According to the Kasikorn Research Center (K-Research), more Thai factories are expected to close this year than in the past two years, driven by a weakening manufacturing sector and ongoing economic challenges.
In 2024, factory closures exceeded 100 per month for the second consecutive year. The highest closure rates were among small and medium enterprises (SMEs), which faced financial struggles due to limited capital. On average, the registered capital of companies that shut down their factories last year was 3.8 times lower than that of companies that closed plants in 2023. The total registered capital of companies that closed their factories in 2024 amounted to 47.8 billion baht, a significant decrease from more than 180 billion baht in 2023.
From 2021 to 2022, Thailand saw 4,855 factory closures and 1,818 new factory openings, leading to an average of 127 closures per month. In contrast, from 2023 to 2024, there were 4,302 closures and 3,034 new factory openings, resulting in a net average of 53 factory closures per month. The furniture, electronics, garment, automotive, and steel industries experienced the most significant closures during this period.
K-Research attributes factory closures to a combination of factors, including sluggish domestic economic growth, low purchasing power, and structural issues within the manufacturing sector that have reduced the competitiveness of Thai SMEs. Additionally, external challenges such as the US-China trade tensions, decreased global demand, and heightened competition from both local and imported goods have further strained the sector.
While new factory openings may provide some relief by absorbing workers from closed plants, K-Research notes that these openings have been less impactful in terms of job absorption. On average, each new factory has absorbed 36 workers, compared to the 52 workers who lost their jobs when a factory closed. Furthermore, the number of factory workers experiencing reduced working hours has been rising. In the first half of 2024, the number of workers working fewer than 40 hours per week increased by 11% year-on-year, reaching 457,000 workers.
These challenges are particularly affecting low-income workers in the manufacturing sector, further weakening their purchasing power. As a result, K-Research predicts that factory closures will continue to rise this year, in line with a decline in the country’s manufacturing index, which fell by 2% year-on-year in the fourth quarter of 2024.
