Business Opportunities: Machinery, Tools, and Dies Thailand’s machinery and metalworking industry is home to about 50,000 enterprises and 400,000 workers, with demand growing for more sophisticated products. This creates attractive opportunities for investors since the local industry offers a limited supply of high-end machinery and parts. In fact, machinery and parts rank among Thailand’s top 5 most imported goods, with their inbound shipments totaling US$19.84 billion in 2011. Japan is the primary source of these products, representing about 24.6% of such imports, followed by China at 21.3% and the United States at 9.4%. The leading products include air or vacuum pumps and air or gas compressors and fans, with US$1.50 billion in imports. The country’s exports of these products have grown by 63% since 2004 to nearly US$12.56 billion. The ASEAN Free Trade Agreement (AFTA) has added fuel to Thai machinery and parts exports as growth looks likely to continue as demand from developing nations such as Vietnam, Malaysia and Indonesia strengthens. Thailand will become even more attractive as an investment location when the 10 member countries of the Association of Southeast Asian Nations fuse into a massive single market called the ASEAN Economic Community (AEC) in 2015. Thailand is flush with agricultural resources, and the machinery to make efficient use of these resources in the fields and on the processing floors is in high demand. As major suppliers of agricultural machinery in Thailand currently fall short of meeting demand, the domestic market must turn to imports, which increased by more than 80% over six years to reach US$548 million in 2009. While importing more modern equipment for use in its fields, Thailand has also increased its exports of agricultural machinery. In 2011, exports reached US$473.57 million, with the top categories being tractors and equipment for harvesting and threshing. Growth in Thailand’s automotive and E&E (electrical appliances and electronics) industries boosts demand for modern machine tools. Automotive and auto parts companies are the biggest buyers of machine tools, accounting for 35% of the domestic market, while the E&E industry purchases about 14%. The machine tools sector is heavily dependent on imports, which totaled US$2.66 billion in 2011. Reflecting growing demand, Thailand’s market for computer numerical controlled (CNC) machine tools also relies strongly on imports, half of which come
from Japan. Annual imports of CNC machine tools total about US$87.45 million. Exports are worth around US$10.55 million, the top categories being lathes and other turning centers for removing metal. Thailand’s world-class downstream manufacturing industries continue to have a keen hunger for imports of industrial machinery and parts, which in 2011 totaled US$16.62 billion, a 30% jump over six years. At the same time, however, the country’s industrial machinery sector is developing rapidly as an exporter. In the past six years, industrial machinery exports soared 48%, reaching US$11.70 billion in 2011. More than 10,000 food processing companies are operating in Thailand, creating healthy demand for processing and packaging equipment, with the domestic market for such growing 20% annually. Imports comprise a large portion of this market at a value of nearly US$337.7 million in 2011, most coming from China (18.9%), Japan (16%), Germany (8.5%) and the United States (6%). The leading import category by value comprises machinery for filling, closing, sealing, capsiling and labeling bottles, with shipments exceeding US$188.43 million in 2011. This is also the biggest growth sector over the past three years. Moulds and dies are essential inputs for downstream manufacturing. With Thailand’s automotive and E&E industries expected to continue growing robustly, the prospects for the mould and die sector are bright. The government’s Mould and Die Industry Development Project 2010-2014 aims to reduce dependence on imports by more than 3% and increase the value of exports by 5% through the creation of added value for the sector. The project supports 20 industry-related educational institutes and has invested in the expansion of 225 mould factories. Seven mould excellence centers with public and private funding have already been established. One of the many functions of such centers is to train mould technicians, with 4,426 trained so far. The project is also raising production standards to sharpen Thailand’s global competitiveness. According to a Thai Tool and Die Industry Association survey, there are 1,061 mould and die factories in the country. Of these, 90% produce moulds and dies for plastic and metal, while the rest manufacture the products for rubber, glass and ceramics. Stamping, progressive and forming are the most common types of metal moulds, while injection and blow plastic moulds are widely used by auto and E&E makers and the packaging industry. As the automotive industry is expanding output, investment opportunities exist in die casting for the manufacture of engine blocks, crank shafts, front cases, oil pans, gear boxes and auto safety parts.
In 2011, Thailand imported US$1.04 billion worth of moulds and dies. Exports totaled US$429.77 million, going mostly to Japan, the United States and China. Closing this trade gap presents another investment opportunity in Thailand’s mould and die sector. Thailand has successfully negotiated many free trade agreements (FTAs). This includes FTAs with ASEAN member countries, Australia, New Zealand, China, Korea and Japan. Thailand’s prime location in the heart of Southeast Asia and its membership in AFTA and the AEC provide it with unparalleled access to ASEAN’s market of 600 million people. As Thailand grows so do the opportunities, and with the coming AEC and Thailand’s position at its crossroads the future looks very bright.