Assesses how the Thai industrial sector responded to the economic crisis of 1997. Analyses the validity of those factors which influenced the decisions industries made to cope with the rapidly changing economic climate. This research surveys manufacturing industries, selected by multi-stage random sampling method, and analyzes data using the multinomial logit model. The outcome indicates that 50.43% of those industries selected chose to reduce their labour force in response to the crisis. Of this 30.43% reduced the total number of employees and 25.00% cut their total production output and 7.61% adjusted the price of their product. Use of the multinomial logit model indicates two main factors which influenced industries to reduce the total number of people in their employ. The first is the ratio of labour costs to total production costs and the second is the ratio of import costs to total production cost. The factor which greatly influenced decisions to reduce the total number of working hours include the amount of registered capital, industry type and the ratio of machinery capital costs to that of total costs. Factors leading to reduced production output include registered capital, industry type, the ratio of labour cost to total costs, ratio of import costs to total production costs and the ratio of exports to total production. In conclusion this research indicates that the majority of industries made adjustments to their labour force to deal with the economic crisis. This then indicates that the cost involved in doing this were less than the costs involved in making adjustments in other areas. It could be suggested therefore that to avoid further exacerbation of the economic crisis government policies should be targeted at employment assistance programs to both lessen and counter the adverse affects the crisis has on the economy.
