Flooding forces 400 Japanese plants to close in Thailand

October 21, 2011

The industry ministry reported on Oct. 20 that 419 of 691 Japanese companies located in six Thai industrial parks have suspended operations or lowered output due to continued flooding, with some saying the damage caused by the natural disaster may exceed the Great East Japan Earthquake for some businesses.

Sony's new line of cameras, including its NEX-7, Nikon's digital cameras and Tomy's Christmas toys are among products under threat due to the continued flooding, most notably in the province of Ayutthaya.

Sony Corp., which operates a large plant in the hardest-hit area, announced Oct. 20 that it will postpone the release of four new compact digital cameras, all of which were scheduled to make their market debuts next month.

"The flooding may hurt our bottom line even more than the March 11 disaster, which paralyzed parts distribution networks and struck a huge blow to our balance sheet," a Sony executive said.

Sony produces all four new models in Thailand. The electronics giant expected to see the four new cameras become mainstays for its year-end shopping strategy. However, the company now says it is not even sure if it can release the cameras by the end of the year.

Sony is currently planning to use another plant in Thailand that has not been affected by the flooding. The company said it will have to use boats to transport necessary equipment from the flooded factory to the secondary plant before it can resume production. But Sony also fears that even if it moves production to the different plant, it may not be able to sufficiently procure parts due to supply lines being severed by the flooding.

Camera maker Nikon Corp. has also seen its main plant in Thailand become swamped with water. The plant produces about 90 percent of the maker's digital single-lens reflex camera.

"If the flooding continues, we may run out of our stock of digital cameras," a Nikon representative said.

Audio equipment manufacturer Pioneer Corp. has seen its plant for car navigation systems and other devices deluged with water. This has caused a delay in car deliveries at dealerships selling autos that use navigation systems manufactured by Pioneer. Pioneer is now considering shifting production of navigation systems to its plants in China.

The plant shut downs will also have a huge impact on the sales of computers in Japan, as Thailand is a major manufacturing site of key components for personal computers.

Toshiba Corp.'s plant for hard disk drives was flooded on Oct. 19. Toshiba is exploring the feasibility of relocating hard disk drive production to its plants in other countries.

Although Hitachi Ltd.'s hard disk drive plant escaped the flooding, Hitachi has had to lower its output as flooded parts suppliers have halted production.

With the year-end shopping season approaching, Fujitsu Ltd., a major computer maker, has set up a task force to deal with problems caused by the flooding. The task force has requested its parts suppliers to shift production to different factories and also consider switching to alternative parts.

Leading toymaker Tomy Co. also suspended operations at plants that produce its flagship Plarail and Super Auto Tomica Building toys for sale in Japan.

"Some of our toys for the Christmas shopping season have not been manufactured yet," a Tomy representative said. "With the prospect for restoring our plant in Thailand hanging in the balance, we are not sure how far the impact of the flooding will ripple out."

It could be a blue Christmas for a lot of kids in Japan this year.

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An engine assembly line has been shut down at a joint venture plant established by Mazda Motor Corp. and Ford Motor Co. in the Thai province of Rayong on Oct. 19. (Kazuhito Suwa)

An engine assembly line has been shut down at a joint venture plant established by Mazda Motor Corp. and Ford Motor Co. in the Thai province of Rayong on Oct. 19. (Kazuhito Suwa)

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  • An engine assembly line has been shut down at a joint venture plant established by Mazda Motor Corp. and Ford Motor Co. in the Thai province of Rayong on Oct. 19. (Kazuhito Suwa)

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