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Thai floods sink utes
Devastating floods to impact Oz ute supplies as most Thai factories remain closed
1 Nov 2011
THAILAND’S worst floods in 50 years will soon impact the availability of almost all Japanese and US-brand utes in Australia as most Thai automotive factories remain closed this week.
However, the full extent of the natural disaster remains unknown as the nation’s previously booming computer and automotive industries remain at a standstill.
Downtown Bangkok may have escaped the kind of flooding that devastated the rest of Thailand as the Chao Phraya River peaked on Monday, but unseasonal monsoonal rains since July took the death toll to 381 on Sunday.
Thailand’s automotive industry group said the nation would produce 300,000 fewer vehicles than expected this year as a total of 9859 factories and about 660,000 workers remain idle after more than 80 per cent of Thailand’s provinces were flooded.
While all seven Japanese auto manufacturers in Thailand have ground to a halt, Honda and Toyota appear to be the worst affected, with a lack of Thai-sourced components also crippling production at vehicle plants throughout South East Asia and as far as the US and UK.
Honda, which produced 170,000 vehicles in Thailand last year, this week announced it will immediately cut production at all six of its North American and Canadian facilities by about 50 per cent until at least November 10, and cancelled all Saturday overtime work in its US factories this month.
From top: New Chevrolet Colorado, new Isuzu D-Max, Ford Ranger, Mazda BT-50, Mitsubishi Triton and Nissan Navara.
Japan’s third-largest car-maker, which this week reported a lower than expected second-quarter profit and declined to forecast its full-year earnings, also said it would delay by “several weeks” the US launch of its redesigned CR-V, which had been due for release there in December.
In a repeat of the situation that followed Japan’s devastating March earthquake – which severely impacted domestic production of Honda and Toyota vehicles, as well as vital electronic components for many car-makers – American Honda said several critical electronic parts for its vehicles were sourced from Thailand.
Honda of the UK Manufacturing this week also announced it would temporarily reduce its weekly production volume while it works to re-establish the flow of parts from suppliers in Thailand and elsewhere, but said “it is likely that production adjustments may have to continue in the short term”.
In Japan, Honda car production at Suzuka and Saitama will slow from November 7 due to limited parts supplies from Thailand.
“Honda is making progress in procuring alternative parts, and the timing to normalise production will be determined while monitoring the situation in the future,” said the company.
As we have reported, all vehicle production at Honda’s Ayutthaya factory – which produces the Civic, Jazz, City, CR-V and Accord for Australia – has been suspended since October 4.
Honda has extended that shutdown for the foreseeable future and remains unable to access its flooded Thai facility due to an official evacuation order.
In Australia, where Honda sales were down almost a quarter in the first three quarters of this year, the Japanese brand said there was no immediate impact on the retail availability of its Thai-built Accord, City, Civic, CR-V and Jazz models.
“Due to the prohibited access to the Honda Automobile Thailand plant … it is difficult to confirm the current situation of the facility,” said Honda Australia spokesperson Melissa Cross.
“As such, it is too early to determine the impact on supply and sales in Australia. We are working closely with our dealer network to prioritise supply to retail customers.”
Meanwhile, Toyota has extended the closure of its Samrong, Gateway and Ban Pho plants in Thailand, which have been shut since October due to lack of parts, until at least November 7.
Toyota has also now cancelled all overtime at its US plants this month and reduced production from this week at its plants in North America, Canada, South Africa, Indonesia, the Philippines and Vietnam.
Asia’s largest car-maker, which said it will announce production plans from November 7 as the situation develops, has also indicated that production of about 6000 vehicles – including the Prius – could be affected by supply chain impacts at four of its Japanese plants.
Toyota Australia, which sources all of its top-selling HiLux utes from Thailand, said the situation for Australia is currently being reviewed.
“There has been no HiLux production since October 24,” said Toyota Australia spokesman Mike Breen. “Production will be reassessed on November 7. At this stage the damage situation to our suppliers is still under review (and) ongoing assessments and countermeasure activities are being undertaken by Toyota Motor Thailand.”
GM Thailand’s Rayong plant, which produces the Colorado for Australia, remains one of the few Thai plants unaffected, but Holden could not say whether its scheduled launch early next year of the redesigned Colorado, which commenced production in Thailand on October 7, would be impacted.
“At this stage there is no change to the timing of the Colorado launch, but the situation is being monitored on a daily basis,” said GM Holden’s senior product communications manager Kate Lonsdale.
The Colorado’s mechanical twin, Isuzu’s D-Max, is produced in a separate factory in Thailand and also remains unaffected, but its replacement is one of a number of other new one-tonne utes due Down Under in early 2012, including SsangYong’s new SUT-1, an all-new dual-cab from Foton and at least one other new Chinese ute.
“At this stage D-Max production in Thailand is unaffected,” said Isuzu Ute Australia marketing manager Cornelius Jones.
“It has been a public holiday there since last Thursday, so we’re expecting a statement in the next few days.
“Our factory is not flooded, but problems at a number of tier one and two suppliers could cause delays.
“At this stage we haven’t heard of any delay to the release of the new model here in the second quarter, which we’re very excited about, but even if the factory remains in full production there are simply not enough vehicles being built in Thailand to fill and send the ships.”
Ford and Mazda say they have sufficient stocks of the new Ranger and BT-50 dual-cabs to satisfy demand, but that situation is likely to change.
The Auto Alliance (Thailand) plant that makes both new models remains closed this week and AAT says it will monitor the situation on a daily basis.
“AAT is located in an area of Rayong that has not been affected by the floods,” said the company on October 17.
“However, a number of AAT’s suppliers operating in Ayutthaya province have been affected, and we are working with them on a daily basis to assist in their business continuity and recovery act.
“We will continue with a day-to-day assessment of our production capabilities.”
Mazda Australia said its rollout of new BT-50 models – including the Dual Cab now in local showrooms, the Freestyle Cab late this month or early December, and the Single Cab early next year – remains unaffected at this stage.
“Production at AAT in Thailand has currently been suspended until November 4 due to the impact of the floods on parts supply,” said Mazda spokesman Steve Maciver.
“We’ve currently got stocks on the ground here in Australia and although we’ll continue to monitor the situation closely, our launch plans for all-new BT-50 are not affected. Dual Cabs are available now from Mazda dealers.”
However, while Mazda Australia now sources its smallest model (the Mazda2) from Japan, Ford’s closely related Fiesta continues to come to Australia from the AAT plant in Thailand and the Blue Oval said it is only a matter of time before local vehicle stocks are affected.
“Yes, our plant in Thailand will be shut until approximately mid-November,” confirmed Ford Australia public affairs manager Sinead Phipps.
“The exact date will depend on recovery efforts at our suppliers who have been affected by the floods.
“We will be affected by the loss of production but the specifics aren’t known yet.”
Likewise, Mitsubishi Motors Thailand has temporarily halted production at its Laem Chabang plant since October 13 and has no plans to reopen until November 7, depending on the delivery of supplies.
Mitsubishi Motors Australia sources all of its Triton and Challenger models from Thailand but says it is not yet certain of the potential impact.
“We’ve been alright so far,” said corporate communications chief Lenore Fletcher. “But we are not sure of the extent of the problem and continue to monitor the situation.”
Nissan Motor Thailand’s Samut Prakan plant, which produces all Navara models for Australia except the STX dual-cab, is not flooded but also remains idle until at least November 4 due to parts shortages.
The company said production outside Thailand – which also produced the Micra for Australia until recently – remains unaffected at this stage.
Nissan Australia CEO Dan Thompson said supplies of some Navara models would be slim for a matter of weeks, but that the situation could have been much worse.
“It’s extraordinary the challenges the industry has faced,” he said at a press event last week. “First it’s earthquakes and tsunamis (in Japan) and now floods in Thailand.
“We’ve had many, many of our parts suppliers washed away with the floods. But it was very different from the Japanese situation because the floods had been coming for quite some time so there was a lot of work done ahead of time to resource and find alternative suppliers.
“So Nissan will come out of it without too much impact and we should be up and running and producing next week.
“It’s just fortunate that we decided many, many months ago, because of capacity constraints – we’re selling so many Navaras and so is the rest of the globe – that we couldn’t get enough supply out of Thailand.
“We moved D22 (Navara) back to Japan and they’ve already started production, so that was quite fortunate. And we also from next week start up much larger volumes of D40 (Navara) out of Spain.
“We’ve been working for about a year plus to find more capacity, so we’ve really from last week significantly reduced our reliance on Thailand for Navara production.
“It was just fortunate – we were lucky, let’s be honest – that we were working on resourcing plants for 12 months when the floods hit and we’ll just have a few weeks of impact.
“So it’s quite a dramatic shift. 12 months ago we were sourcing I’d suggest 90 per cent of our Navara volume out of Thailand and now, over the next six months, we’ll probably be sourcing 10 per cent of our Navara volume out of Thailand.
“We moved Maxima back to Japan because we were having capacity constraints (and) we moved Micra to Indonesia earlier this month because of capacity. The only product that really remains in Thailand is Tiida and a few Navaras.”
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