Thai government promotes upstream industries in hard disk industry
By Jon Fernquest
International
supply
chains
nowadays are complex beasts with the manufacture of a single small
product such as a hard
disk-drive (HDD) spread over many countries (see photo of
HDD on right) . The well-developed supply chain of Thailand's automobile industry includes the final assembly of parts into a finished automobile as well as the manufacture of parts used in final assembly (intermediate goods).
Hard drive production in Thailand has still not reached this level of development and sophistication.
The Hard Disk Drive Institute (HDDI), a Thai government agency, is working to change this situation and develop upstream industries in Thailand's hard disk-drive industry.
This phenomenon found here is called "vertical specialisation in trade" :
...the
international fragmentation
of production, where production processes are sliced thinner and
thinner into many stages, and the resulting production fragments are carried out in different
locations. The production of a finished product thus
involves the participation
of many economies, with countries specializing in
different fragments of the
vertical production chain. International trade is then
increasingly dominated by trade in parts and components —
fragments. While the international
division of labor in the global economy is nothing new,
the vast scope
and the intricate nature
of this pattern of global production sharing seems genuinely unprecedented
(Source: Vertical Specialization in Chinese Trade, US International
Trade Commission, 2007, link)
Despite the current economic downturn and calls for Asian countries to lessen dependence on exports to US and the west, this kind of "vertical specialisation" export seems likely to be here for the long-term, even if the destination of the export is ultimately another country within Asia.
Read
a previous article on developing
Thailand's hard drive industry and another article on the recent acquisition of
Fujitsu's hard drive manufacturing operations by Hitachi. hard
disk, hard disk drive (HDD) - the device used to
store data on every computer (See Wikipedia)
a supply chain - the steps in different firms and locations needed to produce a final good from raw materials and intermediate goods, ending with final assembly and distribution of goods in consumer stores (See Wikipedia)
final assembly - the last step of manufacturing and producing before the finished good is sold to a consumer
intermediate goods - partly finished goods that are used in the manufacture of other goods
sophistication - more advanced and complex than others
upstream - up the river, towards the source of the river
upstream industries - industries that supply inputs to production, a whole "supply chain" of industries producing parts of greater complexity, for for example, going backwards up the chain from the car to the car door to the steel, glass, and electronics in the car door, etc....
downstream industries - industries that use the output of a company to produce goods
vertical specialisation in trade - different countries produce parts for different steps in the supply chain
fragmentation - break into several pieces
sliced - cut into pieces
specializing in Y - knowing a lot about Y and spending a lot your time doing Y
vertical production chain - a series of steps in production
horizontal - companies at the same stage of production in the supply chain
vertical - companies at different stages of production in the supply chain
international division of labor - the way in which people in different countries do different tasks in a process in order to efficiently produce goods
vast - extremely large
vast scope - the very large range of things that an activity or organisation deals with
intricate nature - has many small parts and details
US International Trade Commission (USITC) - an independent, non-partisan, quasi-judicial, federal agency of the United States that provides trade expertise to both the legislative and executive branches. Further, the agency determines the impact of imports on U.S. industries and directs actions against certain unfair trade practices, such as dumping, patent, trademark, and copyright infringement (See Wikipedia)
acquisition - when one company buys part of another company
a supply chain - the steps in different firms and locations needed to produce a final good from raw materials and intermediate goods, ending with final assembly and distribution of goods in consumer stores (See Wikipedia)
final assembly - the last step of manufacturing and producing before the finished good is sold to a consumer
intermediate goods - partly finished goods that are used in the manufacture of other goods
sophistication - more advanced and complex than others
upstream - up the river, towards the source of the river
upstream industries - industries that supply inputs to production, a whole "supply chain" of industries producing parts of greater complexity, for for example, going backwards up the chain from the car to the car door to the steel, glass, and electronics in the car door, etc....
downstream industries - industries that use the output of a company to produce goods
vertical specialisation in trade - different countries produce parts for different steps in the supply chain
fragmentation - break into several pieces
sliced - cut into pieces
specializing in Y - knowing a lot about Y and spending a lot your time doing Y
vertical production chain - a series of steps in production
horizontal - companies at the same stage of production in the supply chain
vertical - companies at different stages of production in the supply chain
international division of labor - the way in which people in different countries do different tasks in a process in order to efficiently produce goods
vast - extremely large
vast scope - the very large range of things that an activity or organisation deals with
intricate nature - has many small parts and details
US International Trade Commission (USITC) - an independent, non-partisan, quasi-judicial, federal agency of the United States that provides trade expertise to both the legislative and executive branches. Further, the agency determines the impact of imports on U.S. industries and directs actions against certain unfair trade practices, such as dumping, patent, trademark, and copyright infringement (See Wikipedia)
acquisition - when one company buys part of another company
Boost for hard disk industry
Strategic plan to focus on human resourcesBy: SASIWIMON BOONRUANG
17/06/2009
Thailand is looking to add value to its hard disk manufacturing industry by introducing a strategic plan to focus on human resources and technology capability development to boost the local content value.
Located in Ayutthaya’s Bang Pa-in district, Western Digital (WD) is one of the major hard disk drive factories in Thailand.
Currently, Thailand is the world's largest hard disk drive exporter, with more than 100,000 workers employed by the industry and exports valued at 500 billion baht.
However, the value added to the HDD industry was only 10 percent, while the supply chain of local content value was less than one percent.
looking to Y -
planning to do Y, thinking about doing Y
added value (noun) - improvements and extra features added to a product, increased value in product from improvements
add value (verb) - adding improvements to a product to increase the product's value
Western Digital (WD) - the second largest manufacturer of hard drives (See Wikipedia)
local content - the parts of a product that are made in the country (made locally in Thailand)
local content value - the value of the good added to by manufacturing in Thailand
added value (noun) - improvements and extra features added to a product, increased value in product from improvements
add value (verb) - adding improvements to a product to increase the product's value
Western Digital (WD) - the second largest manufacturer of hard drives (See Wikipedia)
local content - the parts of a product that are made in the country (made locally in Thailand)
local content value - the value of the good added to by manufacturing in Thailand
Upstream industries in hard disk industry
The Hard Disk Drive Institute (HDDI) of the National Science and Technology Development Agency (Nstda) has created some 50 SMEs supported by foreign investment.According to HDDI director, Dr Djitt Laowattana, since four giant HDD makers' manufacturing bases are located here, Thailand should take the opportunity of creating upstream industries and strengthen the capability of SMEs to work with multinational companies.
"Without the upstream, the middle and downstream industries will be gone," he said.
Hard Disk Drive Institute (HDDI)
- a Thai government institute promoting the development of the hard
disk-drive (HDD) industry in Thailand
the National Science and Technology Development Agency (NSTDA) - Thai government agency driving rapid science and technology development (See description)
manufacturing bases, production bases - the main centers for manufacturing a company's products
multinational companies (MNCs) - a companies whose manufacturing and sales are spread over many countries (See Wikipedia)
the National Science and Technology Development Agency (NSTDA) - Thai government agency driving rapid science and technology development (See description)
manufacturing bases, production bases - the main centers for manufacturing a company's products
multinational companies (MNCs) - a companies whose manufacturing and sales are spread over many countries (See Wikipedia)
The strategic plan of HDDI will focus on human resource development and technology capability development. "Not only must we create the knowledge base, but we have to bring that knowledge base to work in the industry and have more capable SMEs so that they can generate more income for the industry," Dr Djitt said.
The increase in the number of capable SMEs may help create value added of one percent more, or around 5 billion baht.
The value content creation covers components such as automation systems and precision parts. Dr Djitt pointed out that HDDI did not focus on products, but rather on the components and process technology.
human resources - the
people who work for companies, and their skills and abilities that the
companies will use
human resource development - improving the skills and abilities of employees who work for companies
knowledge base - a collection or database of information
content - the parts of a good
value content creation - creating parts that add value to a good
components - parts
automation - machines and robots doing the work of humans
precision parts - parts that meet standards exactly such as size and shape
human resource development - improving the skills and abilities of employees who work for companies
knowledge base - a collection or database of information
content - the parts of a good
value content creation - creating parts that add value to a good
components - parts
automation - machines and robots doing the work of humans
precision parts - parts that meet standards exactly such as size and shape
HDDI has collaborated with 14 universities and HDD makers including Seagate, Western Digital, Hitachi and Toshiba, in terms of human resource development. In addition, US-based Hutchison plans to set up a presence in Thailand.
It is expected that there will be some 25 SMEs within the year, seven companies of which are working together with Hitachi.
Some projects required to do prototype and HDDI researchers would help them create know-how by running as research projects and help them to create prototypes, with 30 percent financial support, because the SMEs have a financial constraint and there is no venture capital in this industry. "Once the project is practical and marketable, HDDI will find a model to help SMEs to do marketing," Dr Djitt said, noting that when the industry can be sustainable, HDDI would eventually step back to be a facilitator.
Western
Digital (WD) - the second largest manufacturer of hard drives
(See Wikipedia)
Seagate Technology - the largest manufacturer of hard drives and storage solutions, founded in 1979 and based in Scotts Valley, California (See Wikipedia)
Hitachi -
Toshiba - a large Japanese company, most important businesses are in Electronic devices and components, consumer products and infrastructure, the company's semiconductors are among the top 20 semiconductor sales leaders worldwide, the world's fifth largest personal computer manufacturer after Hewlett-Packard and Dell of the US, Acer of Taiwan and Lenovo of China and US (See Wikipedia)
prototype - test version of a new product before producing in large quantities
know-how - the knowledge of how to do something
a constraint - something that limits what you can do
a financial constraint - when lack of money limits what you can do
venture-capital - private equity capital provided by professional outside investors to new, growth businesses. Cash is exchanged for shares in a usually high risk company with above-average returns.(See Wikipedia)
practical - useful for real people in real situations
marketable - is possible to or even easy to sell, because it has what buyers want
sustainable - able to continue for a long time
step back - stop being involved in an activity
a facilitator - a helper
Seagate Technology - the largest manufacturer of hard drives and storage solutions, founded in 1979 and based in Scotts Valley, California (See Wikipedia)
Hitachi -
Toshiba - a large Japanese company, most important businesses are in Electronic devices and components, consumer products and infrastructure, the company's semiconductors are among the top 20 semiconductor sales leaders worldwide, the world's fifth largest personal computer manufacturer after Hewlett-Packard and Dell of the US, Acer of Taiwan and Lenovo of China and US (See Wikipedia)
prototype - test version of a new product before producing in large quantities
know-how - the knowledge of how to do something
a constraint - something that limits what you can do
a financial constraint - when lack of money limits what you can do
venture-capital - private equity capital provided by professional outside investors to new, growth businesses. Cash is exchanged for shares in a usually high risk company with above-average returns.(See Wikipedia)
practical - useful for real people in real situations
marketable - is possible to or even easy to sell, because it has what buyers want
sustainable - able to continue for a long time
step back - stop being involved in an activity
a facilitator - a helper
He noted that Suranaree University of Technology is now running a reverse engineering by working together with eight companies. Once there is the prototype, they can respond to the industry's inquiries and now it has a sign that SMEs have an opportunity to work with multinational companies.
However, Dr Djitt said that Thai SMEs should adjust their attitude and working style, and have a sincere mind to work together for the industry development as a whole.
HDDI would enhance those existing SMEs who are in the automobile industry, meanwhile, enabling the potential companies to do better, the director said, adding that if they can increase the value added by 5 percent, there will be an additional 25 billion baht circulated in the country.
reverse engineering
- taking something a machine aprt to learn about the technology used to
make it and how you can copy or imitate the design and build the
machine (See Wikipedia)
inquiries - people asking about something
respond to inquiries - giving answers to people asking about things
attitude - the way you think and feel about something, as shown in behaviour
adjust attitude - change behaviour and the way behaviour expresses what you think and feel
sincere - when a person really means what they say and do (See glossary)
circulated - going around (more money going around the country)
inquiries - people asking about something
respond to inquiries - giving answers to people asking about things
attitude - the way you think and feel about something, as shown in behaviour
adjust attitude - change behaviour and the way behaviour expresses what you think and feel
sincere - when a person really means what they say and do (See glossary)
circulated - going around (more money going around the country)
Apart from the HDDI's fiscal budget of 120 million baht, the institute has asked the National Science, Technology and Innovation Policy Office for some 900 million baht for a three-year operation.
According to Dr Chayakrit Charoensiriwath, Nstda researcher, the SMEs in the automobile industry have the potential to make HDD components, such as automation systems and precision parts. "The jig and fixture of HDD are mechanical parts that require very high precision. Local SMEs are capable to make them, but they need to upgrade their skills," he said.
National
Science, Technology and Innovation Policy Office -
jig - helps control the location and motion of a tool (also called templates or guides) (See Wikipedia)
fixture - used to hold objects in place and clamp them to machines or operating surfaces so that the object can be machined or assembled (See Wikipedia)
high precision - made with great accuracy, meets standards and design specifications exactly
specifications - detailed information about how something is made (includeds requirements, design, details, features)
upgrade their skills - improve their skills
jig - helps control the location and motion of a tool (also called templates or guides) (See Wikipedia)
fixture - used to hold objects in place and clamp them to machines or operating surfaces so that the object can be machined or assembled (See Wikipedia)
high precision - made with great accuracy, meets standards and design specifications exactly
specifications - detailed information about how something is made (includeds requirements, design, details, features)
upgrade their skills - improve their skills
HDDI tries to promote collaborations between multinational companies and local SMEs to achieve better efficiency, lower lead time and lower costs and aimed to strengthen the local HDD supply chain through collaborative research projects in three fields of precision tools, automation, and indirect materials, among the multinational companies, SMEs and academic researchers.
The researcher noted that the heart of the industry is the automation system. "We would like to have SMEs who can develop the high precise jig and fixture and have the software programs to control the automation," he said.
Chayakrit noted that HDD automation is the science and know-how that can integrate with every other field such as electronics, physics, medical equipment, agriculture, automobiles, textile, etc. "And that's the reason why we should promote the HDD industry," Chayakrit said.
Currently, there are three excellent centres, Suranaree University of Technology, King Mongkut's Institute of Technology Ladkrabang (KMITL) and King Mongkut Institute University of Technology Thonburi.
Western Digital has run a prototype with KMITL and Nectec doing Electrostatic Discharge.
(Source: Bangkok Post, business, Boost for hard disk industry: Strategic plan to focus on human resources, SASIWIMON BOONRUANG, 17/06/2009, link)
collaborate (verb) - work together with
others on a project
promote collaborations - trying to get people to work together on shared projects
efficiency - doing a task without wasting time or energy
lead time - the time period between receiving an order and delivering the final product to customers
collaborative research projects - projects with many researchers working together as a team
integrate with - join together and work together as one well-functioning unit
a field - a subject of study or work (for example: the field of law or architecture, an expert in his field)
Suranaree University of Technology - an engineering university in Nakhon Ratchasima, Thailand founded in 1989 (See Wikipedia)
King Mongkut's Institute of Technology - an engineering and technical university with many branches in the Bangkok area (See Wikipedia)
promote collaborations - trying to get people to work together on shared projects
efficiency - doing a task without wasting time or energy
lead time - the time period between receiving an order and delivering the final product to customers
collaborative research projects - projects with many researchers working together as a team
integrate with - join together and work together as one well-functioning unit
a field - a subject of study or work (for example: the field of law or architecture, an expert in his field)
Suranaree University of Technology - an engineering university in Nakhon Ratchasima, Thailand founded in 1989 (See Wikipedia)
King Mongkut's Institute of Technology - an engineering and technical university with many branches in the Bangkok area (See Wikipedia)
