Petrochemical industry in Map Ta Phut and automotive industry in Laem Chabang : a comparative study of industrial adaptation in Eastern Seaboard

Abstract

Focusing on the Eastern Seaboard Development, this dissertation addresses differences between the petrochemical industry and automotive industry in responding to a changing business environment. It explains why the automotive industry, in contrast with the petrochemical industry which has declined in the face of global competitions, remains technologically dynamic and competitive since the Asian financial crisis. Current debates—which either glorify the region’s economic development from the bureaucratic perspectives or which vilify its adverse impact from social and environmental perspectives—don’t address the difference of two industries. The dissertation argues that a network-based industrial system is emerging in the automotive industry which is blurring supporting-firms boundaries and sustaining regional advantage. Based on semi-structured interviews, the character of the independent firm-based industrial systems is found out regarding the petrochemical industry. First, regional lobbying organizations are indifferent to the pattern of regional social interaction. Second, industrial structure is heavily vertically integrated in a few major corporate groups where inter-group transactions are rare. Third, the corporate groups have their own centralized management and decision-making systems. On the other hand, the automotive industry has the character of the network-based industrial system. First, a bottom-up organization helps to create and sustain regular patterns of regional social interaction among skilled Thai engineers. Second, the Thai industrial structure is largely independent of the traditional Japanese vertically-integrated supply chain system. Third, corporate organization is decentralized and skilled workers are at their discretion to act to some extent. Three recommendations are drawn. First, it should be considered for the petrochemical industry to shift the character of the industrial system from being an independent firm-based one to a network-based one through an unbundling of energy industries. Second, the petrochemical industry should utilize the dynamism in the adjacent automotive industry. Third, for this regional integration, a bottom-up consortium is needed as a hub of regional social networking. Still, the dissertation leaves a further important question for Thai study: what is the reason behind the fact that the petrochemical industry has an independent firm-based industrial system in Thailand? The question ought to be addressed through the lens of rent-seeking behaviors for energy resources.