Job losses of 10,000 as 100 factories close this year

About 10,000 workers in the textile and garment industry lost their jobs due to closure of 100 factories in the first 10 months of this year, the Thailand Textile Institute said yesterday.The global economic recession, especially in the United States, as well as Thailand's political unrest have hurt growth prospects for the industry that employs more than a million people, said the institute's executive director, Virat Tandaechanurat.

The poor world economy also means the sector is likely to miss its target of 10% export growth this year, he added.

The impact of worsening conditions was clearly seen in September and October, when 19 factories closed, affecting 5,350 workers, he said.

"In 2009, more factories will be affected as major foreign trade partners have been facing financial problems. However, the number of job losses is unlikely to be so severe because there is still a demand for workers in some specific segments of the market," said Mr Virat.

According to the institute, the market share of Thai-made clothing in the US has been falling steadily and is now 3.4%, down from double digits several years ago, due to intensified price competition from products shipped from China, Vietnam, Cambodia and Bangladesh.

Thai textile and garment exports to the US were worth US$1.3 billion in the first 10 months of this year, down 10% from the same period in 2007, Mr Virat added.

However, the industry has done well in Japan and Asean markets, thanks to tax privileges under the Asean Free Trade Area (Afta) and the Japan-Thailand Economic Partnership Agreement (JTEPA).

Shipments to Japan rose 30% year-on-year to US$179 million for textiles and $228 million for garment.

The sector earlier expected export growth in range of 10-12% in 2008 from $7.55 billion last year, but figures to date have prompted the institute to believe that the minimum growth of 10% was unlikely to be achieved, he said.

Dej Pathanasethpong, president of the Thai Garment Manufacturers Association, called on new government to inject funds to increase domestic liquidity flow, saying the industry expected to see significant layoffs next year.

The sector has performed relatively well so far this year with export growth of 7% expected for textile exports and 5% for garments, he said.

But next year, the market would be tougher with the possibility of deflation and stiff competition pushing down prices of products by 20%. The economy of the US is forecast to bottom out at the end of next year and take up to five years to fully recover, he said.

To weather the crisis, Mr Dej said Thai manufacturers should focus more on the growing Asean and Indian subcontinent markets, which each account for 9% of the industry's total exports.