Collaboration to reduce manufacturing, operation costs for parts makers

Thai Subcontracting Promotion Association president Somkiat Chupukcharoen has suggested that auto component makers in Thailand and Malaysia should collaborate to develop auto parts, reports New Strait Times. Chupukcharoen was talking to reporters speaking during Metalex 2015 briefing in Kuala Lumpur, Malaysia yesterday (22 September). “Future collaborations will bring about many benefits to both countries as we will be able to share our technology and boost efficiency to achieve higher volumes and derive better values in our products,” Chupukcharoen told reporters. He said that ompanies from both the countries are using similar technologies for their production lines and thus collaborative efforts make sense economically. He suggested the companies could combine their investment in purchasing heavy machines, share technological expertise and focus on entering developed markets.

Significance: The collaboration between Thailand and Malaysia could help suppliers in both countries to produce quality parts cost-effectively and achieve economies of scale. Through the partnership, Malaysia could benefit from Thailand’s expertise in metal-based products, while Thailand could leverage Malaysia’s know-how in plastics-based auto parts. Presently, there are about 2,400 and 300 auto parts makers in Thailand and Malaysia respectively, exporting their products to the international market. The collaboration could help the countries bolster their exports to regions outside ASEAN. Further discussion on the same would be taken at the Metalex 2015 scheduled to be held in Kuala Lumpur, Malaysia in November this year.

Automakers continues to invest in Thailand with goal to serve both vehicle demand in ASEAN and exports to nearby international markets including Australia. BMW, for example, announced plans to invest some THB1.1 billion (USD30.7 million) in the country to expand capacity at its local plants in September this year. Also, in December last year, Mazda said that it will deploy its Thai factory as the group's second global production base, mainly for pick-ups and eco-cars. According to IHS Automotive, Thailand recorded 1.85 million units of light vehicle production in 2014, which is anticipated to increase to 2.8 million in 2020.

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