Thai Flooding Creates Moving Production Target

Devastating floods covering 30 provinces and killing at least 269 have Thai auto industry officials disagreeing on whether production will reach the forecast 1.8 million units this year.

Honda so far is the only major auto maker forced to suspend production because of flooding at its base in Ayutthaya province.

Honda Thailand halts production of Brio, other models.

The company says high water levels and turbulence hindered its efforts to prevent flooding at its sole Thai assembly plant, located in the Rojana industrial park.

Because it still is assessing the damage and is concerned for employees’ safety, Honda says it is halting production at least for several days. The auto maker is assuring customers it has procedures to deal with parts and cars in the flooded area, and they will not be sold.

Thai Automotive Industry Assn. President Piengjai Keawsuwan tells the Bangkok Post car dealers in many provinces have suspended operations, and some report inventories severely damaged by water.

She says most of the country's major vehicle-assembly plants and parts suppliers are located in Rayong, Chon Buri and Samut Prakan – areas not yet affected by floods.

She believes the industry’s 2011 sales target, pegged at 1.8 million by the Thailand Automotive Institute, still is attainable.

“We think the market can pick up sharply after the water levels subside, especially in the final quarter, which is a high season for car sales,” says Piengjai, who also is a vice president of Siam Nissan Automobile.

Suparat Sirisuwannangkura, senior vice president-Toyota Thailand and chairman of the Federation of Thai Industries’ automotive industry club, doubts the 1.8-million-unit sales target can be met, saying supply disruptions are crippling both exports and domestic production.

Toyota has halted all overtime as output declines. But Suparat tells The Nation rumors that Japanese auto makers will move out of the country because their production facilities are under water are untrue.

“The tsunami in Japan, which also resulted in supply-chain disruption, left behind far greater damage than the floods,” he tells the newspaper. “What worries them more is discrepant news flows. To help, the government should streamline the information to avoid causing confusion.”

Flood sirens wailed Monday in Nakhon Sawan, 155 miles (250 km ) north of Bangkok, and residents fled as a concrete embankment along the Ping River collapsed, sending floodwaters more than 3 ft. (0.9 m) deep surging into the province.

Disaster Relief and Mitigation Department chief Wibul Sanguanpong tells the newspaper the southwesterly monsoon is expected to cause heavy rains in many new areas, including Bangkok and nearby provinces.

Sanguanpong says the capital will have to cope simultaneously with floodwaters from upper areas, increasing rainfall and the next round of high tides from Oct. 16-18.

Prime Minister Yingluck Shinawatra says authorities need another 1.5 million sandbags to build floodwalls and fight off the rising water.

The Bank of Thailand estimates overall damage to the economy at 60 billion baht ($1.9 billion), while the National Economic and Social Development Board puts it at TB90 billion ($2.9 billion). Both say the figure will go higher.

With many industrial parks under water, hundreds of thousands of workers now are jobless.

Ayutthaya is home to many electronics manufacturers in addition to auto makers, and Electrical and Electronics Institute director Somboon Hortrakool says plants run by 200 companies in the industry are flooded.

The Federation of Thai Industries has asked the Industry Ministry to cut workers’ pay by 25%. Chairman Payungsak Chartsutipol says he also has proposed creation of a fund to help businesses replace or repair damaged machines and equipment with loans that are interest-free or capped at 1%.