By on November 6, 2011

The persistent floods in Thailand did cost Japanese automakers already close to  200,000 unbuilt vehicles, and no end of the floods is in sight. This is putting a severe crimp into the major push that was planned for the last quarter of 2011 and the fist quarter of 2012 to make up for lost production after the March 11 tsunami.

Here is a current tally by The Nikkei [sub].

Toyota: 100,000 units
Honda: 20,000 units.
Nissan: 20,000 units.
Mitsubishi: 15,000 units
Isuzu: 30,000 units.

Except for Honda, where the plant in Thailand is under 6 feet of water, most automakers had to stop production due to a shortage of parts. Parts will now be brought in from other countries, and some production is planned to resume shortly.

The flood may affect you even if you are not in the market for cars: Hard disks, digital cameras, and other gadgetry are already in short supply, causing panic at electronics retailers getting ready for the year-end shopping season.

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10 Comments on “Thai Floods Drown Hopes For Fast Recovery Of Japanese Car Industry...”


  • avatar
    zerofoo

    Thanks to the floods, hard drives have almost doubled in price recently. I always thought just-in-time manufacturing would get us in trouble at some point. When you have very little inventory, and little spare capacity, one sufficiently large disruption in your supply chain can kill your business.

    Things will be tight for a while in the automobile and tech business, at least for the next few months.

    • 0 avatar
      rochskier

      zerofoo-

      Your assertion about “Just In Time” is spot on. The main issue is that the JIT concept was developed and pushed by eggheads with very little real world experience.

      On paper, JIT is a fantastic concept. The problem is that the paper world fails to account for very real obstacles that include: human error, mechanical failure, transportation accidents, shoddy maintenance, or natural disasters.

      • 0 avatar
        th009

        JIT is vulnerable to supply chain disruptions, to be sure. But natural disasters aside, it works very well for very many companies for a very high percentage of time.

      • 0 avatar
        PenguinBoy

        JIT works extremely well for manufacturing operations.

        The problem here is not JIT, but rather failing to adequately manage risk in the supply chain. For example, qualifying second sources for critical components would make a disruption like this less likely.

        You would think that the Japanese companies would be seriously looking at second sources after the Tsunami, but I suspect that Japanese ideas about vendor partnerships prevent them from doing this. Deep partnerships have some advantages, but being totally reliant on a single supplier is not one of them.

        I also think that the relentless “race to the bottom” encourages companies to throw all their business at the lowest cost suppliers in exchange for even more price breaks. The Japanese are certainly not alone in this.

  • avatar
    Diewaldo

    Suits them right, they outsourced everything as far East as they could. Because there are low wages, low environmental protection standards, resulting in one of the cheapest locations to produce cars.

    If Taiwan wil be too expensive some time they will shift production perhaps to Bangladesh or Africa etc. Somebody will have to learn that polluting the enviroment uncontrollably will backfire in floods etc.

    Some regimes like China may still have the power to suppress the growing anger and despair of the poor while a chosen few are literaly drowning in money. But this will also end … political factors should be taken into account when planning a factory as well.

    Or to put it in the words of Karl Marx:

    “In every stock-jobbing swindle everyone knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety.”

    • 0 avatar

      I can’t see any connection between Taiwan and Thailand, except that both country names start with “T”.
      Also, I do not quite understand why citing Karl Marx on stock exchange swindle issues in the 19th century will shed any light on current problems, especially, if those problems are generated by typical “acts of god”, like tsunamis, earthquakes, floods. What would Karl Marx have done, in your opinion?
      That’s why I would hesitate to disregard the concept of “Just in Time” in general. But I’m quite confident that a lot of people will think about improving this system. Not to do so might drown their enterprises completely.

      • 0 avatar
        Diewaldo

        Sorry for Taiwan, had some wrong wires connected in my head. The flood was in Thailand.

        Well, it is a fact that the number of natural desasters is increasing in number and strengh worldwide, due to global warming. The big companies are use those low cost countries not only to produce on the cheap, but also to avoid the rather strict environmental standards that have been set in industrial countries.

        And why do they do that? The answer is quite simple: greed.

        And there you have the full circle to my quote. They know that nature will backfire from time to time, but in the meantime it is profit above all things.

        Am I sorry for the people who have lost everything in the flood? Yes, of course!

        Am I sorry for the companies that placed their plants in that area? No, not at all!

      • 0 avatar
        Athos Nobile

        Ah… global warming… the perfect excuse to buy a cool vehicle like this one

        http://img.netcarshow.com/Hummer-H2_SUV_2003_1600x1200_wallpaper_03.jpg

        With a couple of turbos and some Iceland-like mods it would be an awesome Artic region melter.

  • avatar
    ceonwulf

    HAARP at work.

  • avatar
    Secret Hi5

    Poor Thai workers! Are they being paid by the automakers while the plants are down?


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