Floods and diesel: Thailand’s small manufacturers face two waves

The IMF–World Bank Annual Meetings are taking place in Bangkok this week. Thailand’s government has announced plans to invest about $8 billion in long-term water management in the Chao Phraya basin. The World Bank estimates that flooding costs Thailand about $600 million each year. The figures presented in the conference hall are large, and the plans stretch far into the future.

At the same time, factory owners in Pathum Thani are looking at different numbers: the water level outside their factory doors and transport bills that rise each week.

According to the Department of Disaster Prevention and Mitigation, flooding had affected 3.14 million people as of October 11. Pathum Thani, with about 249,000 households affected, and Samut Prakan, with about 225,000, had the largest numbers of affected households. These are areas next to Bangkok where small factories are densely concentrated. By October 13, the Ministry of Industry had recorded damage of about 18.2 billion baht at 4,635 establishments in 59 provinces. The Federation of Thai Industries (FTI) has called for emergency assistance for small and medium-sized businesses.

Even after the water recedes, a second wave awaits: diesel. With tensions continuing around the Strait of Hormuz, Brent crude is trading around $106 a barrel. In its October report, the International Energy Agency (IEA) projected that a global diesel shortage would continue into 2027. Trucks delivering raw materials, vehicles supplying modern-trade distribution centres and export container transport all depend on diesel. When production halted by floods resumes, the higher transport bill arrives with it.

Large companies have industrial-estate flood barriers, insurance and factories spread across several locations. Small businesses often have only one factory and one warehouse. Once water enters, raw materials, finished goods and machinery can all be brought to a halt, along with promised delivery schedules. The same flood can deal a very different blow to a small company.

What small manufacturers can do now may be modest, but it is clear.

First, do not keep all inventory in one place. Separating raw materials from finished goods and keeping them above floor level can change the scale of the damage.

Second, start discussing transport costs now. If diesel shortages persist into next year, companies that have already discussed how to share higher logistics costs with their customers will face a different year from those that have not.

Third, keep track of government assistance. Alongside damage registration and low-interest loans, measures to ease cash flow are emerging, including the postponement of the start of Employee Welfare Fund contribution collection to January 1, 2027.

There is also something to ask of the government. An $8 billion water-management programme looks a decade ahead. A factory that has been flooded needs affordable financing to pay next month’s wages and manageable logistics costs when its machines restart. Policies must bridge the gap between large plans and small factories.

The Ministry of Industry reported that the industrial sentiment index rose to 90.7 in September. Yet that figure is hard to feel on a factory floor. This autumn, Thailand’s economy is better understood through water levels and transport bills than through an index alone.