Late last year, Thailand suffered devastating floods, which wreaked havoc on the high-tech manufacturing sector. Semiconductor, EMS, and hard disk drive companies were among the hardest hit.
This week, I am on the ground in Thailand. I’m here to understand what the impact was, see for myself how the recovery efforts are going, and talk to people about what's happening now. I'll be talking with officials from the Thailand Investment Board and the local American Chamber of Commerce, meeting with senior-level manufacturing and operations executives, and visiting plants damaged by the floods.
Over the next few days, you'll find some daily dispatches posted here, and in the next couple weeks, EBN and our sister site, Velocity, will be featuring more in-depth analysis on doing business in emerging markets and how developing countries like Thailand deal with natural disasters and supply chain disruptions. We'll use the trip to focus on some significant things happening in the hard disk drive segment.
To provide a bit of perspective on how severe the floods were, I pinged an economist who has spoken about the Thai floods for major news outlets like the BBC. Citing Thai government and World Bank statistics, Ramya Suryanarayanan, an economist at DBS Bank in Singapore, told EBN that the flooding caused a loss in output of about 2.5 percent of GDP (or approximately $9 billion in US dollars).
“This doesn’t include loss of capital stock and wealth — buildings, roads, fixtures, machineries, household fixtures/assets, etc.,” she said in an email. “Manufacturing and agriculture suffered the most. Manufacturing output dropped by 22 percent quarter-over-quarter, seasonally adjusted. Within manufacturing, the auto industry and hard disk drives were especially [hard-]hit, followed by machinery and equipment (air conditioners), domestic appliances (refrigerators), and semiconductors.”
Anecdotally, there's not much to see in terms of flood damage while walking around Bangkok. The worst-hit areas were away from the commercial center in the Lumpini neighborhood I'm in. But I've heard some stories and have a long list of questions to ask.
For instance, a few “common folk” — not company or government officials, but locals and ex-pats living here — told me informally that the government hasn't significantly progressed in taking measures that would prevent wide-scale flooding from reoccurring in the future. So what has been done, and what needs doing?
And as a Seagate executive mentioned in a recent blog, companies were forced to rethink their supply chain practices and beef up their emergency management strategies. (See: Opportunities Beckon as Risks Rise.) But what practices need to be reevaluated? And would preventative steps taken in one situation work well if the region goes under water again?
Thailand may be a small space on the overall high-tech supply chain map, but valuable lessons can be learned as a result of last year's natural disaster. Let's find out what some of them are.
For full disclosure, the trip is sponsored by the Thailand Investment Board and is part of an international press tour. All stories, however, reflect independent reporting, writing, and analysis.