Bangkok: Thailand's manufacturing sector is undergoing significant transformations due to demographic changes, labor shortages, and increasing labor costs. Veerachai Mansinthorn, President of the Small and Medium-Sized Manufacturing Institute (SMI) and Vice President of the Federation of Thai Industries, has outlined critical vulnerabilities and immediate solutions for the Thai industrial sector.
According to Thai News Agency, the current labor costs and workforce shortages are impacting older, labor-intensive industries such as food, textiles, furniture, packaging, and assembly. These sectors are grappling with high labor and overtime costs alongside frequent employee turnover, necessitating continuous investment in training new workers.
Foreign investors, however, are not solely driven by labor costs. While industries dependent on cheap labor have relocated, modern investors consider a range of factors, including supply chain logistics, infrastructure readiness, and business-friendly laws. In these areas, Thailand maintains competitive advantages with robust infrastructure and strong port facilities.
For SMEs, adapting through AI and affordable "Small IoT" technologies is crucial for survival. The labor shortage has led to increased reliance on foreign workers, with "upskilling" and "reskilling" becoming essential for enhancing employee productivity. While large corporations have the means to automate, SMEs often lack resources and expertise. The SMI Institute, in collaboration with public and private entities, is aiding SMEs by facilitating access to AI technologies and Small IoT solutions to improve production processes and reduce costs.
Financial liquidity remains a pressing issue for SMEs. The Federation of Thai Industries, with partners, promotes financial tools like the PromptBiz project and a joint fund with the Stock Exchange of Thailand to support SMEs in converting invoices into working capital and preparing them for capital raising.
Mr. Veerachai supports the minimum wage increase but urges the government to bolster SME productivity to prevent business failures. He also advocates for revising educational curricula and deregulating visas for skilled foreign workers to foster national growth.
Looking ahead, the next 3-5 years will see a dichotomy in Thailand's factory landscape. Large corporations with financial clout and expertise will thrive, while SMEs, if they fail to embrace AI and automation, may struggle and face potential closure. SME entrepreneurs are urged to proactively adapt, reduce labor dependency, and enhance productivity to ensure survival. Support from the SMI Institute and the Federation of Thai Industries remains vital for funding and technological integration.