Toyota boosts Thai truck industry

BAN PHO, Thailand (Reuters) -- Executives at Toyota Motor's pristine new plant in a Bangkok suburb point out the factory is the first in Thailand to run on clean natural gas.
Equipped with robots and parts movers shuttling quietly on assembly floors, the $426 million facility shows Thailand's recent political turmoil has not dented global carmakers' positive views on the country.
Thailand is the world's biggest producer of one-ton trucks, with output projected at 853,000 units this year, outpacing the United States at 588,000 units, according to J.D. Power Automotive Forecasting.
It is the second biggest market for the versatile trucks that are a common sight in rural areas shifting people and farm produce. Domestic sales this year are forecast at 510,000 units, against 651,000 in the United States.
"The strength of our truck industry lies in the size of our domestic market that makes production cost competitive," said Vallop Tiasiri, director of the privately-funded Thailand Automotive Institute.
"Our traditional political and labor stability also help." The Toyota plant, opened last month on what used to be 245 hectares (605 acres) of paddy fields, consolidates Thailand as a major export base for small pick-up trucks.
"We ship 4,000 right-hand drive Hilux trucks to Australia a month and another 2,000 of the left-hand version to Saudi Arabia," said plant manager Charnchai Suppayakorn, adding the factory's initial 100,000 annual production capacity can be quadrupled in response to future export demand.
Toyota's third Thai facility raises its annual vehicle output to 550,000, 40 percent of which are shipped overseas.
The 2,000 workers at the Ban Pho plant bring Toyota's Thai workforce to 13,500. Around 5,000 are permanent staff and the rest hired on temporary contracts.
By Toyota procucing their trucks in Thai facilities they are achieving their comparative advantage in the field. thailand has the lowest opportunity cost, therefore the most trucks are made there. Even though the US residents would not get the jobs, it opens up those people to go and get jobs in the arena where the US has lowest opportunity cost. Like we talked about today in class, the US is moving away from goods marketing towards services marketing. By producing the goods in Thailand the US employees can focue on other jobs like teaching or oil changing.