Thailand Automotive Manufacturing Needs New Skills For EV Shift

Automotive manufacturing sector in Thailand needs to adapt to evolving skills requirements and integrate responsible business practices as the industry rapidly transitions towards electric and low-carbon vehicles, according to a new study by the International Labour Organisation (ILO).

The report, titled “Navigating Transformational Changes and Transitions: The Skills Development and Employment Landscape in Thailand’s Automotive Manufacturing Sector,” highlights the need to bridge the gap between current skills and emerging demands. Thailand’s pivot towards becoming a central hub for electric vehicle manufacturing in ASEAN is driving this demand.

Key insights include the growing need for digital skills and expertise in green technologies, particularly in battery production and vehicle automation software. Ongoing skills development is essential to support a more digital and automated manufacturing environment. Existing training and education programs are insufficient to meet these demands, the report reveals.

To bridge this gap, it is necessary to enhance technical skills and foster a culture of continuous learning and adaptability, crucial for maintaining global competitiveness. Xiaoyan Qian, Director of the ILO Decent Work Technical Support Team, emphasized that reskilling and upskilling opportunities are critical for supporting just transitions in a greener economy.

The study also highlights the importance of integrating responsible business conduct into operations and training programs, ensuring all employees, including migrant workers, understand and implement these practices. Demographic shifts indicate that older workers need additional support to adapt to the advancing technological environment.

Gizem Karsli, Project Manager of the Skills Development and Responsible Business Conduct for Transition initiative, funded by the Government of Japan, stressed that responsible business conduct is imperative as the industry moves towards more sustainable practices. This approach not only mitigates risks but also attracts investment and partnership opportunities.

Tailored training programs that cater to different learning paces and styles are important for ensuring all employees can contribute effectively. Thailand’s automotive manufacturing sector, the country’s second-largest export sector, accounted for 14% of total exports in the first nine months of 2023, valued at approximately US$27.7b (THB 1.02 trillion). Thailand is the largest automotive producer and exporter in ASEAN and the eleventh-largest globally, producing over 2 million units annually.

The Biggest Catalyst

This comes after Chinese automakers seized the opportunity to double down their presence by positioning their cars as pocket-friendly. They started rolling out electric vehicles (EVs) assembled in Thailand in the local market in compliance with the government’s EV3.0 policy, which aims to balance locally produced vehicles with exports. Thansettakij, a Thai-language media arm of the Nation Group, reported MG4 Electric cars have been assembled at the SAIC Motor-CP factory in Chonburi since April with slight adjustments. China’s Hozon Motors are also assembling their NETA V-11 in Thailand.

If this is not damaging enough, Suzuki and Subaru have announced plans to cease manufacturing in Thailand, causing significant worries for Thai auto parts makers. The global push for carbon neutrality and the increasing adoption of electric vehicles (EV) led to Suzuki reassessing its global production efficiency, the company said. 

Sluggish auto sales were attributed as the reason behind both brands’ pulling out manufacturing facilities. Additionally, reports of consumers’ preferring EVs to Internal Combustion Engine (ICE) cars are putting more pressure on the latter’s position in the country.

Comparisons have been made between EVs and ICEs in terms of cost-effectiveness and convenience. It turns out that EVs proved more worthwhile given the country’s ramping up charging station across the country, after sales and service, along with offsetting petrol costs.

For Subaru, Tan Chong International Limited (TCIL) disclosed the reason as a “proactive business transformation” to HK Stock Exchange, the Subaru distributor, according to reports, has been experiencing continuously declining sales in Thailand which may have led to the plant closure. Moreover, reports also say Tan Chong Motor Holdings Bhd is apparently in a tight financial situation after posting four consecutive years of net losses.

Currently, steel and metal industries are hit hardest in Thailand as production costs remain high and cheap Chinese goods flow into the market. Thailand had 561 factories shutting down this year, primarily in the steel and metal industries. The Federation of Thai Industries (FTI) warns that if production costs, including energy, transportation, and interest rates, remain high, more closures are likely. 

However, despite transitioning to Electric Vehicles, Thailand auto parts businesses can be resilient with a little push from the government to diversify — with auto parts making to medical devices.

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