Thread: No raw materials from China forces closure of Kanchanaburi factory – 500 jobless

About 500 employees of a company in Thailand’s western province of Kanchanaburi were abruptly notified by the management on Friday that they are being laid off, due to a shortage of raw materials normally imported from China.

The employees, including Thais, Filipinos and those from Myanmar, arrived at the Zica New Materials Company in Village 14, Tambon Huey Krachao, Huey Krachao district in the morning only to find out that the gates were locked, with a notice attached from the management announcing the shutdown of the office and factory.

Provincial labour and social welfare officials, as well as officials from the Internal Security Operations Command, were sent to meet with the shocked workers, most of whom admitted that they had not been aware that the company was in trouble after six years in operation.

The notice from the management claimed that the company had run out of raw materials from China, due to the outbreak of coronavirus.

Labour officials said that the Taiwanese CEO had already flown back to Taiwan.

One of the labour officials, Mr. Pairote Panthakarn, said the management had agreed to pay 2,500 baht compensation to each of the 193 Myanmar migrant workers and arrange for buses to take them to Mae Sot district in Tak province for the journey back to Myanmar.

For the Thai employees, negotiations with the management, to settle on the severance pay issue and mediated by labour officials, are ongoing.

Mr. Pairote said labour officials would help if the Thai employees want to take a case against the management to the labour court, to seek better compensation for their abrupt termination.

No raw materials from China forces closure of Kanchanaburi factory – 500 jobless – Thai PBS World

Originally Posted by Fondles

Sounds like bullshit to me

Actually its not that they close down for the lunar festival but this particular incident has the material and supply chain crippled. I do not know about your company inventory practices but our company is feeling it and it is getting worse. Typically during their annual lunar festival, most CM's work their staff hence no gaps in deliveries. Most CM's are planned and loaded to receive materials and use them with in a few days to a few weeks tops. Inventory control is critical to keep operating income stable and risk inventory exposure. By the Chinese govt shutting down all in and out, extending the lunar new year by 2 weeks this is a "Hard" shutdown. The material completed can't ship, there is no WIP on the lines. Even when they return to the factories (Yet to be determined) it will be a slow recovery process.

I experienced this same issue back during the 2011 Thailand flood. It was a mess and it took many companies months to recover and some went out of business. Others moved away to other locations as the OEM mandated a risk mitigation site.

The big unknown now is, when will this peak? When will China be able to allow their work force back to the factories. I think Feb 13th is optimistic. We will have to wait and see.

Originally Posted by JPPR2

Actually its not that they close down for the lunar festival but this particular incident has the material and supply chain crippled. I do not know about your company inventory practices but our company is feeling it and it is getting worse.

We run just in time but plan for events where there will be no deliveries. For the lunar new year we ordered enough stock to keep us operating for 4 weeks as there is always a backlog out of China when they return to work causing shipping delays, We also have alternate suppliers for the times when China cannot supply or there is a shipping issue causing a delay.

Considering it is still the Lunar New year break in China this company that has closed should have had stock on hand to cover it.... to run out and close up shop blaming the beer virus is bullshit.

I agree Fondles. Some companies have poor planning management systems and they surface rather fast when something like this happens. Others ( like most and we did) ordered in advance of the lunar holiday and received most components. However when the supplier (CM) is struggling to keep up with our increasing demand many time companies live close to the edge. It happens routinely as something can push out the proposed LT and thus your window is gone. Of course a lot will depend on what your company makes, the CT to build it and the market segment you are in. Most optical companies struggle having multi sources because the product is higher tech and smaller market share and there are no other sources available to make it. It can be cost prohibitive having multi sources as you have to invest big in bringing one to speed.

I do not know what the company in the OP made but sounds like they were living on the edge anyway. Probably floating inventory and cash reserves were tight. Good excuse to pack camp and have an excuse to write it all off.

Originally Posted by JPPR2

. Good excuse to pack camp and have an excuse to write it all off.

CEO's already done a runner?

Originally Posted by VocalNeal

CEO's already done a runner?

Appears so from the OP.

What did the company manufacture? Typical shit reporting failed to mention the product.

Originally Posted by Seekingasylum

What did the company manufacture? Typical shit reporting failed to mention the product.

"Sica is a professional manufacturer of mining, selecting, smelting, development, production, and sale of quartz products. Under the leadership of the president, Francis Pan, Sica adheres to the concept of energy-saving and environmental protection, integrates Thailand's high-quality quartz mineral resources, as well as uses the industrial facilities principles of Taiwan's technology industries in combined with the professional management team in order to commit to become a high quality of silicon material supplier in the world."

Sica New Materials Group

Ah, I thank you. The report wrongly describing the company as "Zica" was particularly helpful...........

Originally Posted by Seekingasylum

Ah, I thank you. The report wrongly describing the company as "Zica" was particularly helpful...........

Yeah took me a bit to work it out.

If they set up here for the "high-quality quartz mineral resources" I wonder what was imported from China that crippled the company to the point the CEO did a runner ?

Be nice if the labour department was able to seize the 532 rai the company purchased and sell it to pay the employees what they are owed.

Originally Posted by Fondles

crippled the company to the point the CEO did a runner ?

Ya know sadly I have read and personally witnessed where a CEO/Founder sees the writing on the wall and does not want to deal with the backlash, potential threats etc so they bail out and let the CFO and HR deal with the fall out.