Thailand’s worst flooding in five decades could disrupt the operations of automobile and parts makers that use the country as a production base, industry analysts have said.
About 270 people have died since late July in the floods, mainly in the centre, north and northeast, the Department of Disaster Prevention and Mitigation told Reuters.
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Nearly 200 factories, including a Honda Motor facility, have had to close in the central province of Ayutthaya after an industrial estate run by Rojana Industrial Park was flooded.
Pitak Pruittisarikorn, executive vice president of Honda Automobile (Thailand) told Reuters it was too early to estimate the total cost of damage but said hundreds of cars waiting for delivery to clients had been submerged in water.
“We have the insurance to cover the plant and all the machines. We’re urging the government to help drain water out as soon as possible,” Pitak said after a meeting with the industry ministry.
Last week, Honda moved about 3,000 assembled cars from the estate to other areas.
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By GlobalData“It (flooding) will affect all original equipment manufacturers (OEMs) as suppliers in Ayutthaya and in Pathum Thani (Navanakorn) supply all major suppliers,” Hajime Yamamoto, Thailand director for Colorado-based research firm IHS Automotive, told Reuters.
“Honda will be hit hardest due to its location but others will nonetheless feel the disruption.”
Thailand is a major centre for car production for most of the world’s biggest manufacturers, but their assembly plants are mostly in eastern Rayong province, which has not been badly affected by flooding.
However, Honda has two plants located at the Rojana Industrial Park and can produce 240,000 vehicles a year there. It halted production and evacuated workers from the Ayutthaya plants last Thursday.
“Since suppliers may have one week of stock, the other OEMs will face production halts from one week later but we need to wait until the last moment to confirm which OEMs will halt production,” Yamamoto said.
An industry source told Reuters there were 20 car part plants on the Rojana and Saharat Nakorn industrial estates affected by the floods. That accounted for 10% of the total parts production of the country.
Ammar Master, a senior market analyst at the Asian unit of JD Power and Associates, said: “There will certainly be some impact on production due to the flooding in Ayutthaya.”
“While automakers will have a stock of components, we expect a slowdown in production in the immediate term,” he said.
“Measures taken are likely to be similar to those implemented in the immediate aftermath of the (March earthquake) disaster in Japan.”
