Textiles and clothing make up Thailand's largest manufacturing industry, with more than 4,500 factories employing over one million people. The sector accounts for approximately 20 per cent of total employment in manufacturing and 17 per cent of total Thai GDP. Niki Tait reports from Bangkok.

Textiles and clothing have been one of the kingdom's top export earners since 1985. Annual exports of textiles and clothing amount to US$6 billion per year - making this the nation's second leading export industry - with garment exports accounting for almost 55 per cent of this total.

Thailand ranks as the world's 13th largest exporter of garments, with a two per cent share of the global export market and also ranks as the world's number 14 textile exporter.

The major importer of Thai textiles and clothing is the United States, which accounts for slightly more than a third of all exports and over a half of all garments, followed by the EU, ASEAN, East Asia and the Middle East.

The textile industry covers everything from fibre making to finished product and although it does not grow many raw materials it does produce lots of synthetic fibres. The industry incorporates raw fibre production, spinning, weaving and knitting, bleaching, dyeing, printing and finishing of the fabrics and the manufacture of clothing and house hold textiles.

There are 18 manmade fibre mills that between them employ 15,500 people; 154 spinning mills employing 61,750 people; 673 weaving mills with 57,880 employees; 675 knitting factories that employ 60,280; and 414 dyeing and printing mills with 47,200 workers.

A further 150 dyeing and printing facilities are integrated within spinning, weaving and knitting plants. In addition there are 2,658 clothing factories (with more than 20 sewing machines) employing 841,520 people.

Of the sewing factories around 10 per cent can be regarded as large companies employing over 1000 people. 40 per cent are medium-sized, employing 200-1000, and 50 per cent employ under 200 people.

Industry structure

Fabric spreading - Nan Yang

Most companies in the Thai textile and clothing sector are privately owned. Estimates suggest 10 per cent of the textile industry is foreign-owned, with investment mainly coming from Japan and Taiwan. A further 10-20 per cent of clothing companies are foreign owned, mainly by Hong Kong firms including the TAL Group and Fang Bros.

With several new free trade agreements under negotiation there is potential for new foreign investment in both textiles and clothing.

Although the textile and clothing industry is still centred in Bangkok and its suburbs -with 70 per cent of all factories located within an hour's drive of the centre - any expansion of the industry is taking place in the rural areas due to labour shortages. The government is actively encouraging this.

There are also considerable differences, for example, in the minimum wage rates in different areas. Bangkok and its suburbs are the most expensive at 175 baht per eight hour day, while areas such as Chaingrai, Nan, Payao are down to 137 baht.

Most new factories opening up outside the town are very large, with clothing companies employing 1000-2000 workers.

Export growth

Circular kniting at Jongstit

The total textile and clothing industry accounted for US$6.396 billion in exports in 2004, a 17 per cent growth on 2003. Textile exports accounted for US$3.0 billion and clothing shipments for US$3.395 billion.

Textile exports can be broken down into fibres (13 per cent), yarns (24 per cent), fabric (32 per cent), home textiles (7 per cent) and other textiles (24 per cent).

Around 500 companies produce 85 per cent of all clothing exports; the top 30-50 probably produces 50 per cent. Customers include many of the well-known brands and retailers such as Nike (Thailand is apparently Nike's number one supplier), Adidas, Wal-Mart, K-Mart, JC Penney, Sears, Next, Old Navy, Puma, Liz Claiborne, Eddie Bauer, Gap, Banana Republic, and Uniqlo.

Preferential trade agreements
Following the lifting of quotas, Thailand is actively negotiating Free Trade Agreements (FTAs) and other preferential trading agreements with various other countries.

On 1 January 2005 the first FTA came into force, with Australia. An FTA with New Zealand has also been signed which will come into effect in July 2005. An ASEAN FTA, of which Thailand is a member, was signed in November 2004 with China and this will also come into effect in July 2005.

Others under current negotiation are with USA, which could be signed by the end of 2005 or early 2006, as well as Japan, Peru and India. A bi-lateral agreement with China is also under consideration.

Should these go ahead, particularly the FTAs with the USA and Japan, Thailand's clothing exports to these countries are expected to at least double. Should the FTA demand yarn forward production as anticipated, the opportunities will be widened throughout the entire textile supply chain.

The ASEAN agreement will also be of increasing importance to Thailand's textile industry. Many ASEAN members are also major clothing producers, such as Vietnam and Cambodia, with little established textile manufacturing of their own.

From 2007 onwards the duty within ASEAN on textile goods will be abolished, leaving Thailand in a prime position to act as the ASEAN fabric-producing hub.

Niki Tait, C.Text FTI, FCFI heads Apparel Solutions which provides independent assistance to the apparel iustry in the areas of manufacturing methods, industrial engineering, information technology and quick response.

The author would like to thank the Thailand Garment Manufacturers' Association for arranging for her to visit over 20 key companies, organisations and personnel within Thailand's textile and clothing industry.

Maker making at Castle Peak