Slow Recovery for Flood-hit Thai Manufacturing Plants

Dec. 18, 2011
While many Japanese companies have said publicly they remain committed to Thailand, in private there is frustration with the government's handling of the crisis.

Piles of rubbish, rusting furniture and discarded machinery litter one of Thailand's top high-tech parks, a former symbol of economic prowess laid to waste by weeks of flooding.

Many of the companies located in the country's industrial heartland say it will be several months at least before their operations return to normal. Investor confidence in the kingdom is likely to take even longer to recover.

At least one major manufacturer, Sanyo Semiconductor, is pulling the plug on its operations in hard-hit Ayutthaya province north of Bangkok altogether, while others are considering moving to safer areas.

"We've realized, obviously with hindsight, that we're in the wrong place -- we're in a flood zone," said Richard Han, chief executive of semiconductor maker Hana Microelectronics, whose plant was badly affected.

Even if large dykes were built around the industrial parks, production would have to be suspended if the area is flooded again because access to the site would become too difficult, he said.

"My customers understand that," Han added. "They are moving their business elsewhere."

Severe Blow to Global Supply Chain

The disaster caused billions of dollars of damage and dealt a severe blow to the global supply chain. There are also questions about whether insurers will continue to cover companies located in the flood-prone region.

Japanese high-tech giant Toshiba still has no idea when operations will resume at eight of its affected factories as new machines and parts are needed and electricity and telephone links have not yet been fully restored.

"We already destroyed more than 100,000 damaged goods in our warehouse," a spokeswoman said.

Clean-up Operations Continue

At the Rojana Industrial Park, the more than two-meter-deep water that overwhelmed flood defenses in October and poured into a host of factories has receded, and a clean-up operation by a small army of workers is under way.

On a recent day at Japanese auto giant Honda's plant, employees in rubber boots and face masks were hosing down floors and walls stained brown by the water, while muddy vehicles were parked outside, an AFP reporter saw.

Further down the road at a factory run by electronics maker Pioneer, several windows were shattered, while at Panasonic workers were demolishing a perimeter wall damaged by the unstoppable mass of slow-moving water.

In total seven major industrial estates in central Thailand fell victim to the kingdom's worst floods in half a century, which left hundreds dead.

While many Japanese companies -- a key pillar of the economy -- have said publicly they remain committed to Thailand, in private there is frustration with the government's handling of the crisis, particularly its confusing advice.

"I wish the government had done more," said the president of a local subsidiary of a Japanese textile producer, who had to rely on the media for information about the disaster.

His factory, located in the northern suburbs of Bangkok, close to where the government set up its emergency response center, was submerged in one and a half metres of water, despite the firm's efforts to protect it with sandbags.

"In the beginning Don Mueang was a flood relief and evacuation center so the government said it would be OK... but they completely failed," the Japanese businessman told AFP, speaking on condition of anonymity.

The factory's stock was destroyed and the machinery is now rusting and needs to be repaired or replaced. But he has no plan to abandon the kingdom.

"We will start operations again at the same place with all the employees," he said, but added, "I hope the government prevents flooding next year."

Thailand's Board of Investment is planning to invite chief executives to Bangkok next month for a forum at which it says long-term flood prevention measures will be announced.

As well as a plan to build permanent dykes around the industrial parks, one idea that has been raised as a possible long-term solution is the construction of a new waterway from the central plains to the sea.

For flood-stricken firms, action cannot come soon enough.

"All of us are very sick. We fought very hard. We're very tired ... If the government wants to do something, (they) must announce it quickly," said Yeap Swee Chuan, head of auto parts maker Aapico Hitech.

Copyright Agence France-Presse, 2011

See Also:

Toyota, Mitsubishi to Resume Thailand Production

Thailand Floods Disrupt Honda's North America Production

About the Author

Agence France-Presse

Copyright Agence France-Presse, 2002-2024. AFP text, photos, graphics and logos shall not be reproduced, published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP shall not be held liable for any delays, inaccuracies, errors or omissions in any AFP content, or for any actions taken in consequence.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!