SI RACHA, CHON BURI: The labour shortage in the agricultural sector and the government's rice pledging scheme helped Siam Kubota Corp's sales of agricultural machinery reach 2.5 billion baht in the first six months.
Sales met the company's forecast as domestic demand rose by 25% from the same period last year. It has projected total sales of 5 billion baht this year, up from 4.2 billion last year.
Senior executive vice-president Opart Dhanvarjor said the 2011 floods disrupted the supply chain and manufacturing process to skew last year's sales.
Siam Kubota, a joint venture between Japan's Kubota Corporation and Siam Cement Group (SCG) with stakes of 60% and 40% respectively, controls 70% of the domestic agricultural machinery market worth 7-8 billion baht per year.
The domestic market accounted for 80% of sales and the rest was exported to Laos, Cambodia, North America and Australia.
The company projects that once the Asean Economic Community is established in late 2015, exports will account for 30% of its sales.
Next year, Siam Kubota will establish subsidiaries in Laos and Cambodia to serve growing demand.
Mr Opart said the labour shortage would lead to increased adoption of machinery to address the issue and increase productivity.
Difficulties facing Siam Kubota in the second half of the year will be the lower gross domestic product (GDP) forecast and possible weak demand.
But Mr Opart said the GDP projection is based on export numbers and usually does not affect the agriculture sector. "There will always be consumption in the agriculture sector," he said.
Siam Kubota's plant at Amata Nakorn Industrial Estate in Chon Buri is its Asean production hub. At full capacity, the factory is capable of producing 70,000 tractors and combine harvesters a year. It now operates at 80% capacity.
The company has invested 500 million baht in the main part of its distribution hub at Navanakorn Industrial Estate in Pathum Thani that opens next year.
Its factory at 304 Industrial Park in Prachin Buri was launched in 2010 to produce metal casts and gear and hydraulics systems with an investment of 2 billion baht.
Siam Kubota aims to source and produce more parts domestically.
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Writer: Nop Tephaval