Author Topic: Isaan - Companies in bid to avoid penalty for delayed shipments  (Read 600 times)

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Companies in bid to avoid penalty for delayed shipments

The continued flooding through the Northeast has prompted major garment manufacturers to share their production capacity in a bid to avoid penalties from delayed shipments.

Lost production over the past two weeks because of the floods is estimated at roughly 500,000 pieces, mainly at manufacturing plants in Nakhon Ratchasima, Chaiyaphum, Khon Kaen and Mukdahan, with probable further losses in Ubon Ratchathani. The losses could total Bt125 million.

Major manufacturers including Hong Send Garment, Hi-Tech Group, Thong Thai Garment, Nice Apparel, Liberty and Nanyang Group have opted to share production with one another. If one of these companies has production capacity left, it will assist manufacturing for others by moving raw materials to functioning plants.

In the 19 provinces of the Northeast region, there are about 70 garment factories, ranking from small to large producers. However, most are medium-sized manufacturers.

Garment factories in the Central provinces of Lop Buri, Phichit, Ayutthaya, and Nakhon Sawan have also been hit by floods. There are 20 manufacturers in these provinces.

Some manufacturers have had to suspend production even though their plants have not been damaged by floods, because they are without electricity or employees cannot get to work.

"It will take a month for the garment industry in flooded provinces to recover production," said Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association.

"We have to share our production capacity in every way, otherwise we may have to pay penalties for delayed shipments," Sukij said, pointing out that exporters now had to ship by air instead of marine transport, which also increases their shipping costs by 20-25 per cent. The manufacturing capacity of major exporters averages 1.5 million pieces per month. Their current focus is mainly on sportswear so that they can share manufacturing facilities.

Sukij said Thailand's total garment export value would drop by 5-10 per cent to US$2.9 billion (Bt86.7 billion) next year from the expected value of $3.2 billion to $3.3 billion this year. The drop is mainly due to the continued strengthening of the baht.

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