Thailand’s debt ridden Tanning Organisation returned to profitability last year after a major rethink succeeded in cutting costs and reviving its market.

The Defence Ministry-owned organisation makes leather goods for the armed forces, including 40,000 pairs of boots each year as well as bags, holsters and saddles. Around 5% of its output goes to the private sector.

For the year, the agency announced profits of b21.4 million (US$ 502,585), a dramatic increase over the losses of b103.6 million (US$ 2.4 million) recorded in 2001 and b19.1 million (US$448,568) in 2000.

The organisation’s profit-boosting overhaul included an early retirement scheme that reduced the workforce from 774 to 512, the streamlining of its management structure and the changing of working practices to improve operational flexibility. The import of good quality low-cost raw materials is expected to lower production costs by 11.68% this year.

The agency ran into financial difficulties in the late 1990’s amid tough competition from the private sector, cheap imports from China and government spending cuts to the armed forces.

Managing director, Parnthep Pourpongpan said the revamp was the most crucial step taken in the organisation’s 48-year history.

Share this story: