Thailand Board of Investment North America

(Source: Thailand Investment Review, June 2017)

Thailand is at the heart of one of the world’s major manufacturing zones, with ASEAN accounting for 5% of global manufacturing in terms of value-added. As a regional trade hub with a well-diversified economy, Thailand’s manufacturing sector remains a core industry for the country, and its machinery industry plays a crucial supporting role in driving growth in manufacturing and in the overall economy.

Thailand’s machinery and parts manufacturing industry has seen substantial growth in recent years. According to Thailand’s Department of Industrial Works, Ministry of Industry, in 2016 there were 4,458 factories in Thailand producing machinery and parts and almost 250,000 workers in the industry. Exports of machinery and parts rose 15.2% annually between 2010-2016.

Technology trends in manufacturing

Worldwide, the manufacturing industry is being transformed by innovation and technological advancements. The designs, systems, and processes of modern factories around the world are undergoing rapid changes, and machinery manufacturers, especially in Thailand, need to embrace these changes in order to stay competitive. Doing so will help them improve productivity in their operations, and provide their customers, who may be implementing their own innovations, with a competitive edge.

The “data-driven factory of the future”, in which all internal and external activities in the production facility are connected in real-time on the same, easily accessible platform, is well on its way to becoming a reality. This concept is being driven by four technology trends:

Internet of Things (IoT): While the IoT has received media attention for its use in the home (connected refrigerators, lights, etc), the real value of this breakthrough technology will be in factories. Utilizing the power of the Internet to connect assembly and manufacturing machines, office computers and devices, and essential stakeholders (executives, operators, suppliers, and customers), IoT can provide real-time data that will increase production, labor utilization, and output efficiencies. Manufacturers preparing to invest in IoT technology will need to evaluate and select essential data streams, train workers capable of operating this next generation equipment, and hire specialists who can analyze and evaluate the “big data” and the output from the factory floor. Companies like Toyota Tsusho Electronics (Thailand) have already begun using IoT, such as Amazon Web Services (AWS), to analyze data for the company’s 50,000 trucks and 10,000 taxis in the country. Meanwhile, state-run energy giant, PTT, has invested heavily in the IoT and digitization in order to increase production efficiencies and reduce costs.

Automation and Robotics: Automation and robotics have also received significant media coverage in the past few years. But concerns about full automation and the loss of “human creativity” has led to the development of a concept called, “cobotics”, in which robots “complement” rather than replace humans. Early implementations of this concept have been focused in the automotive and aerospace industries, but as new technology that allows for greater operational integration between robots and humans develops, “cobotics” will spread quickly to other industries. Thai Beverage Group (ThaiBev) and Charoen Pokphand (C.P.), two of Southeast Asia’s biggest F&B conglomerates, have recently announced plans to develop robots and automated production technology and machinery, in line with the Thailand 4.0 policy. The International Federation of Robotics reports that 2.32 million robots will be used around the world this year, while in Thailand, 41,600 robots will be used in 2017.

3D Printing: 3D printing offers manufacturers a variety of cost and time-saving uses that eliminate the constraints of economies of scale. Currently, manufacturers are using 3D printing (also known as “additive manufacturing”) in product development, the production of prototypes, and to dramatically reduce the design-to-production timeframe. But the possibilities of 3D printing for manufacturers going forward are significant. Everything from the production of highly specialized, low-volume products and parts, to creating tools for the molding, forming or casting of products and parts could be implemented through 3D printing. The global 3D printing market is expected to be worth THB 682 billion (US$20 billion) by 2020. In late 2015, Cal-Comp Electronics (Thailand) Plc and Taiwan’s Kinpo Group established a 50-50 venture, XYZ Thailand, to manufacture 3D printers in Thailand. Globally, XYZ Printing sold 80,000 3D printers in 2016 and expects to sell 130,000-150,000 3D printers in 2017.

Augmented Reality (AR): The mainstream view of AR is that its primary applications are in gaming, and virtual experience (i.e. travel). But like other emerging technologies, AR has a definite application in manufacturing, where operators can use AR goggles on the factory floor to perform complex tasks and jobs, and get immediate feedback about the potential quality and accuracy issues. Safety and training, maintenance, and inventory tracking are among the other uses for AR technology. Property giants, Sansiri and Ananda Development, have recently started investing in “proptech” startups that use technology solutions like digitization and augmented reality to solve urban living problems. By making strategic investments in these emerging technologies now, machinery and parts manufacturers will have a significant jump on their competition and will avoid the kinds of disruptions that have plagued established players in other industries.

© 2013 The Board of Investment of Thailand. All rights reserved.