Thailand's ceramic and glass industry faces a growing threat from rising liquefied petroleum gas (LPG) prices, higher minimum wages and a flood of products from neighbouring countries.
Amnart Yasothorn, secretary-general of the Federation of Thai Industries' Ceramics Industry Club, said the Asean free trade agreement that went into effect in January 2010 flooded the market with products as tariffs were eliminated for ceramic products.
"In 2015 when the Asean Economic Community takes effect, it will not impact the industry since we're already flooded with cheaper products from Malaysia, Indonesia and Vietnam," said Mr Amnart.
"It is apparent we have to adapt by increasing value and focusing on design. But in the short term we are more worried about increasing LPG costs and minimum wages."
The value of Thailand's imports of ceramics rose significantly over the last three years, from 13.96 billion baht in 2008 to 18.56 billion 2010.
Exports dropped to 19.87 billion baht in 2010 from 31.39 billion in 2008.
Anurak Napawan, executive director of Indra Ceramic, said a hike of LPG prices by 12 baht this year is a major burden for his company, in which fuel costs represent almost 20% of total production costs.
The company produces tableware, home decorative items and gifts with a capacity of 500,000 pieces or 250 tonnes per month.
With capital of 250 million baht and employing 600 workers, 75% of its products are exported to markets including the United Kingdom, Germany, Europe and the United States.
Mr Anurak said the company, as well as many others in the Lampang Ceramic Association, are currently not accepting pre-orders.
"A gradual increase of two baht per year is okay, but an immediate 12 baht increase is causing us to raise product prices and slow production since we don't want to accept too many orders," he said.
"At first we were planning to increase production lines, but now we have cancelled the plan and we are not hiring new staff due to the planned increase in minimum wages."
The Lampang Ceramic Association recently submitted a petition to the administrative court in Chiang Mai concerning the government's decision to raise LPG prices. It is awaiting a decision on its suggested injunction to delay the price increase.
Tepiwan Jitwatcharakomol, chief of the Thailand Center of Excellence for Glass under the Department of Science Service, said ceramics will be hit hard from higher production costs and stiff competition once Asean economic integration takes place.
"Glass at least is recyclable, and their scraps can be remelted. Demand remains relatively strong in several industries such as hotels, food, construction and automotives," she said.
Dr Tepiwan added the department is preparing a formula for reducing costs for the ceramic and glass industry while recommending they take their equipment more seriously.
"Thai operators need to see how their kilns run at full capacity. If the kilns are too old, they have to adjust or find new hardware," she said.
