6 Engagement of Small and Medium-Sized Manufacturing Enterprises …
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the quality and price of imported products, for instance, from China (JS-3; JS-4; JS-9).
Their competitiveness continues to deteriorate due to business disruption by floods.
Therefore, the already narrow profit margins are further hampered, thus impeding
investment in more productive machines or in adaptation measures (e.g., JS-8; JS12). Consequently, small enterprises typically stop their production and distribution
when they are exposed to floods and continue after the water has receded (e.g.,
JDS-10). Medium-sized firms that oftentimes possess more resources and are in a
better competitive situation can develop a more sophisticated flood adaptation. Thus,
the enterprises can finance, for instance, special staff for emergence response or a
flood risk monitoring. The survey shows that more than every second medium-sized
firm established an emergency response team, while only 5.3% of all small firms
integrate this soft measure in their portfolio. Medium-sized enterprises can invest
their resources to train their staff and implement new organizational procedures to
alleviate the impact of floods on their production processes.
The engagement of SMEs in individual adaptation is reaching its limit, especially in the case of indirect flood exposure. As mentioned before, the SMEs are
more exposed to indirect flood exposure. The firms can only mitigate to certain
extent side effects of flooding, such as power outages or inundated streets by generators or stopped delivery. Especially in Semarang, the respondents stated that their
pumps become useless. When the rivers reach a high water level or the sea has high
tide the firms cannot drain the water from their premises (SMG-7; 23; 24). The
respondents complained about clogged or too narrow drainage canals (e.g., SMG26). Moreover, the SMEs are not in a position to fix the insufficient drainage system
because it is public infrastructure, and not all firms engage in cleaning clogged canals.
Another issue is the unpassable streets that cause indirect business disruptions. The
street network in the industrial parks has poor quality, especially in Semarang. Only
the main streets are often paved, and the other streets are gravel roads with many
potholes. Rain and tidal flooding convert the gravel roads into muddy ones full of
puddles complicating that trucks can pass through. Main streets to the harbor or
to the customer are inundated and clogged by slower traffic speed causing delayed
shipping and higher transportation costs. Overall, the SMEs face additional costs and
disrupted supply chains.
Although most of the SMEs adapt individually to their flood risk, their adaptation
remains insufficient, thus they are still exposed to floods. Two major constraints
underline insufficient flood risk reduction. First, the individual adaptation measures
orientate to a large extent on hard measures (i.e., built infrastructure) that have a
reactive character. The SMEs utilize their long-established competencies on flood
risk reduction, even though the flood risk cannot be reduced substantially in the long
run. Second, the dynamic capabilities of the SMEs are not enough to coordinate and
fund larger scale flood adaptation strategies, such as an expanded drainage canal or a
better street network. In order to solve these issues completely, collective approaches
and the support from crucial stakeholders, such as the governmental authorities or
the managers of industrial parks, are needed to cover the high costs of larger scale
adaptation measures. Therefore, the remainder of the chapter discusses and analyzes
whether the integration of the SMEs’ engagement on flood adaptation should be
109
the quality and price of imported products, for instance, from China (JS-3; JS-4; JS-9).
Their competitiveness continues to deteriorate due to business disruption by floods.
Therefore, the already narrow profit margins are further hampered, thus impeding
investment in more productive machines or in adaptation measures (e.g., JS-8; JS12). Consequently, small enterprises typically stop their production and distribution
when they are exposed to floods and continue after the water has receded (e.g.,
JDS-10). Medium-sized firms that oftentimes possess more resources and are in a
better competitive situation can develop a more sophisticated flood adaptation. Thus,
the enterprises can finance, for instance, special staff for emergence response or a
flood risk monitoring. The survey shows that more than every second medium-sized
firm established an emergency response team, while only 5.3% of all small firms
integrate this soft measure in their portfolio. Medium-sized enterprises can invest
their resources to train their staff and implement new organizational procedures to
alleviate the impact of floods on their production processes.
The engagement of SMEs in individual adaptation is reaching its limit, especially in the case of indirect flood exposure. As mentioned before, the SMEs are
more exposed to indirect flood exposure. The firms can only mitigate to certain
extent side effects of flooding, such as power outages or inundated streets by generators or stopped delivery. Especially in Semarang, the respondents stated that their
pumps become useless. When the rivers reach a high water level or the sea has high
tide the firms cannot drain the water from their premises (SMG-7; 23; 24). The
respondents complained about clogged or too narrow drainage canals (e.g., SMG26). Moreover, the SMEs are not in a position to fix the insufficient drainage system
because it is public infrastructure, and not all firms engage in cleaning clogged canals.
Another issue is the unpassable streets that cause indirect business disruptions. The
street network in the industrial parks has poor quality, especially in Semarang. Only
the main streets are often paved, and the other streets are gravel roads with many
potholes. Rain and tidal flooding convert the gravel roads into muddy ones full of
puddles complicating that trucks can pass through. Main streets to the harbor or
to the customer are inundated and clogged by slower traffic speed causing delayed
shipping and higher transportation costs. Overall, the SMEs face additional costs and
disrupted supply chains.
Although most of the SMEs adapt individually to their flood risk, their adaptation
remains insufficient, thus they are still exposed to floods. Two major constraints
underline insufficient flood risk reduction. First, the individual adaptation measures
orientate to a large extent on hard measures (i.e., built infrastructure) that have a
reactive character. The SMEs utilize their long-established competencies on flood
risk reduction, even though the flood risk cannot be reduced substantially in the long
run. Second, the dynamic capabilities of the SMEs are not enough to coordinate and
fund larger scale flood adaptation strategies, such as an expanded drainage canal or a
better street network. In order to solve these issues completely, collective approaches
and the support from crucial stakeholders, such as the governmental authorities or
the managers of industrial parks, are needed to cover the high costs of larger scale
adaptation measures. Therefore, the remainder of the chapter discusses and analyzes
whether the integration of the SMEs’ engagement on flood adaptation should be