COMPLETION REPORT
Japanese Automobile Production Network and Roles of Thailand and ASEAN beyond 2015
Dr. Kriengkrai Techakanont
Assistant Professor
Faculty of Economics,
Thammasat University

This research studies the adjustment of the Thai automotive industry in response to the loss incompetitive advantage, due to the rising wage in Thailand, and the role of road networks that connect Thailand andCLMV. It is argued that the relocation of standardized production technology will be firstly moved out fromThailand to another location that is more suitable in terms of production and market penetration.
To maintain its competitiveness, the Thai automotive industry needs to improve their capabilities. Fromthe interviews with leading car manufacturers and some key first-tier suppliers, this study could confirm that Thaioperations have accumulated experience in production and become involved in higher technological levels, suchas process and product engineering. For carmakers, Thailand can handle higher level of engineering activities, suchas product design (upper body) for ASEAN models. For part suppliers, this study found that the persistence oflabor shortages and high wages, some firms have relocated labor-intensive processes to lower labor-cost countries,
such as Cambodia, Lao People’s Democratic Republic, Myanmar or Viet Nam. For instance, Toyota Boshoku set
up a factory in Laos (Savannakhet) in 2013. This factory plays a role as a satellite complementing the Toyota
Boshoku group production base in Thailand.
For wire harnesses, Yazaki has established a plant in Koh Kong Special Economic Zone in 2012. Thefactory produces wire harnesses and deliver back to customers in Thailand. In addition, Yazaki has subcontractedorders to a factory in Maesot, Tak province, to produce wire harnesses for some specific model. This plant islocated near the Thai-Myanmar border and uses Myanmar workers because it can easily access to large pool ofworkers. The survey has found that Yazaki in Thailand has gradually shifted toward marketing and engineeringtasks, while production has upgraded to high value and low volume order, which is reported to be the strength ofThai operation.
For Thai companies that produce metal parts, these firms are more difficult to relocate their operation tooverseas in order to lower their costs. They must improve their production productivity and offer competitive priceand higher value services (i.e., product and process engineering) to their customers. They need to participate inproduct development stage of carmakers in order to secure future model orders. To a certain extent, thesecompanies could develop their capabilities in the past decade and can secure orders from their customers.
This research could confirm that the production network of Japanese car manufacturers still has Thailand
as their main production base, along with Indonesia. Intensified competition has forced carmakers and part
suppliers adjust themselves. For carmakers, they have invested and developed R&D capabilities of Thai operationin order to provide technical and engineering support to other locations. For labor-intensive parts, some firms haveestablished factories in neighboring countries. Production linkages between Thailand and CLM countries havebeen developed through the ASEAN road network. Future research should pay attention to the role of Thailand asa technology transferor and the effects of technology upgrading in host economies.

Publication of the Results of Research Project:Verbal Presentation (Date, Venue, Name of Conference, Title of Presentation, Presenter, etc.)
1. August 28, 2015, I was invited to be a resource speaker for the Workshop on Integrating
SMEs into the Automotive Global Value Chains, in the 23rd APEC Automotive Dialogue,in Cebu, the Phillipines.
2. March 17, 2016, I presented a paper “Production Linkages between Thailand and Mainland
ASEAN” at an International Workshop “Human resource development in Asian lateindustrialized countries: Learning of production management knowledge/skills and its
transfer to workplace”, at Graduate School for International Development and Cooperation,Hiroshima University, Japan.
3. Submit a paper titled “Production Linkages between Thailand and Mainland ASEAN” to the13th International Conference Asialics 2016, held on 2-3 October 2016.

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