While textile and garment manufacturers have been driven to invest in neighbouring countries to tap low-cost labour, a medium-sized Thai company has found ways to stay afloat without thinking of relocation.
Founded 20 years ago by his father as solely a textile manufacturer, TTH Knitting (Thailand) Co has no plans to relocate its factory from Bangkok, although the daily minimum wage rose 40% to 300 baht earlier this year, says 31-year-old Kittipong Ruayfuphan, the company's marketing manager.
With slightly more than 220 workers compared with 400 employed in most medium-sized ventures in the industry, TTH has invested heavily in machinery since Mr Kittipong had a say in the management team after graduating with a business administration degree from California State University seven years ago.
"We want to be something modern like a one-stop service company that provides everything from weaving and sewing textiles, producing digital prints and 3D embroidery to designing patterns and sending them to our customers," said Mr Kittipong, adding that the company does not have a limit on the minimum amount of orders.
While the old business model involved hiring subcontractors for different types of work, TTH produces its own fabrics and stocks them in order to create a fast lead time of 25 days at the earliest _ a figure Mr Kittipong claims is the fastest in the industry's medium-sized businesses.
The company currently has fabric worth 20 million baht in stock.
"The only thing we aren't involved in is the dyeing process, as Bangkok has strict regulations regarding the release of waste water," said Mr Kittipong.
Around 10 years ago, the company produced licensed shirts such as those featuring Doraemon, Sailor Moon and Pokemon, but faced losses due to copycats.
After years of developing new ways of doing business, the company is now making a profit.
Now a made-to-order company, TTH's products include polo shirts, T-shirts, uniforms, pants, jackets, hats, towels and other textile products under the Mixprint brand.
Shirts and polo shirts account for 60% of production, uniforms make up 30% and the remainder are other products such as aprons, towels and hats.
The company also produces value-added T-shirts such as the ventilator Mix-Tech, which costs 30 baht more than normal shirts.
Apart from the various services they provide, TTH also puts emphasis on advanced machinery with a combined value of 200 million baht.
This has enabled the company to not only improve the quality of its products but also employ fewer workers. For instance, the printing section used to have around 150 workers, but now 15 work together with three machines. If a worker in the packaging section, for instance, is away, another employee can easily replace him or her by only pressing buttons, said Mr Kittipong.
Despite Mr Kittipong's reluctance to use foreign labour, who make up 30% of the company's workers, he said the turnover for Thai employees is high. Both Thai and migrant workers receive wages of at least 300 baht per day, with a minimum of 330-350 baht per day for skilled workers.
The government's policy to increase minimum wages has so far led costs to increase by 12-18%, said Mr Kittipong.
The company is currently looking for a plot in Bangkok's neighbouring Samut Sakhon province to construct a new factory at a cost of 200 million baht. The new facility is expected to triple production capacity from the current 900,000 units per month, as the existing factory on a three-rai plot cannot be expanded.
"I have not thought about expanding to other countries, as some who have invested in Laos and Cambodia have already pulled out due to labour costs and poor infrastructure," he said.
Although wages in Cambodia are lower than in Thailand, Mr Kittipong said buyers actually have a control on the profit margin, while low wages allow factories to sell products at low prices.
Asked whether he plans to list TTH on the Stock Exchange of Thailand to mobilise funds from the public for business expansion, Mr Kittipong said the company has to grow 10 times in volume before entering the SET.
Meanwhile, TTH is fine with exporting 20% of its products to Japan, Singapore and Italy, as it still can't keep up with domestic demand, he said.
"We still need to stay in Bangkok and surrounding provinces in order to serve the demand of our customers who want a fast lead time," he said.
The company five years ago purchased a raft of Thai domain names, including www.sua.com for shirts, polo.com, uniform.com, muak.com for hats, jacket.com and pha-kan-puan.com for aprons.
"This is so that if someone asks me what I do, I can just easily tell them to look up www.sua.com, which is easy to remember," said Mr Kittipong.
About the author
- Writer: Nanchanok Wongsamuth
Position: News Reporter