Over 100 factories shut down monthly for 2nd year: KResearch

Overall outlook remains negative, as seen in past two years (2023-2024)

Kasikorn Research Centre reports that factories remain at risk of closure in 2025. In 2024, despite more openings than closures, an average of more than 100 factories per month shut down for the second consecutive year.

The overall outlook remains negative, as seen in the past two years (2023-2024). The net increase in new factories, after deducting closures, has dropped to 52 per month, down from 127 per month in 2022-2023.

Industries most affected by closures in 2024 include those facing structural production issues, declining demand, and intense competition, such as furniture, electronics, apparel, automotive, and steel. Both small and large factories in these sectors have shut down, aligning with a continued decline in their production indices.

Small and medium-sized enterprises (SMEs) have been hit hardest, with total registered capital of closed factories in 2024 standing at 47.83 billion baht, 3.8 times lower than in 2023, reflecting persistent challenges for small manufacturers.

On the positive side, newly opened factories continue to absorb labour, preventing a severe employment crisis. However, working hours in manufacturing are declining, impacting workers' incomes.

In 2024, new factories hired an average of 36 workers per facility, higher than the 28 workers per factory affected by closures. However, the impact varies by industry, business size, and location.

Despite net positive employment, Thailand's manufacturing sector is seeing a reduction in working hours and overtime. In the first half of 2024, the number of workers logging less than 40 hours per week rose to 457,000, an 11% increase from 412,000 in the same period last year, contrasting with the overall labour-market trend.If this persists, it will impact workers' income and spending power in the manufacturing sector.

Kasikorn Research Centre warns that factory closures may continue into 2025, particularly for SMEs, due to multiple pressures:

Weak consumer demand amid high living costs and household debt
Trade-war impacts, affecting costs and competitiveness
Rising competition from imports

Thailand’s Industrial Production Index (IPI) has been in decline for nine consecutive quarters, with Q4 2024 contracting by 2.0% year over year. Rebuilding competitiveness will require structural adjustments, which won’t be easy.

(2025/02/08-00:00)