Two years ago Central Trading Co, a unit of the Central Marketing Group, paid its staff the daily minimum wage of 215 baht, which accounted for 20% of production costs.
Employees making jeans can complete more than one process now, meaning Central Trading actually spends less on wages despite the daily minimum wage hike. NANCHANOK WONGSAMUTH
Despite the increase to 300 baht on Jan 1, the company lowered jeans production costs by 7 million baht per year after it took advantage of projects by the Industrial Promotion Department to promote lean manufacturing and maximise material utilisation.
Calling itself a medium-sized textile company, Central Trading has 650 employees working at its two factories. The company manufactures and distributes apparel products from brands such as Lee and Wrangler.
On average, staff receive wages of more than 400 baht per day, said Suphot Phawachittranon, assistant vice-president for production.
"Two years ago employees did not know how to use raw materials efficiently and also lacked teamwork skills," said Mr Suphot.
By improving the production process, the company lowered its defect rate to only 3% from 13% in 2010. It aims for zero defects this year.
The company has the capacity to produce 6,050 pieces per day, of which 42.5% are jeans, 23.5% are shirts and 12% are pants.
"In the past, one employee was needed for each unit, so if we wanted to produce 50 shirts, we needed 50 people. Now one employee can do at least two processes on average. This lowers the number of people needed from 50 to about 30 per production line," said Mr Suphot.
The Industrial Promotion Department said the industries that have been affected the most by the minimum wage hike are labour-intensive manufacturers without substantial profit margins including the textile and garment, furniture, service and construction sectors.
The wage increase is pushing their labour costs up to 25-28% of total production costs.
Sirirat Chitseree, deputy director-general of the department, said although many small and medium-sized enterprises (SMEs) are considering raising their prices by at least 18% to cope, this is unlikely to work, given the fierce competition in the market.
The department expects at least 3,000 businesses to participate in its projects this year as they try to find ways to survive the wage hike.
She said the department will work with SMEs nationwide on projects that lower production costs, manage energy use and enhance competitiveness.