Thailand's auto exporters are experienced in supply-chain disruptions after the worst floods the country has taken almost half a century.
The Southeast Asian country is an important production and export hub for global automakers, including Toyota Motor Co., Ford Motor Co. and Honda Motor Co., and all three have now closed their plants in the country after weeks of deteriorating flooding overwhelmed a cluster of component plant in Ayutthaya, 67 kilometers or 42 miles north of Bangkok. Isuzu Motors Ltd. also supplies stopped production Tuesday at its two Thai plants due to disruptions in parts.
While Honda plant was flooded in the area, Ford and Toyota are the facilities located on Thailand's east coast, away from the area in immediate danger. Industry executives say that leaving the car giants on the same type of just-in-time delivery systems in Thailand, which disintegrated after the disaster in Japan earlier this year.
The broken supply chains threaten the economic fall-out from the floods worsen. While there were many supply chains in Japan is usually within a few weeks after the 11th country March earthquake and tsunami restored, unusual weather conditions in Thailand this year means it is difficult for meteorologists here to predict when conditions would allow regular business resumed.
At least 269 people have been killed since late July, and government officials estimate that the economic damage could be 80 billion baht (2.6 billion U.S. dollars) to make, cut and predicts almost one percentage point from the country's economic growth. Before the flood, forecast Thailand's National Economic and Social Development Board of the economy would be between 3.5% and 4% increase this year.
On Tuesday afternoon, rescue workers and government teams have been scrambling to strengthen flood protection, water from flowing around Bangkok, to prevent the economic and financial heart.
"It could be something as simple as wiring systems, but if the car manufacturers can not guarantee a supply of them then they can not build the car," said a businessman in the supply of auto parts involved here.
Still, some analysts like Fernando Roxas, Professor at the Asian Institute of Management, argued that the benefits of the Toyota-style just-in-time delivery systems contribute to the company as efficient as the good times that they are ready , take the risk of supply chain disruptions from time to time.
Ford said it expected to suspend production at the Thai plant for 48 hours for a full assessment of inventories and logistics permit. The U.S. car company exports to around 150 automotive markets of Thailand as well as supplying local demand.
In recent days, Toyota has suspended production at its three local plants with a total capacity of 550,000 vehicles per year.
"We can not tell when we are able to resume operations. We are now assessing the situation on a day-by-day basis," a senior official of the company declined to be identified, said. Thailand accounts for only 8% of companies planned total 2011 global production.
Toyota will keep its local 2011 production of 680,000 units target, another local company official said.
"We will still provide cars for our customers in general, as we have in stock cars," added the official.
Thailand is an important growth market for Toyota. It grabbed the largest share of local revenues in the first six months of the year with 36% of sales. In the first eight months, Toyota sold 216 000 vehicles, down 9.3% over the previous year, said a spokeswoman.
Mitsubishi Motors, said the local production remained unaffected by the floods, and the company has enough parts on hand to continue their local assembly until Wednesday, said a spokeswoman. It may suspend production for it.
The Honda plant in an industrial estate in Ayutthaya, north of Bangkok, since 4 October has been closed, while a spokesman for Nissan Motor Co. said its operations remain unaffected at this time.
8:56 PM
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