Thai Flood Death Toll Rises as Waters Threaten Honda, Sony

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October 06, 2011, 2:16 AM EDT By Daniel Ten Kate and Suttinee Yuvejwattana

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Oct. 6 (Bloomberg) -- The death toll in Thailand’s worst floods in five decades rose to 244 and threatened to disrupt operations of automobile and electronics makers that use the Southeast Asian country as a production base.

Heavy rain since July 25 has caused flooding in 59 of the country’s 77 provinces, and 28 of them remain submerged, the Department of Disaster Prevention and Mitigation said on its website today. Industrial parks in Ayutthaya province home to factories from Honda Motor Co. and Sony Corp. are at risk after floods caused nearby plants to shut down.

“The situation is getting worse and it may lead to big damages in the industrial sector,” Tanit Sorat, vice president of the Federation of Thai Industries, said by phone. “There are many big plants in Ayutthaya that produce raw materials for textiles and also produce auto parts. If they are flooded, the impact will be massive.”

The deluge has affected more than six million people in the region and claimed a further 224 lives in Cambodia, Vietnam and the Philippines, according to the United Nations. Thailand has seen the most fatalities as typhoons and above-average rainfall damage crops, destroy businesses and uproot families across Southeast Asia.

Flood damage in Thailand may reach 50 billion baht ($1.6 billion), the University of the Thai Chamber of Commerce estimates, complicating government efforts to boost the minimum wage. Exporters will seek assistance in a meeting with Deputy Prime Minister Kittiratt Na-Ranong later today, Tanit said.

Factories Close

At least 40 factories including plants operated by Danish shoemaker ECCO Sko A/S and Japanese food and beverage producer Ajinomoto Co. have closed at an industrial estate near Ayutthaya and may not return to normal for three months, according to Narapote Thewtanom, deputy governor of the Industrial Estate Authority Thailand.

More than a hundred factories producing auto parts, food and electronics have temporarily closed because of floodwaters, according to the Federation of Thai Industries. Indorama Ventures Pcl, which says it’s the world’s largest producer of polyester, shut factories in Lopburi province that make wool yarns and polymers, the company said on Sept. 27.

The waters now threaten the Hi-Tech Industrial Estate and Bang Pa-In Industrial Estate, home to more than 180 factories, Narapote said by phone today. Sony Corp., Canon Inc., Teijin Ltd. and Western Digital Corp. have operations in the areas.

“The two estates are not flooded yet,” Narapote said. “So far they can still control the situation.”

Honda Worried

Honda, Japan’s third-largest automaker, faces a “worrisome” situation at a plant in Ayutthaya, Pitak Pruittisarikorn, executive vice president of its Thai unit, said by phone. The company yesterday halted production at the plant, which can produce 240,000 vehicles a year, on supply shortages, he said.

Honda’s plant is located in Rojana Industrial Park, which is mostly a base for companies making automotive and electronics parts. Nikon Corp., Hitachi Metals Ltd. and Siam Cement Pcl are among companies with operations in the estate, according to Rojana’s website.

The deluge has displaced 2.6 million people in Thailand since late July and damaged almost 10 percent of rice farms in the biggest exporter of the grain, data from the Department of Disaster Prevention and Mitigation and the Ministry of Agriculture and Cooperatives show.

Economic losses from the floods and weakening overseas demand for Thailand’s electronics, textiles and agricultural goods may complicate Prime Minister Yingluck Shinawatra’s efforts to meet a pledge to raise the minimum wage. Her two- month-old government has deployed about 10,000 soldiers to aid flood victims and extended rice-price guarantees to shield incomes.

‘Routine Work’

Yingluck “has to be seen as taking charge,” said Thitinan Pongsudhirak, director of Chulalongkorn University’s Institute for Strategic and International Studies in Bangkok. “So far that’s not the case. It’s more like routine work. There has to be more thrust behind her leadership.”

The University of the Thai Chamber of Commerce, a private institution founded by the chamber, said the impact of flooding, including an earlier deluge, may total 76 billion baht, cutting 0.8 percentage point from economic expansion.

The government estimates the most recent floods may cause as much as 30 billion baht of damage, Kittiratt said yesterday. Costs so far amount to about 20 billion baht, central bank Governor Prasarn Trairatvorakul said.

--With assistance from Supunnabul Suwannakij in Bangkok. Editors: Tony Jordan, John Brinsley

To contact the reporters on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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