Safeskin Medical and Scientific (Thailand), a unit of Texas-based Kimberly-Clark Corporation, plans to shut its rubber glove plant in Songkhla province, leaving 3,000 employees out of work.
In an email to the Bangkok Post, Safeskin said "a strategic decision" had been made to close its disposable glove manufacturing factory in Hat Yai district by year-end. It is one of two Safeskin plants in Thailand.
"The decision to close the factory is necessary to deal with cost, competition and category challenges and to best position the Kimberly-Clark/Halyard Health business for continued success," it said.
The site location and recent flooding of the plant put the predictability of our business results at risk. This move will improve our flexibility and reduce our ongoing costs, said the email.
Prachai Kongwaree, president of the Thai Rubber Glove Manufacturers Association, told the Bangkok Post the closure is driven by major losses the company shouldered for over two years after the factory was hit by floods.
Machinery at the 16-year-old facility is old and would require a massive investment to buy new machinery, said Mr Prachai.
"Safeskin also has a problem about wastewater, but this is manageable. The bigger problem is it's not worth it to continue production," he said.
Safeskin operates another plant in Songkhla's Sadao district producing high-tech medical gloves that will remain open.
There are 3,000 employees at the Hat Yai plant. The company informed them on June 23 the factory would permanently close six months from that date.
A factory source said staff were hoping a new investor would buy the factory so they will not lose their jobs, but they know the wastewater issue remained a concern.
"They are worried Safeskin will use the wastewater issue to shut down the factory without offering severance pay," said the source.
"We will provide as much transition time and support to our employees as possible, and will provide severance pay and support in accordance with Thai government policies."
Chayo Trangadisaikul, vice-chairman of the FTI's rubber industry club, said the rubber glove manufacturing margin in Thailand was very thin.