From Japan to Thailand and back again

Thailand floods Nov 2011 © Mathias Eick EU/ECHO CC BY-SA 2.0

Japan, Thailand

Following the 2011 earthquake and tsunami, automobile and electrical component production in Japan declined by 48% and 8%, respectively. But automobile production also fell by 20% in Thailand, 18% in the Philippines and 6% in Indonesia. Electrical component production fell by 18% in the Philippines and 8% in Malaysia (Ye and Abe, 2012). The Renesas Electronics Corporation, the world’s largest custom manufacturer of microchips for the automobile industry, and which serves Japanese automobile manufacturers, suffered estimated losses of US$615 million. Toyota lost US$1.2 billion in product revenue owing to parts shortages that caused 150,000 fewer Toyota automobiles to be manufactured in the United States of America; production stoppages at five plants in the United Kingdom; and reductions in production of 70% in India and 50% in China (Asano, 2012).

Following Tropical Storm Nock-Ten and heavy monsoon rains, the Chao Phraya River flooded in Thailand, inundating 15 provinces of the country (Haraguchi and Lall, 2012). From October to December 2011, more than 1,000 factories of 804 companies were flooded for up to two months. Of these companies, 451 were Japanese (Haraguchi and Lall, 2012). Although the factories of Nissan and Toyota were not flooded, they had to suspend car production owing to the difficulty in obtaining parts from affected suppliers. In November 2011, automobile production fell by 84% compared with the same month in 2010. Given that Thailand plays a key role in global supply chains in the electronics and automobile industries, Honda factories in Malaysia, North America and Japan had to reduce or halt production. Total loss of operating profit to Toyota and Honda was estimated at US$1.25 billion and US$1.4 billion, respectively. As in the case of the Japan earthquake, a significant proportion of these losses were because of one affected supplier that produced critical electronic components (Haraguchi and Lall, 2012).

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Earthquake Flood Japan Thailand