Bloomberg News

Thai Floods May Take Months to Recede, Delaying Factory Restarts

November 16, 2011

Nov. 16 (Bloomberg) -- Thailand’s government said floodwaters around Bangkok may take as long as two months to fully recede, threatening plans by companies including Western Digital Corp. and Sony Corp. to restart production.

Floodwaters are still more than 2 meters (6.6-feet) deep around some factories in Ayutthaya province, and water levels at two industrial estates in Pathum Thani north of Bangkok are higher than protective dikes, hampering drainage efforts, Industry Minister Wannarat Charnnukul said yesterday.

Advancing waters have swamped seven industrial estates north of Bangkok with 891 factories, and threaten two others east of the capital where Honda Motor Co. and Isuzu Motors Ltd. have operations. Prime Minister Yingluck Shinawatra said that eastern Bangkok should be flood-free by the end of the year, while western districts may take longer to drain.

“We are still not confident about the western part of Bangkok because drainage is quite difficult,” Yingluck said. “We need to see area by area. For the east, we should be able to do it before the New Year.”

The damage from the nation’s worst floods in about 70 years has increased to an estimated 346.2 billion baht ($11.2 billion) and may curb economic growth by between 3.1 and 3.4 percentage points this year, the University of the Thai Chamber of Commerce said on Nov. 10. The central bank said this month it may revise its forecast for 2.6 percent growth this year.

Yingluck has proposed spending 130 billion baht on reconstruction and steps to prevent future floods. She seeks to reassure investors that Thailand remains a safe place for business, as companies including Pioneer Corp. and Toyota Motor Corp. scrapped profit forecasts after the floods shut factories.

Honda, Nikon

Four industrial estates near Ayutthaya, which house plants operated by Honda and Nikon Corp., may be able to resume operations next month, Wannarat said. They include Factory Land, Bang Pa-In, Hi-Tech and Rojana.

“We have made good progress and expect that about 70 percent to 80 percent of the total plants in four industrial estates should resume operations in December,” he told reporters after a weekly Cabinet meeting in Bangkok.

Rehabilitation of the Nava Nakorn and Bangkadi industrial zones in Pathum Thani province hasn’t yet started because water levels are too high, he said. The estates house plants operated by Western Digital, Sony, Toshiba Corp. and Nidec Corp.

“The water level at these two estates is still higher than the dikes,” Wannarat said. “They need to wait until water recedes to the same level as the dikes before starting to pump water out.”

Isuzu Production

Water levels have stabilized around the Bang Chan and Lad Krabang industrial estates in eastern Bangkok, and authorities are installing more water pumps to protect the facilities, Wannarat said. Isuzu said yesterday it will restart production at Bang Chan on Nov. 21 as a parts shortage eases.

The floods have closed 891 factories in industrial estates that employed about 460,000 people, according to the Thai Industrial Estate and Strategic Partners Association.

Saha Rattana Nakorn, which houses a plant operated by Danish shoemaker ECCO Sko A/S and was one of the first industrial areas to be flooded, is still surrounded by 2.2 meters of floodwater, the Industrial Estate Authority of Thailand said yesterday on its website. At Hi-Tech, water is 1.76 meters deep, while floodwaters at Bang Pa-In have fallen to 0.37 meter, the state agency said.

Bangkok Threatened

Authorities are diverting a slow-moving pool of water around Bangkok using a network of canals, dikes and sandbag barriers. The capital is prone to flooding because it sits at the southern tip of a river basin that empties into the Gulf of Thailand and has an average elevation of less than 2 meters above sea level.

At least 562 people have been killed since late July, when monsoon rains began lashing Thailand. Flooding worsened last month, when rainfall about 40 percent more than the annual average filled dams to capacity, prompting authorities to release more than 9 billion cubic meters of water.

The provinces of Nakhon Sawan, 218 kilometers (135 miles) north of Bangkok, and Ayutthaya, 78 kilometers from the capital, began flooding in early August. Floodwaters eventually rose as high as 3 meters in Ayutthaya and took as long as three weeks to reach Bangkok’s outskirts.

Rice Farms

Agriculture Minister Theera Wongsamut said Nov. 10 that the dams didn’t release large volumes earlier because of concern rice farms may be flooded during the harvest. While Thailand’s fertile floodplains have helped the country remain the world’s biggest rice exporter for the past three decades, they also form a natural basin that slows the drainage of water through the Chao Phraya River toward Bangkok and the sea.

The nation’s largest dams are storing 64.9 billion cubic meters of water, or about 93 percent of their capacity, compared with 52.3 billion cubic meters at the same time last year, the Royal Irrigation Department said on its website yesterday.

Yingluck will discuss the government’s response to the floods with United Nations Secretary-General Ban Ki-Moon and U.S. Secretary of State Hillary Clinton when they visit Bangkok today.

“The water level has stabilized and drainage has improved,” Yingluck said. “But, it’s still difficult to say for the western part of Bangkok because there is still a lot of water in the area and we still have problems draining it.”

--Editors: Tony Jordan, Linus Chua

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

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


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