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Thailand monsoon floods threaten to disrupt supply chains
Manufacturers consider exodus to Vietnam and elsewhere in Southeast Asia


A flood gate along the edge of the Chao Phraya River in the historic city of Ayutthaya, Thailand, on Aug. 29. (Photo by Yohei Muramatsu)
YOHEI MURAMATSU, Nikkei staff writerSeptember 1, 2022 01:42 JST

BANGKOK -- Thailand's monsoon season has shifted into high gear, flooding rivers and inundating farmland as foreign companies brace for the damage to reach industrial parks.

In the historic city of Ayutthaya, a UNESCO World Heritage Site, a 2.5 meter flood gate was installed in late August at Buddhist temple Wat Chaiwattanaram, which sits on the bank of Chao Phraya River. The water appeared near its crest.

"Water levels rise every year. They will increase even more starting in September," said a guard at the temple.

Thailand's rainy season begins in June, and flood risks increase in September and October as the season winds down. The country has recorded more than 60 river overflows in the past 50 years.

Foreign businesses, a major pillar of the country's economic growth, have already begun to avoid Thailand due to rising wages, opting for Vietnam and elsewhere in Southeast Asia.

Heightened flood risks may lead to more companies leaving.

Roughly 350 sq. kilometers of rice paddies in the northeastern agricultural region, were flooded as of late August, government satellite images show. A large dam on the Chao Phraya River still has ample storage capacity compared with the severe flooding of 2011. But sustained heavy rainfall could cause flood damage to industrial and urban areas.

The flooding in 2011 caused damaged to the facilities of about 800 companies, including Japanese manufacturers, resulting in $35 billion in losses.

A Honda Motor factory was so severely damaged that it took six months to reopen. A Toyota Motor assembly plant was spared damage but supply disruptions forced the automaker to suspend or cut production, including in nearby countries.

"Major flood risks remain," said Masahiro Hayashi, a risk consultant at Tokio Marine Safety Insurance (Thailand).

Major industrial parks have built floodgates and installed other measures, but flood draining efforts by the government have been delayed, due in part to repeated periods of political instability. Even if industrial estates are protected, inundation in the surrounding areas would cut off supply chains.

The challenge is even more complicated by the peculiarities of the Chao Phraya. It has an extensive drainage basin while the elevation at Ayutthaya is only 2 meters higher than Bangkok, about 100 km downstream. This prevents floodwater from receding quickly, and flooding lasted several months in 2011.

"Compared with neighboring nations in Southeast Asia, river flooding risks are exceptionally high," Hayashi said.

Alex wrote: ↑Thu Sep 01, 2022 1:04 pm Well they've had more than a decade to relocate since the last mismanaged major floods (in 2011). Only a fool would have assumed it won't happen again, and probably worse in the future. If anything, the current government is also far more incompetent than the Yingluck government in charge back then.

I wonder how many companies that were badly affected back then have actually relocated in the meantime? I do remember that there was a lot of talk during and after the floods.

I remember those floods well with loads of Bangkok families evacuating down to Pattaya, I had an entire generational family including pets move into the rather small unit next door to me. Quite a bit of rationing of the basics in the supermarkets due to significant factories being flooded, I think it was the bottling operations that were the problem. One big company and global supply affected was Western Digital with their hard drives when their factory got swamped. 1 guy I know had a top of the range Toyota on order, ended up getting a BMW

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