Following a review, Thailand has recently increased the cost Uplift for imported parts. I suspect that this increases are too high and will result in Thailand now over-recovering Inwards Freight. Please see below the comment on this that I propose to include in the Cost Indicator Report. As you can see the product cost increases are significant. I would appreciate any comment that you may have on this before I issue the report tomorrow.
Regards
Mark
• Following a detailed review of inwards freight costs allocated to direct materials purchased, Thailand has revised the cost uplift from a blanket average of 2% of direct material costs to separate percentages by country of despatch by mode of transport (ocean freight or airfreight) for each part. See schedule attached. This has mainly affected parts sourced from NZ. For October YTD, Inwards Freight costs (which the uplift percentage allocates) were under-recovered by THB12,288k (USD$350k). I have asked Thailand to review these costs as I suspect the new uplift percentages are overstated. For example, the new uplifts have added US$4.25 to the cost of a DishDrawer, of which US$2.62 was for the Filterplate sourced from E-Business. Based on annual DishDrawer production of 100,000 units, this would increase recoveries by THB13,600k. Increases for refrigerator parts sourced from NZ were: E522BRX5 US$2.26, RF522ADX5 US$3.09, E372BRT4 US$3.38 and RF610ADUSX5 US$3.89