Producers Look To Thai Govt For Revival

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Producers look to govt for revival

Petchanet Pratruangkrai

The Nation

Manufacturers paralysed by the massive flood yesterday called on the government to manage the situation urgently so they could resume operations as soon as possible.

The companies also asked for post-flood assistance measures after they met separately with Industry Minister Wannarat Charnnukul.

Dave Rauch, senior vice president of WDC's worldwide operation said the company was projecting at least Bt80-100 billion in losses during the suspension of operations in the next one to two months. He was speaking after meeting veteran politician Suwat Liptapanlop, who also attended the meeting chaired by the Industry Ministry.

It would take at least four to six months to recover from the damage to its two plants, Rauch said.

Another participant in the meeting was Atchaka Sribunruang, secretary-general of the Board of Investment (BoI). Other companies that met Thai state agencies were Ecco (Thailand) and Asia Honda Motor and Honda Automobiles.

Western Digital (Thailand), a subsidiary of Western Digital Corporation (WDC), the world's second largest hard disk drive producer, has called for the Thai government to urgently repair damaged machinery so that it can resume operations in other areas as soon as possible, after the floods caused several billion baht losses in production, according to Suwat.

Western Digital (Thailand) has two plants in the Nava Nakorn and Bang Pa-in industrial estates with a combined initial investment of Bt1.43 billion and total investment of Bt30 billion. The Thai plants are considered as the major production hub for the firm's supply of HDDs worldwide with total exports worth Bt200 billion a year. About 40,000 workers are employed by the company, which has pledged to pay 75 per cent of salaries for the next five to six months during the suspension.

It is also concerned about the thousands of employees in supply chain companies during the pause in production.

Western Digital wants the government to assist it to restore machinery and move production to other areas as an urgent plan to resume production temporarily. The Board of Investment has already relaxed its regulations so the firm can operate outside its approved zone.

Suwat pointed out that the firm has also insisted it would not relocate its plants to other countries if Thailand can urgently manage the flood situation and restore machinery as soon as possible.

The firm also called for the government to reduce taxes to support the restoration of operations, help make the plants viable and provide accurate and up-to-date information on water levels.

James Phillips, managing director of Ecco Thailand, said the firm plans to set up a temporary plant near Bangkok this year to offset losses from suspended operations.

"The firm still has confidence in the Thai government's efforts to relieve floods and has a long-term commitment to investment in Thailand. It is too early to estimate total losses or talk about new investment in the future as the impact of the floods is still going on," he said.

Hopefully the flooding would be relieved soon to ensure minimum impact on industry.

The firm does not want a cash handout but wants the government to facilitate the resumption of operations and prepare tax breaks and assistance to help affected employers soon.

Ecco (Thailand) is the biggest supplier of Ecco's footwear globally, or about 30 per cent of the group's total sales. Ecco (Thailand)'s exports were worth ¤152 million (Bt6.5 billion) last year.

The firm has two plants in Thailand - one in Saha Rattana Nakorn Industrial Estate with 3,500 workers and the other in Phichit with 1,500 employees.

About two-thirds of its output came from Saha Rattana Nakorn. The firm has committed to paying 100 per cent of salaries to its workers until next month.

Wannarat said the ministry would next week ask for Cabinet approval to make investment privileges more flexible to facilitate investors' operations. Those privileges include tax reductions for machinery, loans and BoI regulations.

He said also reported that about 85 per cent of factories in Nava Nakorn were flooded yesterday. The average water level was 80 centimetres. However, most of the 227 factories were still relatively dry as they had their own flood barriers.

Hiroshi Kobayashi, president and CEO of Asian Honda Motor Co, said after meeting with the industry minister that his company wishes to restart operations within a month after the flood has gone. However, in the worst-case scenario, the recovery could take longer as the whole factory in Rojana Industrial Park is immersed in water.

The firm could not estimate losses from the flooding yet. However, it plans to rely on its own funds to resume operations before asking for help from the parent company.

However, the head executive from Honda said he is highly concerned about its suppliers not only in Thailand, but also in other countries, as Thailand is the major supplier for Honda worldwide.

The impact of Thailand's flooding seems to be worse than the earthquake that struck Japan early this year, as Honda's plants in Japan could resume immediately after the tsunami hit, he said.

Despite the serious impact from floods on Honda, Kobayashi reaffirmed that Honda will never move out of Thailand because of its long history here and current success.

The firm is set to reopen its motorcycle factory in Lat Krabang Industrial Estate today after suspending operations on October 11. It halted production of auto parts on October 4.

Honda expects to assemble 240,000 cars and 1.8 million motorcycles in Thailand this year. Honda employs about 6,000 Thai workers. The firm has promised to pay salaries for every employee during the downtime.

Pitak Pruittisarikorn, a director, said Honda wants the Thai government to waive duties on auto parts imported from countries outside Asean to temporarily supply production in Thailand.

The firm also wants to import some cars to ensure that its thousands of suppliers and distributors will survive, he added.

Atchaka said the BoI plans to waive duties on new machinery imported for resuming operations, as many machines have been destroyed by the floods. For new investment projects, it will offer an eight-year corporate tax exemption.

The BoI has decided to postpone its BOI Fair from November 10-25 to January 5-20 after many companies were impacted by floods.

-- The Nation 2011-10-19

[SICHONSTEVE]

"Manufacturers paralysed by the massive flood yesterday called on the government to manage the situation urgently so they could resume operations as soon as possible".

Thats akin to the nanny asking the baby how to prepare its bottle!!!!!.

At least thats what the response will be like!!!:jap:.

Edited October 19, 2011 by SICHONSTEVE

[SICHONSTEVE]

"The firm also called for the government to reduce taxes to support the restoration of operations, help make the plants viable and provide accurate and up-to-date information on water levels".

One must ask where all the money is going to come from to pay for their election pledges!!! They have already well over committed themselves and having to hand out tax breaks for many years to come will diminish their emptying coffers and cause them to renege on those promises they have not yet fulfilled (oh!!! that's all of them I do believe)..

On the second aspect, why don't they give the lady who lives next door to the factory a ring - but first let her cross the road through the raging torrents to get some provisions as she has to hold the rope with 2 hands and wouldn't be able to take the call!! .

Edited October 19, 2011 by SICHONSTEVE