Interview: Joe Hinrichs
What are the contributing factors in choosing Thailand as your key manufacturing base?
JOE HINRICHS: When you assess the current growth of the Asia Pacific and Africa region (APA) for the automotive industry, this decade is a remarkable time. We currently have operations throughout the world, and China, India and Thailand are going to be the key markets for manufacturing. A recent estimate shows that between China, India and ASEAN well over 2bn people will have reached the driving age and the income level to afford a car by 2020. This will be an explosion of potential buyers in the near future – one in which Thailand will play a significant role.
Right now, about one out of every six of our customers is from the APA region, and we expect by 2020 it will reach one out of three. We have chosen Thailand as a key manufacturing base due to its strategic positioning for exports to the rest of the ASEAN and the APA region. Thailand plays a very important role for us not only as a regional manufacturing hub, but as an extension of our operations and distribution globally, due to the number of trucks produced in Thailand that will be exported to up to 180 markets around the world.
We are expecting the ASEAN and APA region will make up 70% of our company’s growth within the next 10 years. We have made a sizeable amount of investments in Thailand to ramp up our plants’ production capacity and will be opening our latest state-of-the-art manufacturing plant in Rayong in 2012. Our plan is to introduce up to 50 new vehicles by 2020, starting with eight new vehicles by the middle of the decade. This proves the significant commitment we have to the market in Thailand, ASEAN and the APA region.
How would you assess the environment in terms of regulations and ease of doing business?
HINRICHS: To begin with, last year we were the first international company to publicly announce a major investment, despite the political uncertainty then on display in Thailand. We have found the Thai business community to be quite resilient through the ups and downs of the political and global economic environment for the past several years. This serves as an important foundation for those investors and companies conducting business in Thailand.
In that same regard, I strongly believe international companies are best served by public-private partner cooperation, which means there is an ongoing dialogue and desire for everyone to achieve growth and sustainability together. In terms of the automotive industry, the Thai government made it clear years ago it intended to support the industry and push it to become a key regional export centre. This has been proven a successful strategy and has been implemented well over time.
When doing business in new markets, it is very important that you have both strong government support and offer competitive incentives to both companies and investors. The Board of Investment has played a significant role in developing incentives for the automotive industry, as well as strongly supporting and cooperating with us for our operations here in Thailand.
How well adapted is the supplier and logistics network for the automotive industry in Thailand?
HINRICHS: Thailand’s advantage in the automotive industry lies in the consistent accessibility of skilled labour and the availability of top quality parts suppliers. A strong majority of car parts are produced in Thailand, which has contributed significantly to the industry. The supplier network in Thailand is more established than any other market in the region due to the port’s strategic location and an established and well-regarded logistics system. The competitiveness of supplier capabilities and increased capacity efficiency has given Thailand a leg up on the region, which has been very helpful for the market’s success. The original equipment manufacturers and auto parts companies are continuously growing and expanding their presence alongside the major auto manufacturers to meet market demands, which has proven to be the country’s strength.
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