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Thai Floodwaters Are Gone…Supply Chain Issues Remain…Recovery is Months Away…Rainy Season Begins Again in Four Months

January 21, 2012

Disasters are so interesting…we hear about them during the urgent response phase and then they fade away from view.  And many of us think the issues have been resolved.  Actually, that is seldom the case.  The floods in Thailand are a good example.  The floodwaters receded weeks ago from the sprawling industrial zone, but the streets are littered with debris, phones don’t work and rusted machinery has been dumped outside warehouses.  Production has ground to a crawl with no sign of returning to “normal” in the near future.

Before Thailand’s great flood of 2011, companies like Sony, Panasonic, JVC and Hitachi produced electronics and computer components that were exported around the world. Of 227 the factories operating in the affected area, an astonishing small number, only 15 percent, have restarted production.

The slow recovery is having global consequences. Before the floods, Thailand produced about 40 percent to 45 percent of the world’s hard disk drives, the storage devices of the digital age. It is now becoming clear that it will be months – that’s right months – before production of hard drives returns to pre-flood levels. This is significantly longer than anyone had imagined.  This will likely result in prolonged period of higher prices for hard drives for consumers worldwide. In the United States, certain models are currently 40 percent to 50 percent more expensive than before the floods, prices that may remain high for several more months.

Many buildings bear the telltale scar of the floodwaters — a high water mark about two meters above street level. Most companies have to literally start over. The hopes of recovering machinery seems to have been dashed by the prolonged exposure to corrosive, polluted water — in some cases two months.

Time will tell as how quickly the country and companies recover.  And oh by the way, the impending rainy season is only a short four months away.

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