Western Digital Exports From Thailand to Fall on Flood
October 18, 2011, 9:42 PM EDTBy Suttinee Yuvejwattana and Katie Linsell
(Corrects percentage decline and export value in first paragraph of story published Oct. 18.)
Oct. 18 (Bloomberg) -- Western Digital Corp.’s exports from Thailand may slide as much as 40 percent to 120 billion baht ($3.9 billion) this year after floods shut two of its plants, Thai Industry Minister Wannarat Charnnukul said.
“This will surely affect the global supply chain and also consumers because Western Digital is a key producer in the global market,” Wannarat told reporters after meeting with executives from the computer disk-drive maker.
The nation’s worst floods in five decades have closed about 1,000 factories operated by companies including Honda Motor Co. and Canon Inc. and disrupted supply chains for manufacturers such as Toyota Motor Corp. Western Digital, which counts Hewlett-Packard Co., Dell Inc. and Acer Inc. among its customers, relies on its plants in Thailand for 60 percent of its production, Wannarat said.
“What they really want now is for the government to clear the site and allow them to get back to the plants as fast as possible,” Wannarat said. “The quicker they can get back to work, the smaller the damage.”
It may take the company between four and six months to resume full production, cutting Western Digital’s exports from Thailand by 80 billion baht, from 200 billion baht last year, the minister said. The Irvine, California-based company has a 33 percent share of the global hard-disk drive market, according to Wannarat.
The stock dropped 7.4 percent to $26.25 in New York trading on Oct. 17, the biggest decline since July 21.
Western Digital expects the closure will reduce its ability to meet customer demand in the quarter ending in December, it said in a statement Oct. 17. Spokeswoman Juliet Lawal in Paris declined to comment and spokeswoman Mimi Wong for the Asia- Pacific region didn’t immediately respond to an e-mail seeking comment.
The company employs about 40,000 people in Thailand and has agreed to pay 75 percent of their salaries over the next six months, according to Wannarat.
--Editors: Ryan Woo, Paul Panckhurst
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net
To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net.
