Factories in rural
northern Thailand
CP Group aims to process rubber closer to China export market
By Jon Fernquest 
All roads lead to Bangkok. A harsh reality of economic life in Thailand is that the headquarters and factories for most large companies are located near Bangkok.
Compare this with other countries such as China or the US where business is spread out over the entire breadth of the country
(Read a recent World Bank report on the formation of urban centers and the urban-rural divide).
Bangkok, centre of
Thailand's job market
Bangkok is also the
center of Thailand's job market as well as commerce. If you want to get a good job in Thailand there are better choices in and around Bangkok than in the provinces.
When the harvest season is finished, migrant workers stream into Bangkok from the provinces to find temporary work in the informal sector, work that ranges from construction to driving a taxi to working as a masseuse (Read Dr. Pasuk Phongpaichit's lecture on the informal sector in Thailand).
A fundamental lack of good job and career opportunities in rural Thailand has long been another harsh reality, at least outside of family farms and businesses.
In contrast, the area around Bangkok, stretching from the Eastern Seaboard up to Ayutthaya has a wide assortment of corporations manufacturing for domestic consumption and export (including textiles, automobiles, electronics).
The sort of place that an engineering student straight out of college can start building a career and acquiring valuable work experience with the latest technology.
This situation may soon be changing.
CP Group is targeting several rural areas for the construction of important new factories.
Chiang Rai factories for China market, Isan for export via Vietnam
Instead of shipping raw latex out of northern Thailand to Bangkok in the south for processing and then shipping the processed rubber back north to China, CP Group is moving its rubber supply chain upstream back to its origins to save on transportation costs(Read article about Thai rubber company moving upstream by purchasing operations in Indonesia).
CP Group plans to set up Latex processing facilities in Chiang Khong district of Chiang Rai, a location convenient for exports to China.
China remains the world's biggest rubber importer because its supply does not meet its demand of more than 2.5 million tonnes a year. About 60%, or 964,000 tonnes, of its total rubber imports last year were from Thailand.
Five to six years ago rubber saplings were planted at plantations located in Thailand's northern and northeastern provinces. The plantations are located in 19 provinces across the two regions.
Starting next year, the fully grown rubber trees will be ready to be tapped for latex. The new processing facilities, located near these plantations, will be able to quickly process this latex without long transportation delays.
The decision has still not been made whether the latex processing facilities will produce rubber sheets or rubber block.
Other latex processing plants will be set up in Northeastern Thailand (Isan) in the cities of Udon Thani, Nong Khai, Sakon Nakhon and Khon Kaen. Produce from these factories will be shipped as exports from the port of Danang in Vietnam.
Market for rubber saplings
The three countries that account for 70% of global natural rubber output are Indonesia, Malaysia, and Thailand. Together they form an organisation known as the International Rubber Consortium (IRCO).Last year met IRCO in an effort to reduce rubber supply and shore up rubber prices. The members of IRCO agreed to fell ageing rubber trees and increase replanted areas to 1.06 million rai, up from 700,000 rai they had planned this year (Read article).
Rubber saplings are in high demand after The goal is to cut rubber production by 200,000 tonnes to shore up falling rubber prices.
CP Group also plans to distribute about 400,000 saplings of the newly developed JVP 80 variety, which could yield up to 450 to 500 kilogrammes of latex per rai.
Vocabulary
All roads lead to Rome - in the days of the Roman Empire all roads lead to the capital of Rome in the center of the country
All roads lead to Bangkok - the capital Bangkok is the transportation center and hub of Thailand (at Morchit Northern and Northeast bus station early in the morning, one can see all the buses from around the country arriving)
harsh reality - the situation in real life is not always the way you wish it was (reality does not equal ideal)
the breadth of the country - from one side or border of the country to the opposite side (for example from Mae Sot near Burma to Ubon near Cambodia)
the rural-urban divide - the difference in income, wealth, and opportunity between the countryside and the city
job market - the market where companies offer jobs and job seekers look for a job (either their first job or a new job)
commerce - all teh activities involved in buying and selling things
the formation of Y - the starting or creation of Y
urban - of a city or cities
informal sector - the part of the Thai labour market outside of big companies, jobs that are not permanent and small vendors in markets
fundamental - describing something very important or essential
a fundamental lack of Y - does not have Y which is very important and essential
career - work (job, profession) that a person does for a long period of life (See glossary)
career opportunities - different areas of work where people are getting jobs and building up work experience that will be valauble in the future
Eastern Seaboard - the area south of Bangkok along Sukhumvit Road passing Chonburi up to Rayong
a wide assortment of - a great variety of
straight out of college - just finished college a short time ago
acquire - get
acquiring work experience - get knowledge from practical work (important addition to book knowledge taught in schools)
rubber - a material that can undergo elastic deformation under stress and return to its previous size without permanent deformation
latex - natural rubber, a milky white sap found in many trees, used in surgical gloves, condoms, and clothing (See Wikipedia on latex and rubber)
synthetic rubber - a substitute for natural rubber with improved material properties, close to 21 million tons of rubber were produced in 2005 of which around 58% was synthetic (See Wikipedia)
the supply chain - the flow of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Many organizations are looking to supply chain optimization as a means of gaining significant competitive advantages (Source and Wikipedia)
upstream, an upstream industry - an industry that supplies the raw materials to this stage of production (for example, raw rubber supplied to a tyre manufacturer)
facilities - buildings, equipment and services for a special purpose
latex processing facilities - a factory for turning raw latex into a product for sale
convenient - an easy way to do something
sapling - a young tree
rubber saplings - young rubber trees
plantations - large farms with many workers growing commodity crops such as rubber, sugar, or coffee
trees tapped for latex -
transportation delays - waiting for the rubber to be shipped south to a processing plant and then back north to China, all of which will add to the cost
rubber sheets,
ribbed smoked rubber sheets (RSS) - natural rubber in sheet
form, the oldest and the most popular type of rubber, the simplest and
easiest to produce on a small scale by small farmers (See All
About Rubber glossary)
technically specified rubber (TSR) - rubber that meets international standards for rubber production, many of these are block types of rubber that use new methods of processing (See All About Rubber glossary; also see this site; also see list of ISO standards at Mahidol University)
natural rubber - latexInternational Rubber Consortium (IRCO) - founded between 2001 and 2002 to "work collectively to ensure fair and remunerative income for rubber small holders of the three countries." The final official injection of capital into the consortium did not happen until 2004:
"On 8 August, 2002, the Tripartite countries met again in Bali, Indonesia to sign the MOU on setting up of the International Rubber Consortium, Limited (IRCo) to carry out Strategic Market Operation (SMO) ... IRCo was officially registered on 28 April, 2004 with an authorized capital of US$225 million, to be fully subscribed by Thailand, Indonesia and Malaysia at the ratio of 4:3:2."
shore up prices - prevent prices from fallingfell ageing trees - cut down old trees
an upstream
industry - an industry that supplies the raw materials to
this stage of production (for example, raw rubber supplied to a tyre
manufacturer)
