Thailand Says Flooded Factories May Restart by December

Thailand’s government said most factories that were shut down over the past month because of flooding will resume operations by the end of December.

“Recovery tasks have proceeded rapidly,” Industry Minister Wannarat Charnnukul said in a phone interview. “Most factories can restart operations by the end of this year but some may take a few more months.”

Floodwaters have swamped about 900 factories in seven industrial estates in Thailand’s central provinces since early October, causing supply-chain disruptions that have affected companies from Apple Inc. to Toyota Motor Corp. (7203) The disaster may cause Thailand’s economy to shrink 3.7 percent in the fourth quarter, the government said today.

“When floodwaters dry, we’ll recover strongly,” Wannarat said. “This will help restore investor confidence and stimulate the economy.”

Water levels have receded at the Factory Land and Bang Pa- In industrial zones in Ayutthaya province, allowing companies including Western Digital Corp. (WDC) to resume operations on Nov. 25 or 26, Wannarat said. Companies in the Hi-Tech and Rojana industrial estates, including Nidec Corp. (6594) and Panasonic Corp. (6752), should be able to restart by mid-December, he said.

Flooding also eased on Bangkok’s outskirts, raising optimism that the Bang Chan and Lad Krabang industrial estates in the city’s east won’t be inundated, Wannarat said.

Ford, Nissan

Bang Chan, 15 kilometers (9.3 miles) north of Suvarnabhumi International Airport, contains 91 factories, including an ice- cream plant operated by Nestle SA. Lad Krabang houses 231 factories including facilities run by Honda Motor Co. and Isuzu Motors Ltd.

At the Hi-Tech estate in Ayutthaya, water levels have dropped by half over the past five days, said Yeap Swee Chuan, chief executive officer of Aapico Hitech Pcl, which supplies fuel tanks, chassis frames and plastic components to Ford Motor Co., Mazda Motor Corp., Nissan Motor Co., Honda, Isuzu and Toyota.

On Nov. 17, Aapico employees were diving into floodwaters more than a meter deep to retrieve autoparts and machinery. Coca-Cola Co., Canon Inc. and Sony Corp. (6758) also have factories at the Hi-Tech facility.

“I’m quite confident the estate will be partially dry on Nov. 25 and we can start cleaning and doing recovery work,” Yeap said today in an interview in Bangkok. “In Thailand, about 70 to 80 percent of cars can start production within next month, except a small percentage of parts that are locally produced and can’t be replaced.”

Soldiers

More than 300 army officers helped protect the Hi-Tech estate from floodwaters that peaked last month at 2.6 meters, Colonel Jakchai Mokkhasmita, a deputy commander with the Royal Thai Army, said in an interview on Nov. 17. They plan to help rehabilitate another industrial zone once Hi-Tech is dry later this month, he said.

Western Digital will reopen its Thai plant once water recedes and it’s safe for workers to re-enter the factory at the Bang Pa-In industrial zone, Steve Shattuck, the company’s public relations director, said by e-mail.

“Our ramp-up will be gated by three things: logistical infrastructure and transportation availability; the repair and recertification of equipment that has been moved or damaged; and component supply availability,” Shattuck said. “We also are working to maximize output at our Malaysian manufacturing facility and are pursuing options at other locations.”

Nava Nakorn

Floodwaters are still 1.5 meters deep near the company’s factory at Nava Nakorn in Pathum Thani province, Western Digital Chief Executive Officer John Coyne said today in Bangkok. The company employs about 38,000 people in Thailand, Coyne said.

Thailand’s government has mapped out plans to prevent future floods and allocated funds to develop water-management systems, Wannarat said. Thailand’s Board of Investment will give tax incentives to companies affected by flooding and tax waivers on machinery imports, according to the government.

“Car companies will continue to be here and we’re going to stay,” said Yeap, whose company has invested $200 million in Thailand since 1997. “I’ve been here for 25 years. Every time when things get really bad, the upside is stronger.”

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net

To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net

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