Korat factory shut after Japanese parent goes bankrupt

The Labour Ministry is probing the shutdown of Funai (Thailand) Ltd, an electronics manufacturer in Nakhon Ratchasima province, to make sure its 862 employees are properly compensated.

The company, which produced radio receivers and audio/video recorders, announced on Tuesday that it would halt operations on November 1 and terminate employment of all staff. It promised to pay compensation to staff at 75% of their last salary, as required by Section 75 of the Labour Protection Act.

Funai Ltd said the move came after its Japanese parent, Funai Electric, received court approval for its bankruptcy plan on October 24. This resulted in the Thai subsidiary being no longer able to import materials for its production, it said.

The factory in the northeastern province had a total of 862 employees, 310 males and 552 females, Labour Ministry spokesman Phumiphat Mueanchan said on Friday.

He said provincial labour officers have been visiting the factory to make sure that it complies with legal requirements regarding compensation to terminated employees. Officials will also make sure affected employees receive all benefits under the social security programme, he added.

Funai Electric, based in Daito, Osaka prefecture, had some 46.1 billion yen (US$303.6 million) in liabilities, according to research firm Teikoku Databank.

The Japan Times reported that the company, which was founded in 1961, had boasted a significant presence in Japan and abroad as an original-equipment manufacturer.

But the company struggled from a slump in the North American market and competition from Chinese rivals after the global financial crisis of 2008. A scandal involving an overseas unit also weighed on the firm, the report said. 

Funai Electric was acquired by Shuwa System Holdings and went private in 2021. The company's finances were also hit by the failure of a beauty-salon unit to pay advertising fees.