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Flooding Effects Auto Industry World Wide

Supply chains in the automotive, retail and electronics industries have suffered disruptions as a result of current flooding in Thailand.

Flooding began in July but became more serious this month, and has affected 61 out of the country’s 77 provinces in total, affecting many businesses. Thailand is a global manufacturing centre for the electrical goods, automotive and electronics industries.

Domestic retailer Big C Supercentre – which operates 106 stores – has been forced to close its three distribution centres in Ayutthaya province, which was hit particularly hard. However, before closing, the company moved all stock within the centre to the second floor and requested that suppliers deliver products directly to stores.

As a result, the company is confident it will be able to operate at a relatively normal capacity. A statement said: “The company considers that the contingency plans are working well. All stores of the company still remain operational except one, which was closed due to flooding and loss of power supply.”

Seagate, the data storage system manufacturer, has also seen its supply chain suffer. Although all of the company’s factories are fully operational, production of hard disks has been disrupted after suppliers of components have been unable to fulfill orders and the extent of the disruption is still not clear. In a statement the company said: “Given the volatility of the situation, it is unclear what the magnitude of the supply chain disruption will be to hard disk drive output.”

In the automotive sector both Toyota and Honda saw production in the country come to a halt after supplies dried up. Toyota reported that production in its three Thailand plants – responsible for around 8 per cent of the company’s global manufacturing -has stopped due to parts shortages, and that it would not restart until 17 October at the earliest.

A spokesman for the company explained that the as a result of using just-in-time production, it is “left without a cushion when disruptions occur”. Honda, which produces around 240,000 vehicles a year at the factory, has also faced supply shortages and has had to close its factory in Ayutthaya after the floods hit the industrial estate where it is located.

The hit for the two Japanese manufacturers comes less than a year after they experienced severe disruptions in both production and supplies when Japan was hit by an earthquake and tsunami.

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Posted by on Oct 14 2011. Filed under News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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