The expenditure freeze for the new factory, estimated to cost between Bt700 million and Bt1 billion, is in accordance with the company's policy of minimising business risk in Thailand during this period of economic and political uncertainty and currency appreciation, which can seriously affect the local export business. The company rolled out its expansion plan last year.

Nibhondh Teeranartsin, managing director of Siam Sanitaryware Industry, a joint venture between the Siam Cement Group and Japan's Toto Ltd, said the local market for sanitary ware was expected to slow down this year, after enjoying double-digit growth for three or four years now.

Thailand's Bt6-billlion sanitary-ware market is expected to grow only 4-5 per cent this year.

Nibhondh said the baht appreciation - from Bt40 to the US dollar before to Bt37 - has discouraged export operations. The company would like to minimise its business risk by allocating only minor investment, in order to maintain the production level of its existing factories, rather than set up a new one that would require a huge investment.

Siam Sanitaryware Industry's two existing factories - in Hin Kong and Nong Kae in Sara Buri - have a combined maximum annual production capacity of about 3 million pieces. The factories are now running at more than 90 per cent of capacity, with 40 per cent of the production for export. The company last year rolled out a major investment plan to set up new sanitary-ware factory at a location near the other two factories in Sara Buri.

Nibhondh said that amid the current economic and political uncertainty, major sanitary-ware manufacturers, including American Standard, have frozen new investment and are carefully monitoring the situation.

Tanasak Sakariganon, manager of the Marketing Division, said the company would replace its plan to build a new Thai factory with imports of premium sanitary-ware products from Toto's other manufacturing facilities, in Japan, China, Vietnam and Indonesia.

"We expect our import sales to grow from only Bt20 million last year to more than Bt50 million this year," said Tanasak, adding that the company started importing Toto sanitary-ware products last year, mainly luxurious models that included the Neorest smart-sensor toilet.

Siam Sanitary Ware Industry Co Ltd achieved total sales of about Bt3 billion last year.

Tanasak said the company would also open its first major showroom at a cost Bt40 million in Sukhumvit Soi 3, to display and demonstrate the full line of Toto sanitary-ware products, especially its premium models.

"We would like to expand our imported premium sanitary-ware products to serve a potential group of rich customers, who have been less affected by the economic downturn. They have still a good demand for luxurious products," said Tanasak, adding that the company expected to sell more than 60 Neorest smart-sensor toilets this year at a price of Bt160,000 each. Twenty Neorest toilets were sold domestically last year.

Yuichi Narukiyo, assistant managing director of Siam Sanitary Ware Industry, said Toto currently had more than 20 factories around the world outside of Japan. The company has 11 factories in Japan and 10 in China.

"We have had a primary plan since last year to set up new investments in three key locations: Thailand, Vietnam and Mexico," said Narukiyo, adding that a Toto sanitary-ware factory in Vietnam was opened last year. The company also decided to open its factory in Mexico before opening one in Thailand, because it wanted to supply products to the US market, which has recorded strong domestic growth over the past few years.

Toto is now the world's fourth-largest producer of sanitary ware, after American Standard, ROCA and Sanitec, and has a total annual production capacity of 11.5 million pieces.

Kwanchai Rungfapaisarn

The Nation