Flooding in Thailand does major damage to local plastics processors

By: Steve Toloken

October 26, 2011

TOKYO (Oct. 26, 3:30 p.m. ET) — Flooding in Thailand appear to have done major damage to some of the country’s plastics processors, according to reports emerging from machinery suppliers with sizable business there.

Tokyo-based Toshiba Machine Co. Ltd., for example, estimated that potentially 500 of the 700 of its injection molding machines in factories in Thailand are damaged from the flooding, which has made its way to the capital Bangkok in recent days.

And Sumitomo Heavy Industries, Ltd. said that 40 to 50 percent of its machines sold to factories in the country could be damaged from flood waters, with potentially 300 machines having severe damage, said Yuji Takaishi, executive vice president and general manager of the plastics machinery division of Chiba, Japan-based SHI.

“Our customers are heavily damaged from the floods,” he said.

Executives from Tokyo-based Japan Steel Works Ltd. estimate that about 600 of their total of 2,000 machines in Thai factories have been damaged by flood waters over the last month.

The companies spoke in interviews at the International Plastic Fair, held Oct. 25-29 in Tokyo.

A spokesman for IPF blamed the flooding for lower attendance at the Tokyo show, saying that many Japanese firms were busy dealing with the situation and could not attend.

Attendance for the first two days of IPF was 13,800, compared with 33,100 the first two days of the last edition, in 2008, IPF said. IPF 2008 drew 66,600 people over its five days.

Executives said it is tough to get a clear picture, but some customers are making “urgent” requests for replacement machinery, said Tetsuya Okamura, CEO of Sumitomo Demag Plastics Machinery GmbH in Schwaig, Germany, which was formed when SHI bought German machinery firm Demag Plastics Group in 2008.

Thailand is a major production center for Japanese firms, including for vehicles, cameras, digital electronics and computer hard disk drives. Several big Japanese car makers closed their factories there last week because of the flooding, which has killed more than 300 people since July.

Toshiba said it is receiving orders from customers for replacement molding machines, and needs to get into those factories to assess the damage but may not be able to until later in November or early December, said Koji Egashira, a group manager of the injection molding machine sales department.

“Many customers are affected by this disaster,” he said. “I don’t know when they can recover the factories and we can check the machines.”

Egashira said in some cases the equipment could be tough to fix.

“If the machine is more than one month inside the water, it is very difficult to repair,” he said. “We have to investigate whether we can repair, especially the big-sized machines.”

The floods have also affected the Japanese machinery firms directly.

Toshiba’s plans to start an injection press manufacturing factory in Thailand this month were delayed when floodwater hit the facility late last week, and fellow molding machine supplier Sodick Plustech’s Bangkok factory has had to shut down because floodwaters have prevented parts and workers from getting there. It could take several months to reopen, a senior Sodick executive said.

The Japanese machinery makers said they are monitoring the situation as best they can. One Japanese firm, Asahikasei Plastics (Thailand) Co. Ltd. said in an Oct. 17 statement that its factory in Ayutthaya was closed from flooding and it could not assess damage as the site was inaccessible.

“It is very difficult to get accurate information from Thailand,” said Sumitomo’s Takaishi.