Industry reels from closures, high job losses

Already 71 manufacturers are suffering and the rapid spread of flood waters to Phetchakasem, Bang Kae, Aom Yai and Aom Noi, where garment, fabric, bleaching and dying plants are in abundance, will curtail the industry’s production for a month because of the shortage of materials.
The flood crisis is forecast to delay the shipments of those manufacturers by at least a month.
However, they are planning to shift to air freight instead of marine transport to catch up with their orders from buyers overseas.
Sukij Kongpiyacharn, president of the Thai Garment Manufacturers Association, said yesterday that the industry’s most important problem was that workers cannot enter the plants even though the water level is not as high as other areas and in inundated industrial estates.
“Flood waters have not hit our operations, as they have been set up quite high. But we’re worried that our 100,000 workers will suffer if the continued flooding hits 109 more plants, which is anticipated to take the total number of affected manufacturers to 180,” he said.
Those damage figures were assessed by the association on Tuesday. Its members will report back on the situation daily.
The flood waters will create a domino effect on the industry as now weaving, bleaching and dying companies have to suspend their operations as their wastewater-treatment systems are submerged.
Three urgent shortage problems have been raised – fabric, air-freight space, and labour.
The fabric problem can be solved by importing, but this has to be prepared in advance.
The government should cooperate with airlines to provide more cargo space on passenger flights and air freighters to facilitate exports, he said.
“We should prepare in advance, because not only garments but also integrated circuits and computer parts will have to be sent via air after the flood. This will cause space problems in the near future,” he said.
Some companies suspended operations early this month and are still paying wages to keep their workers, Sukij said.
Dej Pathanasethpong, managing director of Thong Thai Textile, said the company was expected to lose Bt40 million to Bt50 million from the flood, which is equal to one month of sales.
Located on inundated Phetcha-kasem Road, the company stopped producing on November 3 and restarted office operations yesterday. However, its big problem is that workers cannot enter the factory. It hopes to resume manufacturing by November 21.
“We estimate that our production has disappeared for one month but fortunately we have stocks of materials to facilitate manufacturing through late next month. But the supply of some materials will be tight,” |he said.
The company plans to turn to air freight to ensure it meets its commitments to customers.
However, that will raise costs, as air transport would account for 30 per cent of the freight-on-board price.
Manufacturers will have to fight for air-freight space. This will drive up cargo fees from the middle of December to the middle of January.
The burden on the garment industry for air freight will reach an estimated US$100 million (Bt3.1 billion) based on monthly exports of $300 million.
“The garment industry has not been hit hard like others with businesses in inundated industrial estates in Ayutthaya and elsewhere. Since key infrastructure such as electricity, tap water, telephones and others are still working, they can continue in business,” Dej said.