The 5 Companies Hit Hardest by the Thailand Floods

by Emily Holbrook on October 27, 2011 · 0 comments

Thailand’s worst flooding in five decades has affected companies in every industry, from automotive to technology to pharmaceuticals and beyond. As we saw with the earthquake in Japan, it’s a company’s supply chain that is affected most when natural disasters strike. Thailand is a midsize country of 67 million people and its outsized importance in global supply chains is now becoming clear. Here are 5 companies most affected by the historical floods:

  1. Toyota — It seems as though any natural disaster affects this automotive manufacturer. Toyota announced today that it will suspend production at its plants in North American on Saturday, citing an interruption in the supply chain of some Thai-made components. Toyota plants in Indiana, Kentucky and Ontario, Canada, will be shut down until the situation in Thailand improves. As of last Friday, the floods had resulted in an output loss of 37,500 vehicles in the Southeast Asian country since Toyota idled three plants there October 10th. That number could potentially climb to 250,000 by mid-November. If that happens, it is estimated that operating profit could be reduced by $1.6 billion.
  2. Ford — On a conference call yesterday, Ford Chief Financial Officer Lewis Booth stated that the carmaker may lose production of 30,000 vehicles. Though Ford’s assembly plant is not affected, their supply chain is. The company said the Thai floods have cut fourth-quarter production so far by 17,000 vehicles due to supplier issues. That number could climb to 30,000. Ford said it is “working closely with its affected suppliers to return to production as quickly as possible and to minimize any potential impact in other regions.”
  3. Lenovo — The Chinese computer maker said yesterday that it expects its supply of hard disk drives to tighten “through the first quarter of next year.” Thailand supplies approximately 40% of the global output of hard disk data storage devices, meaning Lenovo is not the only company within the industry experiencing interruption issues. Western Digital and Seagate Technology have both said they expect to face a shortage of parts soon. Because of this, Apple announced they expect a shortage in the coming months of disk drives for their products, specifically the company’s Mac lines, according to Apple CEO Tim Cook .
  4. Canon – The Tokyo-based company has recently revised its full-year financial outlook based on concerns about the impact of flooding in Thailand. The company said the Thai flooding will lower its sales and operating profit by Y50 billion ($660,000) and Y20 billion ($264,000), respectively, in the fourth quarter.
  5. Sharp — Having recently announced that the company is almost fully recovered from the business interruption it experienced after the Japan earthquake in March, Japan’s number one liquid-crystal display maker is now stating that the Thai floods may affect revenue.

    Although Sharp’s manufacturing facilities in Thailand weren’t damaged, the company’s inability to secure certain parts from suppliers hit by the flooding may result in tens of billions of yen in lost revenue, said Sharp Executive Vice President Toshio Adachi at a press conference.

As companies scramble to obtain parts from other regions of the world, we are reminded that supply chain risk management is an often-overlooked segment of the discipline…until disaster strikes.

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Emily Holbrook is the executive managing editor for National Underwriter Life & Health and the former editor of the Risk Management Monitor and Risk Management magazine. You can read more of her writings at EmilyHolbrook.com.

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