1 AIT Asian Institute of Technology

The role of clustering in the development of the Thai automobile industry

AuthorOongart Pornkarnchananun
Call NumberAIT RSPR no.SM-03-38
Subject(s)Automobile industry and trade--Thailand
NoteA research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management
PublisherAsian Institute of Technology
Series StatementResearch studies project report ; no. SM-03-38
AbstractThe clustering or geographical concentrations of automotive industries that gain performance advantages through co-location has enhanced the competitive advantage of the Thai automobile industry in ASEAN. In anticipation of the establishment of the ASEAN Free Trade Area (AFTA), companies made Thailand the core of their ASEAN strategies. So that, the Thai government had an important supporting in the formation of the industrial cluster in the eastern seaboard region. By providing investment incentives and improving infrastructure, it was able to attract assemblers that were considering investment in Thailand or the construction of new plants there, thus creating a virtuous circle in which clustering induced further clustering. The development of international port facilities and the road network were particularly decisive for both assemblers and parts manufacturers, which place considerable importance on convenient access to distribution systems. The purpose of this study is to analysis of production and purchasing organization of two assemblers, which are located in two of the clusters: Toyota Motors Thailand (TMT) and Mitsubishi Motors Sittipol Company (MSC), and to investigate and analyze the role of Thai government in supporting automotive industry. From the study it was found that automobile assemblers and automotive parts makers now having the best advantage to produce the one model/item and exporting from one country plant, instead of producing the same items (model/component) everywhere, it seems that Thailand became the core country in the ASEAN, specialized in final assembling of vehicles, especially pick-up truck for the whole ASEAN area and other destination. Conversely, the weak point of Thai automotive industry slowly catch up with international standards. Technology transfer by Japanese was limited to what was needed to simple parts with few value added and for vehicles exclusively dedicated to the domestic market. The orientation toward export is changing the needs and more extensive transfer is seen in the MSC and TMT case with the recent opening of a training school. A real chance for automotive parts makers is to realize the economies of scale that they .never could achieve by supplying only Japanese makers. But also European and Americans assemblers are engaged production. To supply them on a large scale, automotive . parts makers .h~ to integrate moduJar .production too. AJso, Japanese makers now integrated in Westerners groups (Mazda, Isuzu) could introduce moduJar type of organization as platforms are being designed jointly. Other Japanese car makers (TMT, Honda, MSC) could be pushed by their suppliers to purchase modules in the future.
Year2003
Corresponding Series Added EntryAsian Institute of Technology. Research studies project report ; no. SM-03-38
TypeResearch Study Project Report (RSPR)
SchoolSchool of Management (SOM)
DepartmentOther Field of Studies (No Department)
Academic Program/FoSMaster of Business Administration (MBA) (Publication code=SM)
Chairperson(s)Do Ba Khang
Examination Committee(s)Tang, John C. S.; Igel, Barbara
Scholarship Donor(s)Royal Thai Government
DegreeResearch report (M.Sc.) - Asian Institute of Technology, 2003


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