Thailand: Nearly 10,000 Factories Damaged By Flood

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BANGKOK – Thailand’s worst flooding in memory has caused damage to almost 10,000 factories, forcing some 660,000 employees temporarily into unemployment, according to Deputy Industry Minister Suphap Kleekachai.

Mr Suphap said that a total of 9,859 factories have closed – both inside and outside the industrial estates affected by the worst flooding -- while the disaster has affected at least short-term and perhaps longer-term unemployment for 660,000 workers who were employed by the factories.

Seven industrial estates in Ayutthaya and Pathum Thani -- Saha Rattana Nakhon, Bang Pa-in, Rojana, Hi-Tech, Factory Land, Nava Nakorn and Bangkadi -- were earlier forced to close due to the deep floodwater.

Lat Krabang Industrial Estate in Lat Krabang district and Bangchan Industrial Estate in Min Buri district are on 'high guard' to fight the deep floodwater expected to flow into the areas in the next few days.

He said 838 factories in the seven industrial parks and estates in Ayutthaya and Pathum Thani were hit by the flood and that 382,693 workers were unemployed which caused direct damage of nearly Bt500 billion, while indirect damage could add another Bt300 billion to the losses.

Mr Suphap said the ministry would set up a working group to inspect all factories to evaluate the damage incurred. Details and exact costs of the collective damages wil be submitted to the government for its consideration of extending assistance.

The ministry will also form a panel to rehabilitate the factories, and contact persons will be appointed to coordinate between the public and private sectors to revive the businesses as quickly as possible.

The deputy minister said the government would try its best to protect the remaining industrial estates. The managers of all the industrial estates are prepared to give maximum protection to their properties.

Meanwhile, Standard & Poor's Ratings Services said Wednesday that there is no immediate impact on its ratings on Japanese automakers and suppliers after Thailand's floods disrupted their supply chains.

The floods have forced companies including Toyota Motor Corp.(AA-/Negative/A-1 ), Honda Motor Co. Ltd. (A /Negative/A-1), Nissan Motor Co. Ltd. (BBB /Stable/A-2), and Mitsubishi Motors Corp. (B /Stable/--) to temporarily suspend operations at their plants in Thailand.

The country is the largest manufacturing base in Southeast Asia for the Japanese automobile industry. In some cases, the supply chain disruptions are also affecting vehicle production outside Thailand.

Thailand's severe floods could slow recovery in the profitability of Japanese automakers and suppliers, after the Great East Japan Earthquake in March caused production cuts in the first half of the current fiscal year (ending March 31, 2012),the rating agency said in a statement.

"However, we currently do not expect the impact of the floods to be as severe and prolonged as the production cuts that we saw after the earthquake. This is because Thai-made parts and vehicles are generally less difficult to replace than those made in other regions. Therefore, we do not expect the floods to cause protracted pressure on Japanese automakers' profitability and to have a long-term impact on their market positions," the statement said.

Nevertheless, if the floods eventually result in severe and extended production cuts that lead us to believe that they will likely impair the automakers' profitability and market positions in a serious manner over the long run, we may consider negative rating actions," the statement said.

The Associated Press news agency reports that Toyota Motor Corp. is trimming production this week at its group assembly plants in Japan due to a shortage of parts from suppliers in Thailand, where severe flooding has disrupted its supply chain.

AP quoted Toyota official Shiori Hashimoto as saying on Wednesday that Japan's biggest automaker has suspended overtime work from Monday to Friday at four Toyota factories and seven group companies that assemble cars and trucks. The company estimates it will lose 6,300 units due to the cutback.

That's on top of the estimated 37,500 units in lost output through Oct. 21 from its three Thai assembly plants, which have been shut down since Oct. 10. They will remain suspended until Friday, Hashimoto was quoted as saying. -- NNN-TNA