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Thailands Flooding Causes Damage in the Billions

Concerns are rising among businesses that the flooding that has swept across the country may extend its impact to exports.

 

The supply chain for exports is now threatened by heavy inundations that have affected hundreds of factories in the Central Plains, said Payungsak Chartsutthipol, the chairman of the Federation of Thai Industries (FTI).

Singh Tangchareonchaichana, head of the central region chapter of the FTI, said that around 3,000 factories in seven central provinces had been affected, with physical damages of at least 15 billion baht.

At Saha Rattana Nakorn Industrial Estate in Ayutthaya, all 46 factories are flooded, along with 98 factories in Bang Pa-In Industrial Estate. Electronics plants in Rojana Industrial Estate are also affected.

Rice mills and food processors could recover in two months but electronics plants could need up to six months to repair high-tech equipment, he added.

“Normally, manufacturers at this time of year are running plants at maximum levels with overtime shifts for products to be shipped for the Christmas and New Year season,” he said.

But this year, floods could result in a 30% drop in exports from factories in the most heavily affected provinces, said Mr Singh.

Honda on Wednesday suspended car production as three parts suppliers at Saha Rattana Nakorn Industrial Estate in Ayutthaya were severely affected by the flood.

“We have no idea how long the suspension will last,” said Pitak Pruittisarikorn, executive vice-president of Honda Automobile (Thailand). “We will resume normal production as soon as we get enough parts supplies.”

Honda has been producing 1,000 cars a day at its Ayutthaya plant and has cleared inventories there by delivering vehicles to its dealers nationwide.

Canon Inc, meanwhile, said it was assessing possible damage at its inkjet printer plant in Ayutthaya. However, any damage to the plant would be unlikely to halt operations, said Hirotomo Fujimori, a Tokyo-based spokesman.

Kazuo Karasawa, managing director of Hitachi Asia (Thailand), said his group had 40 companies operating in Thailand with two factories in Rojana Industrial Estate in Ayutthaya.

“We are worried that production at the compressor and rotary transformer factories in Rojana will be hurt because transport is quite difficult in the area,” he said.

Hitachi also makes home appliances in Kabin Buri Industrial Estate in Prachin Buri and they are facing flood threats.

Yutthapong Jiraphaprapong, head of the FTI’s northern chapter, said weeks of floods had resulted in total damages of 100 billion baht with vast areas of crops such as rice and corn damaged.

Not many industrial plants in the North are flooded but manufacturers face rising prices and shortages of raw materials, partly caused by transport disruptions.

A Chiang Mai-based sweet corn producer, for example, reports 10,000 rai of corn plantations in northern provinces damaged.

Meanwhile, sugar mills in Nakhon Sawan and Ang Thong report losses of tens of thousands of tonnes of inventory in the floods.

Tanit Sorat, an FTI vice-chairman, called on the government to provide financial aid and other remedies. State-owned banks, such as the SME Bank, should take the lead in extending soft loans to affected manufacturers.

Mr Singh proposed waiving utility bills for factories. Imports of key materials such as soybeans and coconuts for food processors should also be allowed to offset local shortages, he said.

Paiboon Ponsuwanna, chairman of the Thai National Shippers’ Council, said the floods could dampen exports in the final quarter.

Floods have pushed raw materials prices up as the central region is the major supply base of agricultural produce as well as electronic parts manufacturing, he said.

“We are now worried about the South which is facing flood threats,” said Mr Paiboon. “If the South faces a severe flood like early last year, fishery product and shrimp supplies will be hurt.”

 

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Posted by on Oct 7 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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