Honda enlists Thai soldiers as floods approach

by Daniel Ten Kate and Anuchit Nguyen

Bloomberg

Outside a Honda Motor Co. factory on Bangkok’s outskirts, Thai soldiers guide gravel bags lowered from a crane into a canal as guards stationed on the plant’s plastic-lined walls monitor rising floodwaters.

“This is our final stand,” Pongdej Sriwachirapradit, general manager of Thai Honda Manufacturing Co., told reporters Thursday. “The government needs to show it can protect this last major industrial estate. Foreign investors, especially the Japanese, are watching closely.”

Japan’s third-biggest automaker has already seen Thailand’s worst floods in 50 years inundate its auto factory in Ayutthaya Province. Company officials, determined not to let its motorcycle plant in Bangkok’s Lat Krabang Industrial Estate suffer the same fate, used personal ties to secure 200 soldiers to build a levy around the facility, Pongdej said.

Prime Minister Yingluck Shinawatra is struggling to maintain the confidence of investors who have watched floodwaters breach barricades at six major industrial estates. Thousands of factories supplying parts to companies including Apple Inc. and Toyota Motor Corp. are underwater, putting more than 600,000 workers at risk of losing jobs.

As one of the last major industrial complexes in the flood’s path before it drains into the Gulf of Thailand, Lat Krabang’s defense is key to restoring the government’s credibility among investors, Suparp Kleekhajai, vice industry minister, told factory managers Thursday.

“What investors are watching is how we protect the remaining industrial estates, especially Lat Krabang,” he said. “The collapse of remaining estates would be a humiliation to the government.”

Lat Krabang is 10 km north of Suvarnabhumi, Bangkok’s main international airport. Factories operated by Unilever, Isuzu Motors Ltd. and Cadbury PLC are among 231 employing 48,000 workers in the estate.

Swollen canals surrounding the estate threaten to spill onto access roads, and nearby shacks made of tin, plastic and wood are already submerged by about half a meter of water. Plastic sheets anchored with sandbags draped the walls outside many factories.

Honda has sent its own employees to monitor the floods in areas north of the estate to verify conflicting reports from the government and media, Pongdej said. More than 87 percent of respondents surveyed said the government’s information on the floods was unreliable, according to an Assumption University poll of 415 Bangkok residents taken Monday and Tuesday.

“We can’t risk anything now because Honda will have nothing after this plant,” said Pongdej. “There’s a lot of contradicting information and news. We don’t know who we should believe.”

Honda, which assembles the Civic, Jazz, CR-V and City models in its Thai plant and counts the country as its second-biggest Asian production base after China excluding Japan, produced about 170,000 units in Thailand last year.

Industry Minister Wannarat Charnnukul met with Pongdej and other factory managers at Lat Krabang Thursday to tell them the surge of water would arrive in 36 hours. It had already reached 1.7 meters, about half a meter below the levy height. The minister warned them that efforts to extend the barrier’s height by another meter were likely to fail.

“We can’t rely on the extra meter because everywhere else it has been breached,” he told a room filled with company executives. “The water has conquered our best defenses.”

Monsoon rains about 25 percent over the 30-year average have filled upstream dams to capacity, prompting authorities to release large amounts of water this month down a flood plain the size of Florida. The waters have affected 14,254 factories and businesses in 20 provinces. At least 320 people have died in the floods since July.

Investors like Suraporn Simakulthorn, president of Kulthorn Kirby PCL, didn’t wait for government help. He stopped production Oct. 18 at his Lat Krabang factory that supplies compressors to companies including LG Electronics Inc., Toshiba Corp. and Samsung Electronics Co. and told staff to protect the facility with sandbags, bricks and metal plates welded against windows.

“We’re next in line to fall,” he said, walking by heavy machinery and assembly lines wrapped in plastic. “I don’t want to see my company under water.”

The government should divert more water through central Bangkok so the deluge doesn’t top levies in the industrial estate, said Suraporn, who opened the factory 30 years ago and has since expanded the complex over one of the estate’s main canals. Yingluck has vowed to protect inner Bangkok from flooding that has ravaged other provinces.

“The government doesn’t know what it’s doing,” Suraporn said. “They’ve already failed in protecting six industrial estates. If they can’t protect this one, I don’t think they can survive.”

Aid for firms in Thailand

KYODO

Industry minister Yukio Edano said Friday the government is considering offering financial support for Japanese companies operating in and affected by the flooding in Thailand.

“Damage due to the flooding is gradually expanding, and the situation remains unpredictable,” Edano said. “It is affecting the supply chain of Japanese companies such as electronics appliance and vehicle makers.”

Edano made the comment while announcing the government’s plan to offer Thailand support, but he declined to go into detail on the possible aid for firms.

All of the Japanese automakers operating in Thailand were forced to halt production there as of Thursday, mostly due to disruptions to the supply chain.