Factory shutdowns are expected to gradually increase after 1,600 to 1,700 already shuttered earlier this year because of the economic slowdown, merger plans or rising operating costs, says the Federation of Thai Industries (FTI).
"Many factories, including those owned by subcontractors, could not afford to pay workers, while others merged to reduce the number of employees," said Kriengkrai Thiennukul, chairman of the FTI.
Many entrepreneurs needed to adjust their investment plans to suit economic and political circumstances, he said.
Layoffs and factory shutdowns were options for them to improve or keep their businesses alive, said Mr Kriengkrai.
Thailand has weak consumer purchasing power and rising energy costs, with domestic diesel prices increasing to nearly 33 baht a litre, up from less than 30 baht a litre, while power bills remain expensive, he said.
According to Mr Kriengkrai, logistics costs in Thailand make up 15% of companies' operating costs on average, making the country less competitive than neighbouring nations.
"We expect goods prices to increase because manufacturers cannot deal with higher logistics costs and energy bills," he said.
The automotive industry is struggling as domestic sales are sluggish and exports have decelerated, compared with neighbouring countries, said Mr Kriengkrai.
"Thailand recently lost its top ranking for auto exports in Southeast Asia for the first time," he said.
"We cannot be nicknamed the 'Detroit of Asia' anymore as Malaysia is replacing us."
The Thai economy got off to an unimpressive start this year, with GDP growing 1.5% year-on-year during the first quarter, according to the National Economic and Social Development Council.
Politically, Prime Minister Srettha Thavisin is struggling to defend himself in an ethics probe brought against him in the Constitutional Court, following his controversial appointment of Pichit Chuenban as PM's Office Minister in the last cabinet reshuffle.
Pichit, who was sentenced to six months in prison in 2008 along with two colleagues after they tried to bribe Supreme Court officials by handing them a paper bag containing 2 million baht, resigned shortly before the Constitutional Court agreed to proceed with the petitioned ethics probe.
