|
|
Thailand : Strong Baht affects athletic footwear industry
August 23, 2007 |  |
The athletic footwear industry is another casualty of the appreciating Baht. Some companies recently had to close their operations while some have resorted to deferring their employment to cope with the situation.
As a matter of fact, the sports shoe industry has, for some time, been plagued with spates of problems, i.e, labor shortages despite wage increases, rising costs of production amid wage rises and soaring prices of raw materials.
Worse, exports have been declining steadily as customers have shifted their purchasing orders to China and Vietnam where wages are comparatively lower than Thailand. This makes Chinese and Vietnamese products more competitive than their Thai counterparts.
The affected footwear operators mentioned about chronic woes in the athletic shoe industry as summarized in the following:
1. Cut-throat competition in the global market In the midst of fewer buyers in the market, it is quite hard for sellers to negotiate for favorable conditions and prices.
Despite continued upgrades in management and manufacturing process among local footwear operators, their profitability has been eroding, and most of them have been plagued with chronic losses.
2. Labor shortage Despite being labor intensive, the athletic footwear industry has been confronted with labor shortage woes. In addition to wage increases, several efforts have been made to alleviate the problem including relocations of production bases to provincial areas.
However, the problem has yet to be solved, which has in turn severely affected production. In the midst of high turnover of workers, most operators have to bear the burden of higher training costs, thus affecting their output and delivery.
Some of them have to resort to making shipments via airfreight that is costlier. Against this backdrop, local footwear operators have lost their competitiveness to low-wage producers in China and Vietnam.
3. The production costs, i.e, utility and energy such as electricity, oil and transportation costs are rising steadily, including a higher cost of key raw materials. | | |
|
|
|