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La-Z-Boy plans gradually to move its furniture plants from the UK and New Zealand to Thailand in a bid to cut production costs and make the Kingdom its largest overseas production and exporting centre. It also plans to make Thailand its marketing base in Asia in three to five years.
Dhanakorn Kasetrsuwan, managing director of La-Z-Boy (Thailand), yesterday said the US partner would gradually reduce production in Britain and New Zealand in favour of Thailand.
"The Kingdom offers cheaper costs, particularly for labour," he said. As the local economy has not experienced rapid growth in recent years, there was much less pressure to inflate production costs here, he said.
A relatively stable market and reasonable pricing have prompted the US partner to shift here. Dhanakorn declined to reveal how much La-Z-Boy will save by the move. In preparing for the shift, the partners have jointly invested Bt100 million in a third plant in Chon Buri. The plant is expected to start manufacturing in June. It will enable La-Z-Boy to increase production capacity by up to 12,000 units per month.
Thailand was the only country outside the US where La-Z-Boy had invested in establishing plants with local partners, Dhanakorn said.
Its other global plants include original equipment manufacturing. Ninety-five per cent of production here is exported to international markets including China, Taiwan, Japan, the Philippines, Indonesia, Singapore and Malaysia.
Dhanakorn said having the third plant would enable La-Z-Boy to achieve its target of 25-per-cent sales growth this year.
Last year it achieved Bt700 million in sales. A slightly stronger baht had no impact on its operations. La-Z-Boy was able to sell well as most of its key customers are in the Asia region where respective currencies have risen even more dramatically against the greenback. As La-Z-Boy only quotes its products in US dollars, it had to raise prices by 10 per cent to offset exchange-rate differences. Its customers accepted the increased prices as they understood the currency situation.
In terms of marketing, he said La-Z-Boy Thailand was gradually strengthening its dealerships by showcasing its products and boosting Thailand as its marketing centre in Asia. It currently has 35 dealers here and 10 more dealers in its other global markets. Today, Thailand is its largest market, followed by the Philippines.
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