Electrolux to invest Bt 471 million in washing machine plant in Thailand

Swedish electrical appliance firm Electrolux AB in February announced plans to invest US$ 11 million (Bt 471 million) to set up its first wholly-owned plant in Thailand to produce front-loading washing machines.
     The factory will be operational within one year, making it the first washing machine facility in Southeast Asia for the Swedish home-appliance maker. The project is also the company’s largest investment in Asia since the 1997-98 Asian financial crisis.
     “The facility will be our major supply base for East Asia,” said Fredrik Ramen, president of Electrolux Household Appliances for the East Asian region. He added that machines made for export could reach 50 per cent of the plant’s initial annual capacity of 200,000 units.
     According to Mr Ramen, Thailand was chosen as its manufacturing hub in Southeast Asia because of its large market size, the growth of the domestic market, its geographical location and well-developed infrastructure and supporting industries.
     The construction is expected to begin within three months at one of two sites currently under consideration – Prachin Buri and the Eastern Seaboard. The new factory has yet to seek an approval from the Board of Investment (BoI), but the company expects to receive the board’s agreement.
     Jeffrey Chang, Electrolux’s general manager for manufacturing (Asean), said the new factory would comply with BoI regulations on the localization of components. He explained that the plant would in the initial stage import completely knocked-down kits for local assembly. After six months, it will start to localize content, component by component.
     “By 2004, 40 per cent of our products will be of Asean content,” he added.
     Mr Ramen said this project formed part of Electrolux’s strategy of benefiting from the Asean Free Trade Area (AFTA), which will lower tariffs for goods moving between Asean states to 0 – 5 per cent.
     “Having our own factory here will help increase our efficiency in terms of management, service and competitiveness in the region,” he said.
     Electrolux occupies 40 per cent market share for front-loading washing machines in Southeast Asia. The region is a huge market for this type of machine, totalling between 600,000 to 700,000 units a year.
     According to Mr Ramen, front-loading washing machines are starting to gain acceptance by consumers in the region, where top-loading models have long been the norm. Electrolux’s front-loading washing machines distributed in Asia are currently manufactured in Europe.
     Major home-appliance makers from Japan and South Korea – including Samsung Electronics, Mitsubishi Electric, and Toshiba – have already chosen Thailand as their major production bases for washing machines for both the local market and exports within Asia.

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