Pervasive Thailand Flooding Cripples Hard-Drive Suppliers
Three weeks after monsoon run-off swamped more than 1,000 factories across central Thailand, the brown, corrosive floodwaters have only slightly receded, leaving the world’s largest computer makers without a reliable forecast about when crucial parts will be available once again. Consumers worldwide could see increases of at least 10 percent in the price of external hard drives because of the flooding, according to Fang Zhang, an analyst at IHS iSuppli, a market research company. The effect will be less noticeable for laptops and desktop computers, he estimated, because demand has been weakened by the current global economic malaise. The image of Thailand as a land of temples, beaches and smiles has over the years been reinforced by the country’s tourism advertising campaigns. But the flooding here, the worst in at least five decades, has revealed to the world the scale of Thailand’s industrialization and the extent to which two global industries, computers and cars, rely on components made here. The world’s biggest names in hard-drive manufacturing, for example, operate from Thailand, where suppliers and <a href="http://www.cheapuggsforsaleonline.net"><strong>cheap uggs</strong></a> customers come together. Until the floodwaters came, a single facility in Bang Pa-In owned by Western Digital produced one-quarter of the world’s supply of “sliders,” an integral part of hard-disk drives. Over the weekend, workers in bright orange life jackets salvaged what they could from the top floors of the complex. The ground floor resembled an aquarium and the loading bays were home to jumping fish. “Surely one of the inevitable impacts of this is that never again will so much be concentrated in so few places,” said John Monroe, an expert on storage devices at Gartner, a technology research firm. He estimated it would take a full year for hard-drive production to return to preflood levels. The shortage is not entirely bad news for the disk-drive business, especially for those companies whose facilities were not damaged, such as Seagate, which has a factory high and dry on a plateau in northeastern Thailand. Mr. Monroe said price increases will help lift industry profit margin to about 30 percent from about 20 percent before the floods. The flooding, which is now spreading through the northern reaches of Bangkok, is the second reminder this year of the vulnerability of global supply chains, coming just a few months after the earthquake <a href="http://www.uggsclearancesalestores.com"><strong>ugg boots clearance sale</strong></a> and tsunami that struck Japan and shut down facilities that produce crucial car electronic components. Thailand became a hub for Japanese car manufacturers in the 1980s and 1990s, partly because car makers sought to escape the punishing effect of a rising Japanese yen. Today, as a measure of Thailand’s importance to the global automotive supply chain, the flooding has forced Toyota to slow production in factories in Indonesia, Japan, Malaysia, North America, Pakistan, the Philippines, South Africa and Vietnam. Honda, the carmaker most affected by the Thai floods, has also slowed production at factories in several countries. The initial forecasts of damage to the auto industry were too optimistic, said Hajime Yamamoto, the Thailand director of IHS Automotive, an automotive market forecasting company based in Detroit. “It’s getting even more serious than what we expected,” he said. “Every week we actually revise our estimate for the scale of losses.” Mr. Yamamoto predicted that car manufacturers and their suppliers would seek to diversify their operations to other countries. “They will try to balance their expansion so they don’t have concentration <a href="http://www.uggbootssaleukstockists.co.uk"><strong>ugg boots stockists</strong></a> of risk in Thailand,” said Mr. Yamamoto, who named Indonesia as a place Japanese suppliers were likely to expand.
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