Area Development
{{RELATEDLINKS}}In 2011, when Western Digital’s disk drive manufacturing plant in BangPa-in Industrial Estate in Ayutthaya, Thailand was inundated by flood waters, the local work force did not abandon ship. Quite to the contrary, company workers — a group that includes executives, managers, porters, clerks, and shift operators from the production lines — all came together in an heroic effort to deal with and mitigate the disastrous aftermath of the historic monsoon flood.

And it wasn't just here. In factories and plants throughout the flood zone, Thais rose unfailingly to the occasion to hold the tide, a fitting testament to the spirited and resourceful nature of the Thai people.

The floods caused major disruptions across a wide swath of Thailand's far-flung manufacturing operations. It affected regional automobile production throughout Southeast Asia, a place where Thailand is the leading local supplier.

Within the electronics sector, flood damage caused a global shortage of hard disk drives and other critical high-tech components, which lasted throughout 2012. The term "second sourcing" came back into the vocabulary. Since then, Western Digital has resumed all operations and, in its most recent financial statement it reports that the company “has made a phenomenal recovery after its manufacturing facilities in Thailand were hit by devastating floods in 2011.”

Western Digital Thailand, Eastern Seaboard, Amata City, Laem Chabang Port
Clockwise from top: Thailand's flood triggered a “geographical reset” for high tech manufacturers like Western Digital (source: New York Times, Google Images); Amata City stresses community in its industrial estates (source: Amata website); Thailand's sprawling eastern seaboard conjures Motor City comparisons (source: Google images);Air Products Industry Thailand Head Office & Nongkeam Plant (source:; Laem Chabang is Thailand's main deepwater port (source: Richard K. Wallace)

Thailand too has proved buoyant, a testament to three things: its valuable location and position in the Southeast Asia industrial supply chain, a resilient and motivated work force, and a strong foothold in the digital future. The floods caused a "reset" for Thailand's leaders, accelerating, if anything, its already aggressive plans for the future.

Epic Tide
A good witness to Thailand’s resilient and spirited work force is Yoshihisa Kainuma, president and chief executive officer of Japan’s Minebea Co., Ltd., one of Thailand’s largest employers.

When the floods struck Thailand, Kainuma joined the local response headquarters where he took charge of the response team himself. “I saw all our employees take part in efforts to confront the disaster with the conviction that they were protecting their own workplace,” the top executive observed. “Each day, under the burning sun, more than 3,000 employees collaborated to build embankments against the floodwaters, and despite the hardship, they never lost their good spirit.”

Thailand's Industrial Heartland
Thailand’s industrial heartland has several popular titles, depending upon which industry you favor. Electronics and computer? Welcome to DiskDrive Alley. Cars? Welcome to The Detroit of the East.

Japanese drive makers in the Minebea Group, Western Digital, and myriad other suppliers in this region form a critical link in the global electronics supply chain. In Ayutthaya, Western Digital produces hard disk drives and magnetic disk heads for the computer and storage industries.

Nearby, factory-ready industrial estates, trade zones, and factory clusters are home to a diverse mix of industries and companies, including the leaders in electronics, automobile manufacturing, food processing, and logistics.

The production lines up and down the east coast of Thailand contain assembly or component operations that produce just about everything that can be found in today’s computers, cars, kitchens, and consumer shopping carts. Huge industrial estates, some seemingly expansive enough to qualify for city status in the U.S., dot the landscape, owned by regional operators like Hemaraj Land and Development, whose mega estates occupy large footprints in Bangkok, Royong, Saraburi, and Chonburi.

To Bangkok's south, and adjacent to both deepwater ports and modern air logistics centers, Amata City Industrial Estate is home to Washington state-based Primus International. Primus is a supplier of high-tech engineered metallic and composite parts, kits, and assemblies to the global aerospace industry. Primus specializes in high-stress, moving systems in high-value, high-growth aircraft. Primus’s Thailand facility produces specialty parts for Airbus and other regional aerospace customers.

A short distance up the coast, The Eastern Seaboard Industrial Estate sprawls in all directions, crisscrossed by modern highways and fed by busy railways, ports, and warehouse centers. Located in Rayong province, this hub of industrial activity is known as “Detroit of the East” and is home to automakers such as GM, Ford, and growing numbers of European and U.S. automakers. It's also home to innovative second-tier suppliers like American Axel, based in Rayong.

Industrial Estates, Industrial Zones, Industrial Parks and flatted factories in Thailand
Map of the infrastructure, location assets and Industrial Estates/Industrial Zones/Industrial Parks of the southern-central and eastern regions of Thailand. Click here see an enlarged version of this map and to explore all regions.

Thailand has the second-largest economy in ASEAN and is a leading manufacturing and exporting center for automobiles and parts, including engines and axels. It’s a major supply chain link in the semiconductor, computer, and electronics industries, as well as a leading supplier of plastic resins, chemicals, rubber, and metal products to industry. Thailand is also a world-class center for precious gemstones and jewelry. Thailand cannot sit on its laurels, however, many of which went down stream during the flood, an event that supplied, according to one plant manager, a “geographical reset” that “changed the industry totally.”

Next: Moving up the value chain

{{RELATEDLINKS}}Moving Up the Value Chain
Thailand will remain a critical hub in the regional and global industrial supply chains, but it is mindful that other countries in the region — especially places like Myanmar, Vietnam, and Malaysia — are on the rise. Consequently, Thailand’s new challenge, one fully embraced by the Thailand Board of Investment, will be to move the economic foundation up the value chain.

This takes new policies and new initiatives, many of which are under way at the Board of Investment and Thai government level. "Thailand is working to implement a new investment promotion strategy that will focus on industrial restructuring toward knowledge-based or high-technology industries," Supisara Chomparn the director of Thailand’s Board of Investment (BOI) in New York, said in a recent Area Development interview.

Companies that place emphasis on research and development, human resource training, and environmental protection will receive additional incentives from the BOI. "We hope that this strategy will help push for Thailand’s development as a leading production base in the world," the director said.

Change is also under way at the grassroots level across many Thai industrial suppliers that have been quick to respond to the need not just for a steady supply of product, but also for technical knowledge and new solutions to everyday challenges.

Air Products Thailand, for instance, the industrial gas supplier to the high-tech industry, serves Thailand’s frozen shrimp industry by supplying liquid nitrogen gas. Lately, it is also supplying highly specialized, custom-designed processing systems designed and tested in its Asia Food Technology Center located in the Thailand Science Park in Pathum Thani.

Thailand Science Park, which is owned and operated by the Ministry of Science and Technology, supports numerous industrial sectors and clusters within the country. It is also the central focus for Thailand’s advanced research efforts, including programs like the Organic & Printed Electronics Innovation Center; Nanoelectronics and MEMS Technology Center; the Materials Technology Center, which supports the country’s automobile industry; and a BIOTEC pilot plant that supports Thailand’s agriculture industry.

Beyond the High Water Mark
The World Bank ranked the economic damage and cost of Thailand floods as the world's fourth costliest disaster as of 2011, surpassed only by the 2011 earthquake and tsunami in Japan, 1995 Kobe earthquake, and Hurricane Katrina in 2005.

Plenty of plants and factories in the flood plain bear permanent reminders of the high water mark from the flood, one in which record water levels often took months to recede. The high water mark has also been a real challenge for Thailand's Board of Investment, the inward investment agency that is the touchstone for new and prospective investors in Thailand, with a mission to find and attract new tenant companies and industries to invest in Thailand.

Among the messages that Thailand's trade and economic development investment agency stressed during a recent visit to that the country by a group of journalists and analysts is that businesses and plants damaged by the floods of 2011 have made a full recovery, and that Thailand is still an excellent destination for businesses, especially U.S. companies, seeking to grow their market in Southeast Asia or establish a foothold in this emerging region.

For prospective investors in Thailand the region holds great promise of future growth and development, with investors today looking at emerging opportunities in the service sector and infrastructure. The Board of Investment has a portfolio of 167 projects with a combined investment value of $8.2 million. Major projects involve aviation industry and air transport, electricity generation from natural gas, ports for receiving natural gas, and industrial estates.

Major growth and development opportunities within Thailand’s robust automotive industry include automobile drive-train design and assembly, including axels and transmission assemblies; engine-components; diesel-engine manufacturing; pickup truck assembly; and support for second- and third-tier manufacturing. Thailand’s agricultural sector has ongoing projects targeting production for fruit juice beverages, rubber bars and mixed rubber, canned and frozen food products, animal foods/feeds, and animal-raising projects.

Thailand’s automotive industry is the largest in Southeast Asia and the 10th largest in the world, producing 2.5 million vehicles (mostly commercial vehicles), more than countries such as Belgium, the United Kingdom, Italy, Czech Republic, and Turkey. Most vehicles built in Thailand are developed and licensed by foreign producers, mainly Japanese, South Korean, and more recently, American. The Thai car industry is driven by the ASEAN Free Trade Area (AFTA) to find a market for many of its products. Thailand, meanwhile, is one of the world's biggest markets for pickup trucks with over a 50 percent market share for one-ton trucks, second only to the U.S. Thailand has 635 Tier 1 automotive supplier companies and 1,700 tier 2 and 3 suppliers.

According to the “CEO 360 Degree Perspective of the Automotive Industry in Asean,” Indonesia, Malaysia, Thailand, and Vietnam are demonstrating a compound annual growth (CAGR) of 10.1 percent. Sales in Thailand and Indonesia have reached over 1 million vehicles each, and a significant increase in production is expected based on local demand, with Thai dominance of nearly 2.5 million vehicles produced last year alone. Automobile production in Thailand for 2013 is estimated to increase to 3.5 million units.

And, as the airline business in Asia continues to boom, Thailand has put together the industrial infrastructure, including BOI tax incentives, to build a new aircraft industrial park and aviation training center at the old Korat airport.

"Smart Thailand"

Beyond its established base and industrial footprint as a critical component supplier to key global industries, Thailand is also looking very much to the future. Like the rest of Southeast and much of Asia, including China, mobile everything, everywhere is the predominant trend. And, as is the case in many emerging nations and regions, a considerable “digital divide” exists between population and geographic centers. Adequate broadband, online access, even WiFi and many mobile phone services have yet to reach many parts of Thailand.

Companies like Cisco Thailand, which have very strong ties to the government, are on the case, building strong local partnerships aimed at moving broadband service offerings up the value chain toward “Internet-connected everything,” according to Palasilp Vichivanives, general manager enterprise for Cisco Systems Thailand, Ltd. Market revenues are currently doubling every two years, and “Internet service has become critically important,” according to Cisco’s Vichivanives.

Sometimes termed “the fourth utility,” broadband buildout is Cisco’s primary Thailand focus with initiatives organize around a “Smart Thailand” program with modules for big data and digital government services, the hospital of the future, and the next generation work force, with several pilot projects currently up and running. A broadband e-commerce platform for SMEs is also in the planning.

Smart Thailand is as good a moniker as any for this most essential, modern nation which has become a critical link in the global electronics and technology supply chains.  More importantly, Thailand is looking well to the future these days, wisely and intelligently, investigating the application of IT and cloud technology to government itself. Working with partners like Cisco, IBM, and others, Thailand is paving the way to a more, perhaps, all, digital future for things like trade-based government transactions.

Thailand has established itself in the region as an important supplier and distributor in many sectors, from automobiles to food processing equipment. With all of the benefits of its location and as a regional center for Southeast Asia, look for Thailand to become an even bigger and stronger partner for its growing roster of global companies.