plates (50.92%) and chromium-coated steel sheets (32.70%).Long-steel production was down2.04% along with thegrowth of steel wires (25.22%).
- Metal Prices
The free-on-board (FOB) prices at Black Sea ports of the Commonwealth of Independent States in February 2011 compared with the previous month were as follows:The price of slab grew 10.28%, from US$144.77 to US$159.65 per tonne. The price of hot-rolled steel sheets went up 1.37%, from US$148.72 to US$150.76 per tonne. That of cold-rolled steel sheetsgrew 1.20%, from US$156.07 to US$157.94 per tonne. The price of billet decreased 8.49%, from US$154.59 to US$144.47 per tonne. That of rebar dropped 0.01%, from US$146.81to US$146.80 per tonne.
- Trends
The industry’s production in February2011 is expected to expandwhen compared with a year earlier. Flat-steel production should increase due to growth in related industries, especially motorvehicles and parts, and electrical appliances, stemming from higher demand. Long-steel production should see a contraction due to the substantial number of products left in stock.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
IV.Motor Vehicle Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
In January 2011, the motor vehicle industry experiencedy-o-y growth in response to the domesticeconomy.
- Production
Production volume grew40.81% y-o-y, from 103,849unitsin January 2010 to 146,234units,resulting from increases of passenger cars, 1-ton pickups, and commercial cars. Production volume went up6.43% from December2010.
- Sales
A total of 68,398 units were sold in January 2011, a 38.01% y-o-y jump from 48,560 units, due to increases of passenger cars, 1-ton pickups, pickup passenger vehicles (PPVs) and sport utility vehicles (SUVs). Sales volume went down26.55%m-o-m due to sales acceleration from manufacturers at the end of 2010.
- Exports
Export volume increased 16.33%, from 58,525units in January 2010to 68,082 units, butdropped4.14% m-o-m.
- Trends
The motor vehicle industry is forecasted to growin February2011. The total expected output should be 46% for domestic sales and 54% for exports.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
Motorcycle Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
In January 2011, the motorcycle industry grew compared with the same month a year earlier.
- Production
Production was up14.99% y-o-y, from 155,102units to 178,353units in January 2011,due to the increases of family-type and sport-type motorcycles. The January 2011 figure represented a 10.79% increasefrom the previous month.
- Sales
A total of 161,573 motorcycles were sold in January 2011,5.39% more than the 153,312 units sold in January 2010. Sales increased2.26%m-o-m.
- Exports
Exports of CBU units increased 143.21% y-o-y in January 2011, from 6,434 units to 15,648 units, but dropped 8.62% from the previous month.
- Trends
The motorcycle industry is expected to be stable in February 2011. Production will be 89%for domestic sales and 11% for exports.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
V.Cement Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
The cement industry is improving due to the onset of the construction season. Exports increased and are continuingto growbecause the key markets are developing countries where their economies have been growing.
Source: Industrial Economic InformationCenter,
Office of Industrial Economics
Source: Industrial Economic InformationCenter,
Office of Industrial Economics
Source: Information and CommunicationsTechnologiesCenters,
Department of Trade Negotiations, Ministry of Commerce
1.Production and Domestic Sales
In January 2011, production volumeslipped0.64%m-o-m and 0.32% y-o-y due to the high volume of products left in inventory.Domestic sales increased2.06% m-o-m and 3.77% y-o-ybecause of the onset of the construction season in Q1. Theinvestment acceleration in the government’s infrastructure projectshas increased domestic consumption.
2.Exports
The export value of cement went down17.04% m-o-m and 13.44% y-o-y in January 2011 due to no purchase orders from the United Arab Emirates. The UAE economy has faced slow growth, particularly in the real estate sector, because Dubai World, one of the UAE’s largest investment companies, proposed to delay repayment of its debts.Thailand’s major export marketswereCambodia, Myanmar, Bangladesh, and Vietnam.
3.Trends
The production and domestic sales of cement are forecasted to growdue to the onsetof the construction seasonandthe government’s investment in mega projects.Exports should risein line with the consistent growth in the worldeconomy.Thailand’s key export marketsare countries where construction activity is growing to support the expansion of theirrespective economies.
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
VI. Electrical Appliances and Electronics Industry
1
The Office of Industrial Economics
Industrial Economic Status Report
February 2011
The whole electrical appliances and electronics industry is expected to increase in February 2011.
The electrical appliances sector is predicted to grow 14.13% y-o-y in Februarydue to increases of air conditioners, refrigerators, and compressors, with growth at 25.83%, 27.18%, and 11.94%, respectively.
The electronics sector should go up0.23% y-o-y in February 2011.
Table 1: Top Electrical Appliance and
Electronic Product Exports by Value in January 2011
Electrical Appliances/ Electronics / Value(Million US$) / %
M-O-M / %
Y-O-Y
Computer components / 1,367.13 / -12.31 / -13.75
ICs / 617.50 / -17.68 / 6.31
Air conditioners / 232.09 / -3.52 / 6.96
Overvoltage-protection circuits, printed IC boards / 152.95 / -10.58 / 9.37
Total of electrical appliances/ electronics / 4,144.22 / -8.69 / 4.38
Source: Royal Thai Customs Department
- Production
The electrical appliances and electronicsindustrydecreased5.55% m-o-mand01.55% y-o-yin January 2011.
The MPI of electrical applianceswent up 15.11% m-o-mand 19.98%y-o-y, due toincreases of air conditioner condensing units (13.44%), air conditioner fan coil units (5.74%), and compressors (23.83%) over a year earlier, as well as the filling up of the reduced inventory level and manufacturing for exports. The MPI of the electronics sectordropped 8.14%m-o-m, and 4.25% y-o-y, in response to decreased production of HDDs and electronics because there wasa high volume of products left in inventory.
- Sales
In January 2011, the total export value of the electrical appliances and electronics industry was US$4,144.22million, representing anincrease of 8.69% m-o-m and 4.38% y-o-y.The export value of electrical applianceswent down 1.84%m-o-m, but was up18.59% y-o-y due to exports of air conditioners (US$232.09 million) and overvoltage-protection circuits (US$152.95 million)in response to growing demand from increased office building overseas. That of electronicswas down 12.82% m-o-m and 3.48 y-o-y, due to the purchase order delays of trading countries stemming from the inventory level adjustment. The products with the highest export value were computer components (US$1,367.13 million) and ICs and micro-assemblies (US$617.50 million).
- Trends
The industry should continue growing in February 2011. The electrical appliances sectoris forecasted by the Electrical and Electronics Institute to go up14.19% over a year earlier due to increases of air conditioners (25.83%), refrigerators (27.18%), and compressors (11.94%). The electronics sector is expected to increase0.23%y-o-y.
1