Establishing Manufacturing & Sourcing in Thailand

Webinar:

Establishing Manufacturing & Sourcing in Thailand

Establishing Manufacturing & Sourcing in Thailand

About The Webinar

East West Associates Roundtable with Senior Executives


Who Should Watch?

Executives of US companies who are facing manufacturing, contract manufacturing or sourcing challenges in China or other countries.

Why Should You Watch?
For ideas and guidance to help navigate new business manufacturing and supply chain in Thailand.


US companies are establishing or relocating to Thailand for a number of reasons, not the least is diversification from China. Thailand has become a preferred destination as China labor costs and geopolitical concerns increase, and as US/China tariffs remain.

Thailand has a significant manufacturing base and available skilled labor. For example, in 2021 Thailand became the largest motor vehicle-producing country in Asia Pacific, producing 1.9M vehicles.

 

East West Associates’ speakers will answer questions, including:

  1. Why – and How – are US companies developing manufacturing, contract manufacturing & sourcing capabilities in Thailand?
  2. What industry sectors are finding manufacturing & sourcing success in Thailand?
  3. What financial & operational incentives does the Thai government provide to US companies to establish operations on leased or owned facilities?
  4. How should our investment strategy be designed to best meet the Thailand Board of Investment goals?
  5. How does Thailand labor compare to China & Vietnam? Lease rates? Building costs? What are the relative advantages of Thai Business Park options?
  6. Can you summarize the Thai/US trade relations and tariff policies?

Our speakers briefly present two recent case studies:

    • How an Ohio-based industrial company successfully established a Thai contract manufacturer relationship
    • Key experiences of a Michigan-based electronics manufacturer when relocating its China-based manufacturing to Thailand
Establishing Manufacturing & Sourcing in Thailand

Speakers

Mark Plum | Director, East West Associates
  • Former President of Briggs & Stratton Asia (NYSE: BGG)
  • VP Sales & Marketing, American Standard Thailand & American Standard China
Steve Blyth | Nederman Corporation (Thailand)
  • Former Managing Director of Southeast Asia, Nederman Corporation (Thailand)
  • Former Sales & Commercial Director, Volvo Cars (Thailand) Ltd.

  • Currently based in Bangkok, Thailand

Establishing Manufacturing & Sourcing in Thailand

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Establishing Manufacturing & Sourcing in Thailand

PRESENTATION

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OUR CLIENTS

GLOBAL FOOTPRINT SERVICES: GLOBAL EXPANSION (ASEAN)

GLOBAL FOOTPRINT SERVICES:

GLOBAL EXPANSION (ASEAN)

GLOBAL FOOTPRINT SERVICES: GLOBAL EXPANSION

BACKGROUND

Global firm needed to increase China/Asia manufacturing capacity. EWA was engaged to develop and implement an Asian Manufacturing Footprint Strategy to drive long-term profitability.

GLOBAL FOOTPRINT SERVICES: GLOBAL EXPANSION

APPROACH

Step 1

Identifying the expansion criteria

  • Company analysis
    • Expansion criteria: labor supply/costs, government incentives, inflation rates, availability of raw materials, transport & export logistics, supply chain vendor availability
Step 2

An in-depth comparative analysis of 6 selected countries

  • Philippines, Malaysia, Indonesia, Vietnam, Thailand & China
    • Expansion recommendation: Thailand
Step 3

On the ground interaction

    • Negotiated conditions for property purchase & property management (waste removal, perimeter security, etc.)
    • Negotiated investment incentives with Secretary General of Royal Thailand Board of Investment
    • Qualified local Thai vendors to support the company’s manufacturing location
    • Met with local legal and accounting firms to identify the necessary criteria for establishing a business entity
Step 4

Hands-on implementation

    • Property was purchased and all pre-construction permits/licenses/registrations were acquired by October 2017
    • Plant designs, construction budget/timeline & all construction partner contracts were finalized in November 2017
    • Plant construction and equipment installation began in January 2018 and was completed in April 2019
    • Identification and recruitment of supply chain, distribution & logistics partners was completed in February/March 2019
GLOBAL FOOTPRINT SERVICES: GLOBAL EXPANSION

RESULTS

Government Incentives

      • 8 year tax holiday from CIT, 50% tax reduction for an additional 5 years

Cost Reduction

      • $22.0M tax savings over 10 years
      • $4.3M annual labor savings after 5 years
      • $1.8M annual material savings after 5 years
      • $120/unit average freight savings

Company Growth

      • 42% increase in sales over 5 years
      • 53% increase in revenue over 5 years

 

Company Forecast

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GLOBAL FOOTPRINT SERVICES: PLANT CLOSURE

GLOBAL FOOTPRINT SERVICES:

PLANT CLOSURE

GLOBAL FOOTPRINT SERVICES: PLANT CLOSURE

BACKGROUND

As part of a global restructuring of business units, a multinational chemical company was closing one of their Chinese production facilities. EWA engaged as Project Leader with responsibility for closure implementation.

GLOBAL FOOTPRINT SERVICES: PLANT CLOSURE

APPROACH

Six months prior to plant closure

    • Closure strategy (budget, timing, expenditures, government relations, etc.)
    • Defined implementation team (Operations, HR, Legal, Security, IT, etc.)
    • Development of communication plans (staff, government, external, etc.)
    • Security risk assessment (employee unrest, physical & IP assets theft, etc.)

Three months prior to plant closure

    • Implementation of operational and protective security measures
    • Finalized equipment & inventory disposition, decommissioning plant, etc.
    • External stakeholder negotiations (governmental agencies, landlord, etc.)
    • Obtain approvals from business zone, governmental authorities, etc.
    • Identification of compliance and payment issues, severance packages
Step 3

Upon plant closure and after

    • Finalization of equipment disposition and plant demobilization
    • Filing government documentation in keeping with the registration, business license, board resolutions
    • Filing of all necessary financials, bank accounts, tax, VAT rebates, registered capital and customs documentation
    • Competition of all de-registration and governmental documentation and plant turnover to the landlord
GLOBAL FOOTPRINT SERVICES: PLANT CLOSURE

RESULTS

    • No theft of IP assets, physical violence or governmental authority repercussions
    • 100% of employees signed employment forms
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GLOBAL FOOTPRINT SERVICES: SITE SELECTION

GLOBAL FOOTPRINT SERVICES:

SITE SELECTION

GLOBAL FOOTPRINT SERVICES: SITE SELECTION

BACKGROUND

A German-owned chemical company with an ageing facility was being pressured by local authorities to relocate to an “official” chemical processing zone, as part of the Chinese government’s initiative to combat industrial pollution. EWA was engaged to conduct a comprehensive site selection process and provide the client with quantified site recommendations.

GLOBAL FOOTPRINT SERVICES: SITE SELECTION

APPROACH

Create functional definition of plant

    • Purpose for expansion, customers, supply chain, products, capital equipment, etc.
    • Definition of the site requirements & specifications:
    • Size of plant, land requirements, structural requirements, utilities and consumption, logistics, labor force requirements, ground compaction, water table, number of employees, manufacturing space, office space, employee facilities, etc.

Analysis of company performance influencers

    • Logistics, location of customer base, location of suppliers, location of business partners, freight & transportation costs, current property costs, current operational costs, government incentives, etc.
Step 3

On the ground interaction

    • Identification of 7 business/chemical parks for further exploration based upon site & company criteria
    • Personal site visits, face-to-face negotiations, meetings with other companies located in the individual business parks & interaction with local government officials
    • Tours with company executives
    • Negotiations and confirmations of land price and tax incentives
    • Analysis of the impact on startup and operational costs
Step 4

Recommendation

    • Provided 3 qualified location options with full analysis
GLOBAL FOOTPRINT SERVICES: SITE SELECTION

RESULTS

    • Significant tax and land incentives were attained by EWA negotiations
    • Client approved EWA recommendation and final negotiations are currently in process.
    • Client has engaged EWA in the role of “Owners Representative” for follow-on activities including coordinating design and overseeing construction
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OPERATIONAL & COMMERCIAL PERFORMANCE: GROWTH DEVELOPMENT

OPERATIONAL & COMMERCIAL PERFORMANCE:

GROWTH DEVELOPMENT

OPERATIONAL & COMMERCIAL PERFORMANCE: GROWTH DEVELOPMENT

BACKGROUND

A manufacturer of returnable packaging materials for the automotive industry with stagnating sales engaged EWA to identify and qualify sources of business growth potential.

OPERATIONAL & COMMERCIAL PERFORMANCE: GROWTH DEVELOPMENT

APPROACH

360° Opportunity Assessment

    • An extensive review with the client of the construction and technical aspects of the current product portfolio, the market, adjacent verticals, competitor products & customer base.

Opportunity Identification

    • Identification and validation of 12 key industries as qualified verticals for expansion – based upon ease of adaptation, market size, growth potential and profit margin
    • Total of 1300+ potential new customers
Step 3

Short-listing of 5 core industries of focus for a deep dive analysis

    • Off Road Vehicles, HVAC, Outdoor Power Equipment, Pharmaceuticals, Consumer Electronics
    • Total of 370 potential new customers
Step 4

Opportunity Leveraging

    • EWA prioritized the top 10-12 companies per sector (sales channels, geographical location, etc.)
    • EWA conducted an in-depth investigation of each company & senior management and then delivered a biographical summary and contact information for 63 companies
OPERATIONAL & COMMERCIAL PERFORMANCE: GROWTH DEVELOPMENT

RESULTS

    • The client signed contracts with 9 new business partners
    • 13% increase in sales within 18 months
ARTICLES
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