The controlled chaos that is Thailand’s biggest city was on the verge of outright bedlam on Thursday, as more than nine million Bangkok residents prepared to flee the worst floods in half a century.
Although most of the city was still dry and many residents said they would stay put, thousands of others scrambled onto military trucks, and crowded into the city’s bus station and international airport to try to leave on a five-day national “flood holiday” that began on Thursday.
Others, in areas on the city’s outskirts where flood waters had already arrived, made their escape in paddle boats, plastic tubs, inner tubes and rubber rafts. Some residents built cement walls to protect their shops and homes, and websites posted instructions on how to properly stack sandbags.
Although one-third of Thailand is already covered in water, Bangkok’s residents and Thailand’s recently-elected government have been hoping that the sprawling city could avoid what may turn out to be an urban disaster of immense proportions. But floodwater from unusually heavy rains in the northern part of the country over the past three months has only one way to go – toward Bangkok.
By Thursday, seven of its 50 districts, mostly on the northern outskirts, had been inundated. With higher than normal tides expected over the weekend, Prime Minister Yingluck Shinawatra acknowledged that her government could not control floodwaters and told people that it was time to leave.
“What we’re doing today is resisting the force of nature,” the Prime Minister said, tears welling in her eyes. She said the flooding on its way was so massive that “we cannot resist all of it.”
Floods are nothing new in Thailand, especially during the annual monsoon and cyclone season. But this one has had an especially profound effect on Thailand’s residents, on its economy and on global supply chains.
More than 300 people are dead, at least 110,000 have been displaced, (some estimates say it is closer to half a million) and the thousands of acres used for farmland and industrial estates to the north of Bangkok resemble a giant lake.
Thailand is one of the world’s manufacturing hubs, and these floods have forced seven big industrial estates north of Bangkok to close, affecting more than 10,000 factories and about 660,000 jobs.
Companies such as auto-maker Toyota and computer parts giant Western Digital have been forced to cut back production or stop it altogether because their plants have been flooded or cannot get parts from other factories shut by high water.
It’s estimated the floods have so far caused at least $6-billion in damage, and that number could double if Bangkok is flooded. Economists say the GDP could shrink by 1.1 per cent.
Kim McQuay, who represents The Asia Foundation development agency in Thailand, said factory closures will cause enormous disruptions for months to come. He said it’s likely that several hundred thousand factory employees will be out of work for at least two or three months after floodwaters recede, and that the average of five family members who depend on each factor worker will also suffer as a result.
Meanwhile, city officials in Bangkok are setting up emergency shelters for people who cannot leave.
Flooding affects Canadian auto plants
Disruptions to Thailand’s huge automotive industry are being felt worldwide. Toyota, Thailand’s largest vehicle manufacturer, said it had lost output of 37,500 vehicles because assembly plants could not get parts from flooded areas of the country. Its plants in Japan which rely on Thai-made parts reduced output by 7,000 vehicles this week. Toyota said it would also close its assembly plants in Indiana, Kentucky and Cambridge and Woodstock, Ont., this Saturday and reduce output in South Africa, Indonesia, the Philippines and Vietnam next week. Honda, Nissan and Ford are also experiencing disruptions because of problems in getting parts from factories in flooded areas.
Economy could take $3-billion hit
Thailand is the world’s manufacturing hub for many products including textiles, automobiles and computer technology, and exports account for nearly 70 per cent of Thailand’s GDP. More than 10,000 factories are closed because of flooding and the government predicts the economy could shrink by 1.1 per cent, or about $3-billion, as a result. More than 400,000 workers could be out of work for several months as floodwaters recede. That will have huge implications for all families who depend on factory wages. However, some experts say the economy will rebound next year as Thailand spends billions of dollars to rebuild.
Thai slowdown will shrink world production of computer hard disc drives
25 per cent
Thailand is the world’s largest producer of computer hard disc drives. Factory shutdowns because of flooding have reduced the industry’s output by 25 per cent. About 40 million units are sold every year. Western Digital, which accounts for about 30 per cent of global output, has shut down its factories and now says it could take five to eight months to bring them back on line. Disc component suppliers have also been hit. Nidec, which makes more than 70 per cent of all hard drive motors, has suspended operations at all three of its plants in Thailand. That means component prices will go up, although it’s not clear if consumers will have to pay more.
Just-in-time production strategy called into question
Massive change in attitude
Thailand’s huge manufacturing sector is built on the idea that companies can save money and gain efficiency by concentrating their operations in a few locations and focusing on just-in-time production. The Thai floods are the latest in a string of crises, which include the Japanese tsunami earlier this year and the SARS crisis in 2003, that are forcing corporations to rethink that strategy. “When you have an unforeseen disaster like this, the ripple effects are very, very profound,” said Yuen Pau Woo, president of the Asia Pacific Foundation of Canada. More companies are now moving away from just-in-time production and looking to set up multiple locations for parts and assembly.
Rice prices expected to rise
3 million metric tons
Thailand accounts for one-quarter of the world’s rice exports. Farmers have lost about 20 per cent of their crop – 3 million metric tons of milled rice – and panic over possible food shortages has pushed many Thais to stockpile rice. Thailand still has a reserve supply of four million tons of rice. But experts predict that Thai rice exports could fall by a third, or that they could be banned altogether. That would push prices up. Indonesia is a major rice importer and its finance minister has said he is worried the Thai floods will lead to a food crisis in his country.