Japanese Industries' Relocation To Thailand Undone By Historic Floods

[wintermute]

Again ... Have you even looked at the predicted (at the time) and actual Tsunami economic impact and compared them to the current predictions due to the flooding?

The current estimate is the equivalent of billions of U.S. $ in damage and 2-3% points shaved off GDP growth from the flooding. I wouldn't be surprised if it hits tens of billions with negative gdp growth at the end of this. Just the political debacle in 2008 squeezed thailand's gdp growth until it was just a small fraction of what it should have been. What we're seeing here is much worse..it's industrial devastation.

[Dag]

Only a fool would buy property in Thailand (low ROI) or make investments in the country (I'm talking about individuals here, not big Japanese corporations) since you aren't actually permitted to take money out of Thailand. Considering that the returns on the Thai property market are so low anyway compared to property in developed countries, why buy? You cannot legally buy any more than a condominium anyway. I am currently renting a house that I could live in for 88 years for the same amount of money it would cost to buy it, based on the price my neighbour's house down the street has just sold for. (BTW, I live in Phuket.) Rental prices in Thailand are so low, why buy even if you could? Your return on investment will be much higher if you buy property in your home country and lease it out. If a foreigner has "bought" a house in Thailand, he means his wife has bought it.

It all depends on your way of thinking FB....I have bought 3 blocks of land here and made money thus far on all....one in particular has out performed any overseas investment I have ever had.

[Nisa]

Again ... Have you even looked at the predicted (at the time) and actual Tsunami economic impact and compared them to the current predictions due to the flooding?

The current estimate is the equivalent of billions of U.S. $ in damage and 2-3% points shaved off GDP growth from the flooding. I wouldn't be surprised if it hits tens of billions with negative gdp growth at the end of this. Just the political debacle in 2008 squeezed thailand's gdp growth until it was just a small fraction of what it should have been. What we're seeing here is much worse..it's industrial devastation.

Again, read my question and do a bit of research. Estimates are generally always very inflated higher and there is no way in this world that the floods are going to have a 2 to 3% impact on GDP unless something catastrophic has yet to occur. That is just doom and gloom thinking at its best.

[wintermute]

Again, read my question and do a bit of research. Estimates are generally always very inflated higher and there is no way in this world that the floods are going to have a 2 to 3% impact on GDP unless something catastrophic has yet to occur. That is just doom and gloom thinking at its best.

Where is your proof that it's all inflated? They can estimate the damage from this because of the factories involved. It's not rocket science. Maybe you think cars and electronics are put together by fairies and magic dust but that's not how it works. Idle factories cost an immense amount of money in lost production and overhead expense aside from potential long term damage to machinery. Anyone that has an inkling of how business works would tell you the same thing.

[Nisa]

Again, read my question and do a bit of research. Estimates are generally always very inflated higher and there is no way in this world that the floods are going to have a 2 to 3% impact on GDP unless something catastrophic has yet to occur. That is just doom and gloom thinking at its best.

Where is your proof that it's all inflated? They can estimate the damage from this because of the factories involved. It's not rocket science. Maybe you think cars and electronics are put together by fairies and magic dust but that's not how it works. Idle factories cost an immense amount of money in lost production and overhead expense aside from potential long term damage to machinery. Anyone that has an inkling of how business works would tell you the same thing.

You would answer your own question if you would address the original question which was ...

Have you even looked at the predicted (at the time) and actual Tsunami economic impact and compared them to the current predictions due to the flooding?

Other than that there is not much more to say except we can check back in a month or so to see who was right.

[wintermute]

You would answer your own question if you would address the original question which was ...

Have you even looked at the predicted (at the time) and actual Tsunami economic impact and compared them to the current predictions due to the flooding?

The reason why I didn't answer this foolish question is because one thing has nothing to do with the other. Apples and oranges and all that.

[letitbe]

But if they relocate and Thailand loses 30% of its GDP, if that happened (though it's highly unlikely), then the baht would probably be back up to 65 to the pound or 40 to the dollar...

that would be a kick in the nutsack for everyone whos bought property and businessses with their ex-pat wages

Only a fool would buy property in Thailand (low ROI) or make investments in the country (I'm talking about individuals here, not big Japanese corporations) since you aren't actually permitted to take money out of Thailand. Considering that the returns on the Thai property market are so low anyway compared to property in developed countries, why buy? You cannot legally buy any more than a condominium anyway. I am currently renting a house that I could live in for 88 years for the same amount of money it would cost to buy it, based on the price my neighbour's house down the street has just sold for. (BTW, I live in Phuket.) Rental prices in Thailand are so low, why buy even if you could? Your return on investment will be much higher if you buy property in your home country and lease it out. If a foreigner has "bought" a house in Thailand, he means his wife has bought it.

you can take 50,000 us$ without fuss by simple TT transfer at any one time why not go ask your bank. If you do it to many times they might ask questions. I believe you simply have to fill in a form saying why support family abroad or medical expenses or whatever will do That what Kassikorn bank told me in Bangkok a few years ago but they might have changed regulations since then. You can also without problems change baht at any bank if they have notes to US$ Sing$ or anything else again limit is 50,000 $ or simply buy gold and take it out. So what if my wife owns house and our (her) other land and property and youll be most surprised to learn weve made a huge profit from those investments particularly land over last 15 years Glad to educate you but you'll probably carry on spouting nonsense and BS

[Nisa]

Only a fool would buy property in Thailand (low ROI) or make investments in the country (I'm talking about individuals here, not big Japanese corporations) since you aren't actually permitted to take money out of Thailand. Considering that the returns on the Thai property market are so low anyway compared to property in developed countries, why buy? You cannot legally buy any more than a condominium anyway. I am currently renting a house that I could live in for 88 years for the same amount of money it would cost to buy it, based on the price my neighbour's house down the street has just sold for. (BTW, I live in Phuket.) Rental prices in Thailand are so low, why buy even if you could? Your return on investment will be much higher if you buy property in your home country and lease it out. If a foreigner has "bought" a house in Thailand, he means his wife has bought it.

It all depends on your way of thinking FB....I have bought 3 blocks of land here and made money thus far on all....one in particular has out performed any overseas investment I have ever had.

I'm not ready to buy a home here yet but my understanding too is that there is no yearly property tax as there is in the west.. It is just a shame foreigners, for the most part, cannot buy property but if you have a Thai wife it is not much different than the west as chances are you lose the house either way when you divorce

And to make this a little relevant to the thread. I have a number of Thai family members and friends who have had their houses flooded and it has never been too much of a big deal since most of the houses have very little wood.or porous material. The main thing is getting the right items up high. Some of my relatives lived in areas when young where their homes flooded almost every year back then. As kids they said they thought it was fun ... kind of like I did having snow and ice storms as a kid that would knock out power and paralyze the city.

[Nisa]

You would answer your own question if you would address the original question which was ...

Have you even looked at the predicted (at the time) and actual Tsunami economic impact and compared them to the current predictions due to the flooding?

The reason why I didn't answer this foolish question is because one thing has nothing to do with the other. Apples and oranges and all that.

Here is what started this conversation (your minimizing the impact of the tsunami compared with the flooding)...

Tourism is around 6-7% of Thailand's GDP. When the Tsunami hit it killed many people and destroyed hotels but rebuilding hotels and guesthouses is a lot cheaper. The people that died were mostly service workers, foreign tourists, and day laborer types. I don't want to sound crass but those people are infinitely replaceable. On the other hand when skilled employees are kept out of work and multi-million baht factories are destroyed that is a huge problem for the economy.

Edit: I'm done with this conversation as it serves no purpose to continue for us to disagree ... but I've bookmarked the page and we can check back in a months time when, as I predict, things will be pretty much back to normal.

Edited October 19, 2011 by Nisa

[siampolee]

The cleaning up of the mess left by the floods is going to be both expensive and long term in its nature. The damage to property ,industrial, farming, and the nations transport infrastructures, its economy are not going to be resolved with the wave of some magic wand

The mental and physical damage to people is beyond any costing exercise, many people have lost everything they ever had, those poor souls are indeed both morally and financially destroyed.

The removal of the waste left behind by receding flood waters, the contamination of the soil and indeed the groundwater in areas where chemical spillages have occurred all these factors come into play .

the flood is disastrous, however that is small beer compared to the upcoming aftermath, short term food shortages, long term unemployment for many.

No the waters may soon be seen to be receding then we shall start to see the true cost of this matter and the shortsighted policies and lack of action that have impacted heavily on the country , its industries and its peoples.

Who will bear the cost of it all?

Certainly not the inept self serving politicians whose performance which if described as laughable would indeed be a compliment. No the ordinary man and woman will get to pick up the tab.

Perhaps some good may come out of this,. perhaps there will be a central disaster planning ministry set up so as to co-ordinate all actions so as everyone benefits. Somehow though I do seriously doubt that will happen.

Lessons should be learnt from history so as to benefit our future, however pro active planning is not a part of Thai culture.

Mai pen rai.. Tomorrow is a new day.

Edited October 19, 2011 by siampolee

[OzMick]

The Tsunami in 04 was a crisis and many more lives were lost than in this event, I don't want to sound dispassionate either, but the tsunami was much more localised than this and in no way affected agriculture or manufacturing to any notable extent.

Tourism is around 6-7% of Thailand's GDP. When the Tsunami hit it killed many people and destroyed hotels but rebuilding hotels and guesthouses is a lot cheaper. The people that died were mostly service workers, foreign tourists, and day laborer types. I don't want to sound crass but those people are infinitely replaceable. On the other hand when skilled employees are kept out of work and multi-million baht factories are destroyed that is a huge problem for the economy.

No, you do sound crass. "day labourer types".

Would "minimum wage earners" be more PC?

[GM1955]

If a foreigner has "bought" a house in Thailand, he means his wife has bought it.

And many Farangs in Thailand who have not bought property have not done so because they cant afford it.

So they rent.

[John1012]

You are right that the flood issues will not go away but everyone knew this too when they built their factories in natural flood plains.

I seriously doubt factory owners calculated in rebuilding costs after each natural disaster into their long term overhead. That's why there were flood walls built (which didn't hold) because they didn't understand the magnitude of flooding possible.

If they didn't calculate in a 50 year flood happening then it is 100% on them. Places like Japan as well as insurance companies take into account 100 year flood cycles, not just 50 year. In the US you cannot even buy a single family home without 100 year flood data. These people built in a flood plain and they were aware of this. For those people and areas that built flood walls .. they were well aware they were not 100% protected just as putting an alarm, Lojack, steering wheel lock on your car doesn't prevent theft or make insurance companies give you theft insurance for free because there is no risk of theft. Every factory of any significance was well aware they were in a flood area and that was a risk of building there.

In a month from now, 90% plus of the areas will be back to normal.

They had warning to protect equipment and this is fresh water, not salt that may have got into unprotected equipment that had no power flowing to it..

While a horrible disaster, this is simply another crisis in the road for Thailand that they will get over and in this case, fairly quickly ... Farm land, homes and businesses are flooded every year in Thailand and those areas get back to normal very quickly after the water is gone.

50 years? I doubt if the 'responsible ' people at the water 'management' dept. even thought of this. If they had all the dykes and barriers would have been built higher and stronger and drainage facilities would have been beefed up. Typical incompetant under estimation, never prepare for the worst case scenario, that might just smack of a professional approach to risk management. As long as I have beer, foood and fags today, sod tommorrow.

As for comparing the floods to the Tsunami, rubbish. A localised short term disaster effecting the tourist industry , not a national disaster effecting FOOD production, international manufacturing, highlighting the inability of THAI government departments to PLAN properly to deal with the extremes of a KNOWN problem. The world has now got PROOF that in the main Thai politians and a lot of government employees are incompetant and mainly talk through there fundamental orifices and only hold office for their own benefit and do not serve the country. Still TIT, we do not need to look outside Thailand for anything, arrogent pr*ks.

[Chopperboy]

THIS ISSUE GOES BOTH WAYS.

1. Thailand had a major flood and effected Japans automobile, precision instrument and other industries.
   
2. Japan had a 9.0 magnitude earthquake and following tsunami on March 11 has seen a rush by officials to gain control of power plants in the north-east of the country and have been under pressure to resolve the situation.

"The amount of radiation released by the Fukushima Daiichi nuclear power plant in the days after the 11 March tsunami could have been more than double that originally estimated by its operator, Japan's nuclear safety agency has said.

Good point!

For anyone interested in the events surrounding and leading up to Fukushima disaster please refer here:

[Chopperboy]

The damage is vast compared to anything else.

Computerized factory equipment (CNC) can be very expensive and takes time to manufacture, ship, install and commission. These companies are going to think twice before re-investing in Thailand. Some will see this as the time to switch production elsewhere, particularly if they think this might happen again. I doubt there will be 100% factories back up and running in a years time.

[katana]

I can imagine it will be quite hard to get some of the computer hard disc factories up and running again.

They have special clean rooms where their workers wear special 'clean suits' to avoid contamination during the assembly process. I guess these may need to be built from scratch again if water and debris got in.

[BarryM]

I know of one major manufacturer from Taiwan that invested in a large assembly plant in Thailand. The word was "never again". They seriously underestimated the tea money and red tape involved in set up and ongoing production. This from a company already heavily invested in China and well aware of the likely local problems.

I imagine many other CEOs will now be evaluating their continued investments in Thailand now the exit costs are mitigated by the cost of making good on flood damage and lost production.

[BarryM]

^ also add the populist promise of 300b daily wage without any serious attempt to increase workers productivity (in particular Thailand's education system) and Vietnam, Cambodia and Malaysia will look increasingly attractive.

[Nisa]

^ also add the populist promise of 300b daily wage without any serious attempt to increase workers productivity (in particular Thailand's education system) and Vietnam, Cambodia and Malaysia will look increasingly attractive.

Yes, we all know those countries don't have problems ... including severe flooding ... not to mention Malaysian workers make twice what Thais do.

None of the big companies investing and building in Thailand were blind to the risks vs. benefits to being here. We are also clueless as to the extent of the damage in many factories and many are simply closed out or precaution and transportation issues.

Edited October 20, 2011 by Nisa

[Foggy Bottom]

To the posters above discussing the differentials between salt and fresh water flooding ... you seem to have ignored/forgotten/never knew, that much of the central plains from Ayutthaya to the current coast was a salt marsh and extension of the Bight of Thailand just 400 years ago. Throughout that, now above sea-level, area the sub soils are salt water effluvials. The greater the area flooded now, and the longer it stands, the greater the chance of that salt-holding sub-soil leeching into the standing water turning it saline.

As for how long the waters will stand ... check back to the 2005 floods that began with Chiang Mai, or even the "minor" flooding (compared to this year) in late 2006 and 2007 - Some of that standing water in Ayutthaya Province was still standing in the fields in the following Februaries. Look at the October 2010 floods in Isaan - the Korat city area still had deep standing water in surrounding village areas at the end of January when I left for the UK (My wife said it was Songkran before the fields had all fully returned to normal around her village).

In the OP, Western Digital have estimated EIGHT months before the factory will begin production again.

Yes GDP is going to be hit significantly, and not just by a few percent.

[Nisa]

In the OP, Western Digital have estimated EIGHT months before the factory will begin production again.

????????????

[ronz28]

There is no turning back for the Japanese from exporting their factories to Thailand. Their country is contaminated with radiation for the next thirty years. Who wants to buy a radiated product from Japan?

This is a setback for Thailand but future flooding can be controlled and flood control projects should be started as soon as the place drys out. The most important component of manufacturing, the manufacturing processes are still in the minds of the Thai people that worked there and production can be quickly reestablished after cleanup.

[IsaanUSA]

In the OP, Western Digital have estimated EIGHT months before the factory will begin production again.

????????????

You are correct Nisa, there is no mention of Western Digital in the OP (original post). He's probably getting threads confused since there are so many!

[Arkady]

It is pretty safe bet that many foreign companies will either move elsewhere or reopen smaller operations in Thailand. The new minimum wage is not exorbitant in itself but the large percentage increase will push its way up through salary scales to a large degree, even in firms that don't employ any minimum wage workers. Workers' skill bases and productivity will not increase commensurately. That is a big turn off to foreign investors, not to mention the racial discrimination inherit in the Foreign Business Act.

[Nisa]

In the OP, Western Digital have estimated EIGHT months before the factory will begin production again.

????????????

You are correct Nisa, there is no mention of Western Digital in the OP (original post). He's probably getting threads confused since there are so many!

I can't find any news account of Western Digital saying their plant would close for any significant time. I found one article from 2 days ago in the WallStreet Journal that they say FULL FISCAL recovery could take up to a couple quarters (6-months). http://online.wsj.com/article/BT-CO-20111019-716577.html

[thaibeachlovers]

Next month everything will be back on track this is Asia.

And us farangs on Thaivisa will find another thing to blame Thailand for beyond a 50-year worst monsoon turning into a 50-year worst flooding.

Hmmmm. Up in Lamphun, which did avoid catastrophic flooding, they are doing NOTHING, ZERO, NADA to prevent any future flooding. Drains remain blocked, roads and canals in shocking condition. When Lamphun does have a flood, there will be the same scenes being witnessed on tv now, and they will have no one to blame but themselves.

There was a flood outside our house, and the remedial work by the "contractors" ( must be related to Mickey Mouse ) was so inept that it actually caused the village downstream to flood, which it hadn't before.

Mind you, considering that the whole area I live in was a swamp, and none of the roads or houses were elevated, nor was a proper drainage canal excavated it is a wonder that we don't live in a permanent "flood".

Just because we live in LOS, it doesn't mean that we have to ignore the plain bad infrastructure and lack of proper planning or maintenance.

NB just because it's the worst monsoon in 50 years it doesn't mean that it has to be the worst flooding, but we all know why nothing was done, and why once it's over probably nothing will be done ( unless a suitable percentage can be siphoned off to the usual suspects ).

[thaibeachlovers]

There is no turning back for the Japanese from exporting their factories to Thailand. Their country is contaminated with radiation for the next thirty years. Who wants to buy a radiated product from Japan?

This is a setback for Thailand but future flooding can be controlled and flood control projects should be started as soon as the place drys out. The most important component of manufacturing, the manufacturing processes are still in the minds of the Thai people that worked there and production can be quickly reestablished after cleanup.

Perhaps.

I saw some bigwig from Japan over to Thailand say on tv that unless the Thai Government sorted the flooding problem, and instituted a "plan" to deal with future problems the Japanese would have to reconsider staying here. He was speaking in English, so I know what he said.

Might just be a threat, but I'm sure lots of other countries would like to have their business, and he also mentioned that!

[wintermute]

There is no turning back for the Japanese from exporting their factories to Thailand. Their country is contaminated with radiation for the next thirty years. Who wants to buy a radiated product from Japan?

This is a setback for Thailand but future flooding can be controlled and flood control projects should be started as soon as the place drys out. The most important component of manufacturing, the manufacturing processes are still in the minds of the Thai people that worked there and production can be quickly reestablished after cleanup.

Perhaps.

I saw some bigwig from Japan over to Thailand say on tv that unless the Thai Government sorted the flooding problem, and instituted a "plan" to deal with future problems the Japanese would have to reconsider staying here. He was speaking in English, so I know what he said.

Might just be a threat, but I'm sure lots of other countries would like to have their business, and he also mentioned that!

They Japanese aren't stupid when it comes to business. They know when something is turning out to be a bad deal. The thing is Honda has been making hand over fist with their industrial relocation strategy up until this point. It's all about profit. If they feel they can continue to nice profit margin they will stay. If the government doesn't ease the flooding transition then they will leave because there will be competitors.

[thaibeachlovers]

Only a fool would buy property in Thailand (low ROI) or make investments in the country (I'm talking about individuals here, not big Japanese corporations) since you aren't actually permitted to take money out of Thailand. Considering that the returns on the Thai property market are so low anyway compared to property in developed countries, why buy? You cannot legally buy any more than a condominium anyway. I am currently renting a house that I could live in for 88 years for the same amount of money it would cost to buy it, based on the price my neighbour's house down the street has just sold for. (BTW, I live in Phuket.) Rental prices in Thailand are so low, why buy even if you could? Your return on investment will be much higher if you buy property in your home country and lease it out. If a foreigner has "bought" a house in Thailand, he means his wife has bought it.

It all depends on your way of thinking FB....I have bought 3 blocks of land here and made money thus far on all....one in particular has out performed any overseas investment I have ever had.

Hmmmm. If you are a farang I doubt that YOU bought the land. Might have paid for it though.

Have to say that I agree with Thailand not allowing foreigners to buy land when I see what has happened in my 'ome country.