Opinion · Columns
The Water Recedes, but Customers May Not Return
Flood-hit SME manufacturers need swift funding and a resilient supply chain
Thailand’s Ministry of Industry has released its assessment of industrial damage from the floods. As of October 13, 4,635 businesses across 59 provinces had been affected, with preliminary losses of about THB18.21 billion. Most of the damage occurred inside industrial estates. Chon Buri alone accounted for THB17.9 billion. Earlier, an earthen embankment collapsed at Amata City Chonburi Industrial Estate, forcing 34 factories to suspend operations. When parts supplies stopped, five vehicle manufacturers temporarily halted production.
One finding deserves more attention than the headline figures. In a survey by the ministry’s crisis management centre, 77.6% of affected businesses said they needed urgent assistance. Their first priority was funding to restart operations. Money came before machinery repairs. Factories may be able to run again once the water recedes, but wages, raw material bills and payments to suppliers do not stop in the meantime.
On the factory floor, flood damage arrives twice. The first blow is submerged equipment and inventory. The second comes when customers find other suppliers during the interruption. In the automotive parts industry, approval of a new supplier is said to take nearly a year. Put another way, a place in the supply chain is difficult to regain once it has been lost. Cosmetics and household goods are no different. Modern retail shelves do not wait.
Government assistance is available. SME D Bank offers a principal and interest repayment suspension of up to 12 months, while the SME Development Fund has offered a three-month repayment suspension. Yet only 539 borrowers have participated in SME D Bank’s programme so far. That remains a small number compared with the affected businesses. Whether assistance is insufficient, firms do not know about it, or the paperwork is too cumbersome deserves closer examination.
I see three things small and medium-sized manufacturers can do now.
First, put a number on the damage immediately. Record equipment, raw materials, finished goods and days of lost production, supported by photographs. This will speed up insurance claims and applications for assistance. Even factories that escaped damage should use this opportunity to identify their own flood vulnerabilities.
Second, contact customers first. Companies that honestly explain when they can deliver and whether alternative production is possible preserve trust. Silence sends customers to competitors.
Third, avoid concentrating raw materials and suppliers in one place. Secure a second supplier for critical materials in a different region. Treat the cost of carrying a few more weeks of safety stock as an insurance premium.
My expectations of government and industry are equally clear. The speed and accessibility of assistance matter more than its size. Damage verification and loan repayment suspensions should be handled through a single service point. Guidance should also reach foreign-owned SMEs that are unfamiliar with Thai paperwork. Industrial estates should share inspection results for embankments and drainage systems with their tenants. Reports that the government is considering major investment in long-term water management in the Chao Phraya basin are welcome. But factory owners need visible change before next year’s rainy season.
Thai manufacturing learned a great deal from the floods of 2011. This flood asks whether those lessons remain on paper or have reached the factory floor. The water will eventually recede. Preparation will determine who gets back on their feet first.
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This article expresses the author’s views.