7 minute read
Interview: Continental Tires (Thailand)
Thailand’s automotive industry has been significantly developing for more than 50 years. The industry contributes 10%-12% of the country’s gross domestic product (GDP) with more than 850,000 employees. Thailand is the largest car manufacturer in Southeast Asia. The Federation of Thai Industries (FTI) estimates exports of automotive products to have totalled 950 billion baht in 2018, up from 941 billion baht in 2017. Export growth covers approximately 60% of all automotive sales of Thailand.
Asia-Pacific tyre market expected to see strong growth during 2020-2025 Ms. Sirivan Koo-Amphorn, Managing Director, Continental Tires (Thailand) Co., Ltd.
One of the prominent players in the export of automotive products from Thailand is Continental Tires. Since its establishment in 1871 in Hannover, Germany, Continental Tires is proud of its German heritage and continues to use German technology to provide highstandard products to its customers. It also aims to be one of the top three tyre manufacturers in Thailand. Recently, the company selected Rayong Province — in the heart of the Eastern Economic Corridor (EEC) — for its new passenger and light truck tyre production facility in the Asia and Pacific region, which will create around 900 new jobs in Thailand. GTCC is grateful to Ms. Sirivan Koo-Amphorn, Managing Director of Continental Tires (Thailand) Co., Ltd. since 2012, for sharing with us Continental Tires’ vision and her insights into the EEC in this exclusive interview.
What are your company’s targets in the next 10 years?
We aim to provide top value creation and enhancement of environmental, economic and social requirements for healthy mobility. With the Vision 2025 and Strategy 2030 schemes, we aim to become the global tyre company of choice. The Transformation 2019-2029 structural programme, as part of Strategy 2030, has two main aims — an increased focus on growth areas of future personal mobility such as assisted, automated or connected driving as well as
electric mobility, and the targeted adjustments to the organization and portfolio in order to increase efficiency and productivity.
What is the current situation in the tyre market in Thailand, ASEAN and Asia?
The tyre market in Thailand and the AsiaPacific (APAC) region as a whole — our focus region — is expected to grow during the next five years, and we will continue to actively invest in Thailand and APAC as our main markets. This development will be supported and driven by an increase in automobile production, and favourable initiatives like the EEC that, among others, promote infrastructure. As a company, Continental Tires has invested in a tyre plant
in Rayong so that we can better serve our Thai customers, and provide Thai drivers with safety on the road by using our tyres.
There are constant changes in the automotive industry, and there is always a need to catch up with, and lead, the trend. The competitive landscape for tyres is intense; there are about 23 tyre manufacturers in Thailand producing estimated 130 million tyres annually. We choose to compete only with the premium tyre segment. Relying on German technology and high-quality products, strong anchors in the market and constant development, we are confident about our future tyre business.
The challenges we see the tyre industry are related to the megatrends and everchanging automotive industr y, which has been undergoing a fundamental transformation. Consumer behaviour is changing as they are more conscious about spending on tyres and other products. Customers usually change tyres every two years; however, now they consider buying new tyres every 2.5-3 years. In addition, the inner workings of cars will be completely different in 10 to 15 years from now. The three trends that will bring about
the change are electrification, automation and digitalization.
In order to respond to these trends, Continental Tires is focusing on delivering innovation to match these changes — such as tyres with lower rolling resistance, less noise, better braking on dry and wet roads, and intelligent tyres. Our company is tackling these radical changes vigorously and purposefully, creating sustainable value with pioneering technologies and new business models.
You have five plants in Asia already, so how different is the plant in Thailand from those in China, Malaysia, India and Sri Lanka?
The Rayong plant has the best-in-class energy efficiency standards of the global tyre manufacturing network. All machines are equipped with technology for sustainable production processes. The high automation of logistics and handling processes will ensure an ergonomic work environment for our employees.
Continental will invest more than €250 million in the Rayong plant and create about 900 new jobs by 2022. This plant will strongly support our planned business growth, both in original equipment and the replacement business for passenger and light truck tyres, and will further establish our customer relations in both segments for Thailand and the rest of APAC region. It is estimated that the plant will produce up to four million passenger and light truck tyres per year for Thailand and the APAC region.
Why did you choose WHA Eastern Seaboard Industrial Estate 4 (ESIE 4) as a location for your tyre plant? What are the key strengths in connection with EEC and Thailand 4.0? Will the plant help to enhance the company’s competitiveness?
The site for Continental’s new Greenfield tyre plant in Rayong complies with all requirements. In addition to its proximity to our targeted markets and customers, the strategic location also has a good infrastructure located only 150 km from Bangkok, and 60 km from the deep-sea port in Laem Chabang. The port is very convenient for us to import machinery and export tyres to the main markets of China, Australia and other APAC countries.
What attracted us to the EEC region is the Board of Investment (BOI) promotion package, e.g., tax incentives for importing machinery, and government support. At WHA ESIE4, we receive great support from local contractors and suppliers. There is also the opportunity to hire from a pool of skilled talent from nearby universities.
What will be the impact of EEC and BOI measures on Rayong Province in your opinion?
Rayong is designated as an investment promotion area. The Thai Government has given its “Area-Based Development Policy” high priority in spreading prosperity throughout the entire country as well as in maximising the advantage provided by Thailand’s excellent strategic location that links the Asian subregions together. The policy will lead to concrete economic activities, especially in the eastern part of Thailand which is geographically outstanding and capable of supporting the development of the country’s infrastructure, economy and drive towards “Thailand 4.0”.
What advice would you give to potential investors interested in the EEC and its projects?
For potential investors, I would suggest working closely with the Thai Government and securing strong partnerships with contractors and suppliers. A second aspect would be creating a local community aboard. Here, investors may want to utilise networks like GTCC to expand their local business network. Also, they can keep the community informed of the benefits that their investment will bring to them. This network can help, for example, in the application for the BOI
promotion package. As it may take some time for fine-tuning, depending on the package applied, I would suggest that they submit their application months earlier than planned. A number of conditions need to be fulfilled and various licences have to be acquired during plant set up.
What advice would you give to the Government with regard to attracting more German investors?
The strong points of Thailand are that the workforce is inexpensive. With the growth and development of the EEC, a skilled workforce will be needed. Therefore, the Government might want to focus on education. Continental Tires collaborates with the BOI in terms of technical colleges, in order to help in ensuring high quality of the standards of educational programmes.
In order to increase the attractiveness of the EEC for investors, the Government could consider initiating several public infrastructure investment projects to improve connectivity within the EEC. Also, relaxing certain laws and regulations could facilitate and encourage foreign investors looking to capitalise on the EEC’s initiatives.
Interviewed by Chadaphan Maliphan and Katja Klose, GTCC Team
