The Office of Industrial Economics
Industrial Economic Status Report
April 2011
Summary of Industrial Economic Status
Industrial Indices in March 2011
- The manufacturing production index (MPI) in March 2011 increased 11.5% m-o-m but dropped 6.7% y-o-y. The several industries in which production decreased over a year ago were hard disk drives (HDDs), apparel, jewelry and accessories, and petroleum products.
- The average capacity utilization rate was 66.0% in March, up from 59.5% in February 2011.
Industrial Economic Status
- Motor Vehicle Industry
· In April 2011, the industry is expected to slow from the previous month due to a long holiday in April. Moreover, Japan’s powerful earthquake and tsunami in March has begun to impact Thailand’s automobile sector. Production from April 18 to June 2011 should go down by 50%.
· Production of motorcycles should be threatened by Japan’s tsunami as well, due to the fact that the main motorcycle parts are imported from Japan.
- Electrical Appliances and Electronics Industry
· The growth rate of the electrical appliances sector should go up 11.95% y-o-y, stemming from the increase of air conditioners and compressors.
· The electronics sector should face a slower y-o-y growth rate of 7.44% due to the decrease of HDDs.
Industrial Indices in the First Quarter of 2011
- Manufacturing Production Index (weighted by value added)
In the first quarter of 2011, the MPI was 187.7, a 1.2% decrease from the previous quarter (190.0), and a 2.1% drop from the first quarter of 2010 (191.8).
The main industries responsible for the quarterly MPI decrease were HDDs, petroleum products, canned and frozen seafood products, jewelry and accessories, and beer. Industries with an MPI decrease since a year earlier were HDDs, jewelry and accessories, petroleum products, beer, and apparel.
- Capacity Utilization Rate
The capacity utilization rate indicates the status of industrial production by comparing actual production to full production capacity. In the first quarter of 2011, the capacity utilization rate was 62.6%, a decrease from the previous quarter (63.3%) and from the same quarter in 2010 (62.8%).
Industries that caused the capacity utilization rate to drop from the previous quarter were canned and frozen seafood products, petroleum products, HDDs, plastic pellets, and textile fibers. The main industries that caused the capacity utilization rate to decrease from Q1 2010 were HDDs, television sets, petroleum products, iron, and apparel.
Economic Trends in 2011
The predicted growth figure of the first quarter in 2011 should be unchanged from the beginning of the year’s forecast. Thailand’s industrial growth will not be remarkably impacted by Japan’s earthquake and tsunami. The MPI should grow between 6% and 8% in 2011, with a capacity utilization rate of 64% to 66%. Factors which keep Thailand’s industry growing include the solid global economic recovery, the investment expansion stemming from increasing demand overseas and a shift of production bases to Thailand, and the economic expansion of Asian countries and new-market countries.
1
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
Industrial Indices
Manufacturing Production Index
February 2011 = 177.8
March 2011 = 198.3 é
Activities contributing to the increase of the MPI:
· HDDs
· Petroleum products
· Beer
Capacity Utilization Rate
February 2011 = 59.5
March 2011 = 66.0 é
Activities contributing to the higher rate:
· Petroleum products
· Motor vehicles
· Canned and frozen seafood products
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
- The total MPI was 198.3 in March 2011, an 11.5% increase from February 2011 (177.8) but a 6.7% drop from March 2010 (212.5).
· The main activities that caused the m-o-m MPI to increase were HDDs, petroleum products, beer, motor vehicles, and electronics.
· The activities responsible for the y-o-y MPI decrease were HDDs, apparel, jewelry and accessories, petroleum products, and television sets.
- The average capacity utilization rate was 66.0% in March 2011, a jump from 59.5% in February 2011 but a drop from 68.6% in March 2010.
· The main activities that caused the average capacity utilization rate to increase from February 2011 were petroleum products, motor vehicles, canned and frozen seafood, water products including sparkling water, and HDDs.
· The industries contributing to the lower y-o-y figure of the average capacity utilization rate were petroleum products, television sets, HDDs, canned and frozen seafood products, and iron.
Industrial Activity in March 2011
- The Department of Industrial Works (DIW) reported that 334 plants began operations in March 2011, up 27.97% from February 2011 (261 start-up plants). Investment capital showed an increase of 133.30% m-o-m, from 9,489.25 million baht to 22,138.15 million baht. The number of employed went up by 8,935 in March 2011, a 29.16% increase from 6,918 people recorded in the month before.
- The number of plant openings dropped 6.18% compared to March 2010, when there were 356 openings. The number of employed went down 15.87% compared to March 2010’s growth figure of 10,621 people. Investment capital from the plant openings was 16.55% higher than the 18,994.59 million baht invested a year earlier.
· The activity which had the most plants starting up in March 2011 was the repairing and spray painting of motor vehicles (25 plants), followed by the digging and washing of soil or sand (20 plants).
· The activity with the highest level of investment capital in March 2011 was the generating or distributing of electrical power (8,252.06 million baht), followed by the manufacture of smoked rubber sheets and block rubber (2,676.20 million baht).
· The activity which had the highest employment in March 2011 was the manufacture of woven knitwear (1,292 jobs), followed by the manufacture of plastic products, including food boxes, kitchen utensils, and containers (863 jobs).
- The DIW reported that 111 plants closed in March 2011, up by 60.87% from the previous month, when 69 plants closed. The total amount of investment capital lost by the closures was 1,673.56 million baht in March 2011, higher than the 587.40 million baht loss recorded a month earlier. The number of layoffs in March increased over the month, from 3,211 to 3,385.
- According to the DIW, the number of plant closures represented a 31.48% decrease from March 2010, when 162 plants closed. The investment capital lost due to plant closures in March 2011 was less than the 2,766.03 million baht loss recorded in March 2010. The number of layoffs represented a yearly decrease, as 5,009 were reported in March 2010.
· The activity with the most plant closures in March 2011 was the repairing and spray painting of motor vehicles (16 plants), followed by the manufacture of household furnishings from wood, rubber, or other non-metal materials and not of extruded plastic (10 plants each).
· The activity that lost the most investment capital due to plant closures in March 2011 was the smelting, mixing, purifying, melting, and casting of basic metal excluding non-ferrous basic metal (742 million baht), followed by the manufacture of shoes or parts (194.70 million baht).
· The activity from which the most employees were laid off in March 2011 was the cutting and sewing of garments, handkerchiefs, neckties, gloves, and socks from leather and cloth (957 layoffs), followed by woven knitwear (448 layoffs).
- The Office of the Board of Investment (BOI) reported that in January-March 2011 there were 407 approved investment projects, a 14.65% increase from the 355 investment projects approved in the same period of the previous year. The investment capital totaled 110,000 million baht, an increase of 24.43% from a year earlier, when 88,400 million baht was invested.
Shareholders of BOI-approved investment projects in January-March 2011
Shareholder / Number of Projects / Investment Capital (Million Baht)1. 100% Thai Shareholders / 178 / 41,200
2. 100% Foreign Shareholders / 135 / 31,600
3. Joint Ventures / 94 / 37,200
· The activity with the highest level of BOI-approved investment capital in January-March 2011 was services and public utilities (28,600 million baht), followed by agriculture and agricultural products (24,400 million baht).
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
I. Food Industry
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
The production and export value of the food industry should drop due to declining order volume and rising oil prices, in line with the temporary halt in exports to Japan after that country’s powerful earthquake and tsunami. Domestic sales should go down as a result of rising product prices causing consumers to lower their expenses.
1. Production
In March 2011, major products of the food industry (excluding sugar) grew 5.4% m-o-m, but when compared with a year earlier decreased 7.8%.
Major products mainly for export: Cassava flour, processed chicken, canned tuna, and frozen/chilled shrimp saw y-o-y production decreases of 18.1%, 7.1%, 11.5% and 10.9%, respectively, due to a decline in the volume of raw materials.
Products mainly for domestic market: Animal feed production dropped 8.7% y-o-y. The sugar production sector increased 60.2% y-o-y due to more material quantity, but volume showed a m-o-m 12.3% decrease as it was near the end of the pressing season.
2. Sales
Domestic Market
In March 2011, the domestic sales volume of food and agricultural products went up 2.7% m-o-m but fell 9.2% y-o-y, due to the impact of floods in the south and higher oil prices.
International Markets
The total export value (baht) of the food industry saw an increase of 13.6% y-o-y and 18.9% m-o-m. Products whose y-o-y export value increased were canned pineapple (43.4%), rice products (35.1%), processed chicken (14.8%), and canned tuna (8.5%), due to the world economic recovery. Sugar export volume and value increased m-o-m in response to rising prices in the world market.
3. Trends
Production and exports are forecasted to slow down from the previous month due to decreased orders, rising oil prices, and the temporary halt in exports to Japan after its March earthquake and tsunami. Domestic sales should contract due to rising product prices causing consumers to lower their expenses.
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
II. Textile and Garment Industry
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
Production of the textile and garment industry should drop due to the seasonal decrease in orders.
Source: Industrial Economics Information Center,
Office of Industrial Economics
Source: Industrial Economics Information Center,
Office of Industrial Economics
Source: Information and Communications Technologies Centers,
Department of Trade Negotiations, Ministry of Commerce
1. Production
In March 2011, the production of major textile products went up from the previous month, including textile fibers (4.3%), fabrics (8.8%), bedding (14.1%), and woven-fabric garments (1.1%). Compared with a year earlier, textile fibers, fabrics, bedding, and woven-fabric garments dropped 3.0%, 4.4%, 12.5%, and 8.3%, respectively. Production was carried out only to fill orders.
2. Sales
Most products for the domestic market saw m-o-m increases in March 2011, coincidingt with increased production, including textile fibers (2.0%), fabrics (10.4%), bedding (10.7%), and woven-fabric garments (11.0%). The y-o-y sales increased, including for fabrics (5.8%), bedding (23.7%), and woven-fabric garments (4.0%), while textile fibers fell (-9.2%).
Exports overall went up 18.0% m-o-m. Major textile products increased, including garments (7.6%), fabrics (26.1%), cotton yarns (55.2%), man-made filament yarns (19.5%), synthetic filament fibers (10.9%), and other textiles (25.5%). Exports went up 26.4% y-o-y. Products showing growth included garments (13.0%), fabrics (38.7%), cotton yarns (118.8%), man-made filament yarns (30.6%), synthetic filament fibers (56.9%), and other textiles (13.0%). The export markets showing m-o-m expansion were ASEAN (35.4%), Japan (36.4%), the United States (4.9%), and the European Union (15.3%). By a y-o-y comparison, the markets increasing in exports were ASEAN (43.5%), Japan (71.9%), the United States (1.0%), and the European Union (31.4%).
3. Trends
Production of the textile and garment industry is forecasted to decline in accordance with seasonal decreasing orders, increased material prices particularly for cotton, and decreased orders of clothing accessories and garments. However, orders should increase in Q3 2011 to stock products for Q4 before the year-end festivals.
Domestic sales should slow, but sales of school uniforms should increase for the coming academic year.
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
III. Iron and Steel Industry
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
4
The Office of Industrial Economics
Industrial Economic Status Report
April 2011
The National Development & Reform Commission (NDRC) projected that China’s crude steel output will likely hit 700 million tonnes in 2011, representing a 12% increase from the 74 million tonnes produced in 2010. Due to the Chinese government’s plan to boost construction of houses and distribute prosperity to rural areas, iron demand will definitely be high. However, traders are concerned that steel prices might drop in May due to the massive amount of crude steel in the market.
1. Production
In March 2011, the MPI of the industry climbed 8.33% m-o-m to 148.06 points. The MPI of long-steel products was up 5.04%, with increases by steel wires (28.49%) and wire rods (12.46%) due to demand in restoration of houses and infrastructure damaged by floods. The MPI of flat-steel products went up 10.29%. Products contributing to the increase included chromium-coated steel sheets (25.60%), galvanized sheets (18.46%), and hot-rolled coils (10.87%).