Thailand flooding wreaks havoc on supply chain

The impact on manufacturers from the substantial flooding in Thailand is becoming clearer, with big name companies feeling the effects already.

Yorkshire-based Pace, the world’s largest set top box manufacturer, has reported that it’s likely to be hit with a $9.5 million dent in its operating profits following disruptions to its main supplier.

Hard disk drive manufacturer and supplier to Pace Western Digital has suspended its production at its manufacturing facilities in Thailand. The British firm had already taken a beating following the the Japanese earthquake earlier this year, when its shares dropped to the tune of 40 percent.  

Now Western Digital has been forced to shut down its plants in Bang Pa and Navanakam industrial park facilities outside of Bangkok, meaning Pace will see its shipments negatively affected. Western Digital has even had to turn off factories not directly affected by flooding, but have been rendered useless following damage to upstream component manufacturers.

This has caused Pace to conduct an initial assessment of the impact to its business. It is likely to fall short of the guidance of $150-170 million, a figure already reduced following the Japanese disaster.

Pace told us that it is difficult to give any more long term information about the company’s finiancial position after another natural disaster knocks its suppliers.

“Western Digital is one of our largest suppliers, and two of its factories are literally underwater, so it is difficult to give any further assessment of the financial situation,” we heard.

“The flooding has caused problems throughout the supply chain, with Western Digital and Seagate both also indirectly affected by hard drive component manufacturers further up the supply channel.”

Seagate is expected to make further announcements on its situation today, while Hitachi has also been affected substantially by component manufacturers dropping production.

ON Semiconductor has meanwhile indicated that it expects it will be affected by the flooding for three or four quarters as of the final quarter of 2011.

Sony has been affected with the launch of a number of camera products being put on hold past their November launch date.