Honda Thailand production back on track

Honda has resumed production operations in Thailand after flooding around Bangkok halted production for six months. The factory's official Open House Ceremony was held last weekend at Honda’s plant in the Ayutthaya Province. In attendance to celebrate “a recovery arriving more quickly than anyone could have reasonably expected”, Honda President and CEO Ito Takanobu said the re-opening not only signified a return to production but a “new phase for Honda in Thailand.” Six models are built by Honda Automobile Thailand: the Brio sub-light car, which is under consideration for Australia (see separate article), Jazz, City, Civic sedan, Accord and CR-V. The City, Civic, Accord and CR-V models sold here are usually sourced from Thailand. The Thailand plant absorbed some production requirements soon after the Tohoku earthquake in Japan (in early 2011) but was shut down in October by flood from heavy rainfall over a short (three-day) span, which overwhelmed water catchment and diversion infrastructure north of Bangkok. Swamped by polluted floodwater reaching 2.5 metres, most equipment including die-casting machines and recently (2008) implemented high-end welding robots required replacement. Honda says approximately 1000 cars were scrapped. Honda Thailand’s CEO, Hiroshi Kobayashi told motoring.com.au the ordering process for new machines began in November. “But we couldn’t judge [the extent of damage] because we could only get into the factory by boat… The water was so dirty we had to make assumptions.” And was the boat powered by a Honda outboard? “Yes,” he said happily. “Everything we used was Honda: the generators, the ATVs, the outboards; all ours...” The facility was drained of water by late November. Immediately after, employees took to resurrecting affected production lines and outbuildings. According to Honda spokespersons, 80 per cent of workers’ homes were damaged by the flood but teams of associates managed a 24/7 clean-up program and started to re-equip just 45 days later. Honda’s ceremony was attended by Thailand Prime Minister, Yingluck Shinawatra. The newly-installed leader emerged from a Civic (the bonnet of which she autographed) before a 400-odd strong gathering of media and Honda employees, including execs from Japan to local line workers, to express gratitude for their efforts. “Honda is important to Thailand’s society,” she said. Currently over 6000 people are employed at the Thailand plant. It is situated on low-lying land one hour’s drive from Bangkok and vulnerable to flash-flooding during the region’s monsoon season. A levee bank and concrete wall reaching 3.8m and covering 77km is being constructed as flood-prevention measures; scheduled for completion by September. Meanwhile, GM and Ford operations remain safe in “the Detroit of the East” at Rayong on Thailand’s eastern seaboard. Thailand is Honda’s “most important” production source in the Asian region, supplying to 56 countries. During the ceremony Ito-san said his company “refutes claims that Honda contemplated leaving Thailand” after the floods. “We are here to stay; we have made a commitment,” he stated. Honda also intends expanding operations in India, Indonesia and Malaysia (see separate article). The Honda Thailand dealer network is making a donation towards a flood recovery program for every car, motorcycle or item or power equipment it sells: 1000 (AU$30), 100, or 100 baht respectively. “Since November we’ve had nothing to sell,” said Kobayashi-san. Estimated back-order for Thai-built Honda vehicles across all its markets is around 90,000; taking two to three months to accommodate. While waiting for production to resume, dealers and Honda representatives contacted buyers “one-by-one” asking them not to cancel their orders, he said. The exercise also gave Honda “the chance for maintenance of the customer.” By February, dealers in Thailand claimed a record-breaking order tally but Kobayashi admitted Honda’s fiscal year following the tsunami in Japan “was a disaster”. Figures on the cost of lost production at the Thai plant and Honda’s insurance coverage against further incident of flood are “still under assessment”. The plant can produce 240,000 cars per annum. One of the facility’s (two) lines we visited during the weekend had resumed production of the City model and a two-shift schedule begins this week. Production of CR-V and Civic sedan models for Australia starts this month; Accord and City will follow in May. Execs didn't mention at the time when Jazz models -- currently sourced from Japan -- would return to production in Thailand, however Matsuzawa expects them to roll-out by June.