Many supply chain professionals residing in high tech, automotive, and other industries can well recall the 2011 incident of heavy monsoon-driven floods that impacted the country of Thailand. The flooding of hundreds of production factories resulted in significant disruption of industry supply chains not the least of which was nearly 30 percent of global hard disk drive supply.
After such incidents, it is often important to reflect on what’s occurred since that incident.
We call Supply Chain Matters reader attention to an article published in Bloomberg Businesweek that snapshots the current situation in that country as it relates to luring manufacturing back. It reports that “workers at the Hi-Tech Industrial Estate are completing construction of a levy that’s 1.2 meters (3.9 feet) higher and twice as wide as the one that failed when waters rose 4.9 meters above sea level last year. The barrier is central to convincing suppliers to companies such as Apple Inc. (AAPL) and Samsung Electronics Co. to move production back to Ayutthaya province.”
Some rather revealing statistics are shared in this article. According to the Industrial Estate Authority of Thailand, of the 839 affected plants in the seven industrial business parks, 459 have fully resumed operations, 225 have partially opened and 68 have closed or relocated. These numbers indicate that one year since the floods, nearly 35 percent of the factories have either closed, or are operating at partial capacity. The Thai agency also notes the loss of 20,000 jobs among the affected factories.
The article notes that Thai industrial output has yet to surpass pre-flood levels, and industry and government officials are stepping-up efforts to recruit manufacturers, including tours of the new levies and flood control infrastructure that have constructed since the floods. The new construction includes a 75 kilometer concrete wall erected to protect the 213 factories within the Rojana Industrial Estate in Ayutthaya.
Japan based automakers Toyota and Honda have indicated that they will continue to source production in Thailand, while Sony has relocated its two previously flooded factories to another area of Thailand. Thai officials are also quick to note that if another major flood occurs, with damage, all bets are off.