The Ford Motor Company has announced plans to build a $450 million car plant in Thailand to meet rising demand in the region. Analysts say the investment shows confidence that Thailand will remain a leading auto manufacturing hub despite political unrest and competition from China.
Ford executives say the plant will be built in Rayong, southeast of Bangkok, by 2012 and will produce about 150,000 passenger vehicles a year, most of them for export to Southeast Asia and Australia.
The new car production will support up to 11,000 new jobs at the plant and indirectly through suppliers and dealers.
Ford says they will purchase up to $800 million a year worth of vehicle components through Thai suppliers.
Joe Hinrichs, Ford's president for Asia-Pacific and Africa, announced the investment Thursday in the Thai capital. He says one reason they chose Thailand for the new plant is because of its support for the auto industry.
"We also see growth not only in China and India, but also in Thailand and the ASEAN, Asia-Pacific region," said Hinrichs. "So, we need to add capacity in all those locations to support the markets here. And, that's what we're doing."
The multi-million dollar investment is expected to give a boost to the Thai auto industry after a slump from the global financial crisis and concerns from political unrest.
From March to May violent clashes between soldiers and anti-government protesters in Bangkok left 90 people dead and 2,000 injured-most of them protesters.
Thailand's coastal manufacturing hub was largely unaffected but the unrest raised concerns about foreign investment.
John Bonnell is a senior director of market intelligence for J.D. Power and Associates. He says Ford's investment shows confidence in the future of the Thai auto industry.
Thai 'Red Shirt' anti-government protesters pray during a ceremony to mark the 60th Coronation Day for King Bhumibol Adulyadej, inside their fortified camp in the financial central district of Silom in downtown Bangkok, 05 May 2010
"For Thailand, in particular in the wake of all the troubles that it did face a month or so ago, it is a vote of confidence and it's confirmation that the Thailand automotive industry will remain a production hub for key global manufacturers," said Bonnell. "And, Ford being one of the leading manufacturers and despite not even having a strong position in the domestic market it is continuing to invest for export markets. So, it's a good sign for Thailand."
Bonnell says car makers Nissan and Honda also plan to increase investments in Thailand and he expects Toyota to follow suit.
Despite the confidence in Thailand, China, the world's biggest auto market, remains the focus of car manufacturers.
China in 2009 produced about 14 million cars and that number is expected to grow this year by about a million.
Thailand produces less than 700,000 vehicles annually, about half of them for export.
Ford is investing $1 billion in expanding its production in China and last year moved its regional headquarters from Bangkok to Shanghai to focus on the Chinese market.