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business newsHow Thailand's Tragedy Boosts Indonesia and Vietnam
By
Carol Kopp
Nov 16, 2011 9:30 am
Catastrophic floods have automakers and tech manufacturers looking elsewhere in Asia for factory sites.
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A number of major Japanese companies are considering building some of their factories in Indonesia and Vietnam as an alternative to Thailand, according to a report in Businessweek.com. The devastating floods in Thailand have created parts shortages and threatened profit forecasts for companies including Pioneer (PNCOF.PK), Honda (HMC), and Toyota (TM). Canon (CAJ), Nissan Motors (NSANF.PK), Hitachi (HIT), and Toshiba (TOSBF.PK) also had to shut down factories.
“We acknowledge the need to consider diversifying investment inside Thailand and to other countries in the future,” a Pioneer spokesman told Businessweek after the company had to withdraw its full-year earnings forecast as a result of the factory shutdowns in Thailand.
Thailand had been a preferred factory location for Asian manufacturers because its infrastructure is superior to that of other emerging nations in the region. Indonesia now surpasses Thailand in such investments, and Vietnam is catching up.
The companies are not expected to abandon Thailand entirely. But Japanese executives, still reeling from damage to their homeland operations caused by the March 11 earthquake, want to diversify their manufacturing locations.
The floods, only now beginning to ease after four months, shut down 891 factories north of Bangkok. Parts shortages reverberated from there through the supply chain.
Workers’ hours were cut at a Honda plant in Swindon, England, and mass production of a new Honda Civic model there was postponed, according to a BBC report.
Honda may even shift some production from Thailand to US factories, according to the English-language Tokyo Times.
The technology industry also has been hit hard. Thailand was the world’s second-largest manufacturer of hard drives, after China, leading to fears of shortages and price increases on PCs and laptop computers this winter.
Most prominently, Dell Computer (DELL) warned Tuesday that its revenues for the quarter could be hurt by a worldwide shortage of hard drives caused by the flooding in Thailand.
British site PC Advisor says the UK prices of PCs and laptops already are rising, as a shortage of hard drives forces their costs “through the roof.” Western Digital (WDC), the largest manufacturer of disk drives, is among the manufacturers who had to shut down factories in Thailand.
According to PC Advisor, vendors are opting to keep their biggest business customers supplied, meaning building shortages and higher prices for consumers over the months to come.
CIVETS in Brief:
Guerrilla Marketing In Colombia: It doesn’t seem wise for a bunch of guerrillas to issue a press release announcing the name of their new leader, but that’s what Colombia’s leftist rebel group Revolutionary Armed Forces of Colombia, or FARC, has done.
Rodrigo Londono Echeverri was elected unanimously to replace Alfonso Cano, who was killed during a Colombian military operation on November 4, the group announced. FARC has been waging war with the Colombian government since the 1960s, but its power has waned substantially in recent years.
Colombian officials appreciated the update. "If this is the new boss of the FARC, they have pointed out which our new target to reach is," Minister German Vargas Lleras is quoted as saying in Colombia Reports.
The US State Department offers a $5 million reward for information leading to the arrest of Echeverri, who it says directed the rebel group’s activities in the cocaine trade.
The latest success against FARC has raised the political profile and influence of Colombian President Juan Manuel Santos. British newspaper The Guardian interviewed Santos recently about his growing role as a leader in South America and his war on the drug trade that has done so much damage to his country.
Egyptian Elections Set to Begin
Egyptians began 2011 with a revolution, and they’ll end it with an election season. And “season” is the correct word. The elections for a new parliament begin November 28 and proceed through several rounds of voting, so they’re expected to last into March 2012. There are strong suspicions that the nation’s interim military rulers, who seem unwilling to cede power, deliberately established a bewildering election process.
Wipro to Expand in South Africa
Citing huge potential for growth in Africa, Bangalore-based Wipro Technologies (WIT) has announced it will create an IT services business center in South Africa, and hire 1,000 professionals to staff it over the next three years.
Wipro already has an office in Johannesburg.
A company spokesman told Indian news site Business Standard that the company expects revenues from Africa to rise to $30 million in the current financial year, from $13 million last year. According to Business Standard, IT spending in South Africa will total about $10.7 billion in 2011 and is expected to rise to $17.4 billion in 2015.
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No positions in stocks mentioned.
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Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
