The manufacturing sector has played a significant part in Thailand's economic growth and will continue to hold a prominent stake in the country's progress towards Thailand 4.0. The sector contributed 26.9% to the country's GDP in 2015, with automotive assembly particularly important.
Thailand was ranked first for motor vehicle production in Asean in 2015 and 13th globally last year. Touted as Asia's most developed auto parts market, Thailand is a hub for many large automotive companies, including Toyota, Honda and Mercedes-Benz. All indicators paint a rosy picture for the sector, except for one obstacle -- a shortage of skilled workers.
The big crunch: While the automotive industry has been experiencing increasing demand, the country has been struggling with a shortage of skilled automotive engineers. The Office of Industrial Economics warned in 2015 that Thailand could face a shortage of 290,600 workers in the manufacturing sector by 2019.
The shortage is especially pronounced in key growth industries, including the automotive sector. The long lead time required to recruit a skilled production worker is a related challenge; 56% of firms in the auto and parts manufacturing sector were unable to fill job vacancies within three months in 2014.
These trends not only affect the labour market, but they also drain innovation capacity as the pool of knowledgeable and trained workers begins to shrink. It is clear that labour productivity is a challenge that must be addressed along with the country's desire to transform itself into a high-income economy; embracing automation is one aspect that will raise productivity and competitiveness in this manpower-scarce sector.
The rise of robotics: In Thailand, the demand for robotics is edging up as manufacturers increasingly look to automation solutions to achieve greater production efficiencies amid the labour shortage and increasing competition. Many have turned to collaborative robots (cobots) -- robots designed to work alongside humans -- because of the safety and flexibility they offer.
For instance, Gerenga, a German engineering and automation specialist based in Bangkok, has worked with several automakers to customise solutions using Universal Robots' cobots. Gerenga was founded in 2012 with the objective of addressing gaps in the Thai automation industry where flexible and affordable solutions were lacking.
Based on customers' requirements, Gerenga offers consultancy, conceptualises automation solutions such as system integration and custom machine building, and also sources components for manufacturers. With cobots from Universal Robots, Gerenga tailors solutions that are able to automate a range of production tasks, such as loosening bolts in the assembly process. In such instances, cobots work alongside humans to enhance performance and productivity. This enables business owners to reallocate manpower for other higher-value work and achieve higher output quality at lower costs.
Robotics is an important part of the manufacturing equation. According to the International Federation of Robotics, Thailand is the eighth-largest market globally in the adoption of robotics. The country's imports of industrial robotics and automation systems were worth US$47.3 million in 2016. Bolstered by the electronics and automotive industries, the robotics industry in Thailand is expected to continue to grow. This growth will be driven by demand for both commercial and private-use motorcycles, trucks and cars.
Growing with robots: Still, smaller businesses are shying away from robotics and forgoing a competitive advantage, believing that robotics is only meant for their bigger counterparts. Robotics may sound daunting to a small manufacturing business, but its merit in nurturing sustainable business growth is clear.
In Southeast Asia, Thailand faces increasing competition from regional neighbours, particularly Indonesia -- the region's runner-up in automotive manufacturing. Forecasts show that the production gap between the two countries will close by more than one-third by 2020.
For Thai manufacturers, remaining competitive in the regional automotive market will require better-quality components, overcoming the labour shortage, improved productivity and a boost in innovative capacity. Automation through robotics should be part of the business strategy for long-term growth.
Supportive environment: As with any transformation, the government often plays a critical role. The Board of Investment is making real attempts to lure businesses into deploying advanced technology. As part of its Super Cluster and incentives policy, the government is offering companies the maximum incentive of up to eight years of corporate income tax exemptions as well as a 50% corporate income tax reduction and import duty on machinery and raw materials.
Staying ahead of the curve: Looking ahead to 2020, automotive manufacturers will be able to quickly respond to consumption trends through the adoption of robotics. Workers can be effectively redeployed from labour-intensive duties to knowledge-based and higher-skilled responsibilities, increasing the innovation pool within the automotive cluster.
As Thailand continues to forge ahead to realise the grand plans of 4.0, robotics will be one of the many high-tech solutions to see accelerated development. This is the opportune moment for automotive manufacturers to leverage the country's focus on high-technology adoption, to innovate, automate, raise productivity and stay ahead of the curve.
Shermine Gotfredsen is the general manager at Universal Robots for Southeast Asia and Oceania.