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| Image from powerpoint presentation of German IT firm. |
Press Release – July 3, 2012
Local auto parts makers lament closure of Ford Philippines plant operations
Getting foreign investors in is commendable. Getting them to stay though is the bigger and more important challenge that must be hurdled.
This is the message local auto parts makers are trying to relay. “This is in view of the sadness that is now sweeping the local parts making industry due to the impending closure of the plant operations of Ford Philippines. We plead for Private Sectors, Government and end-users to take concrete steps so that the remaining auto assemblers will not go Ford’s way”, says MVPMAP President Ferdi Raquelsantos.
“Of course we cannot blame Ford since this was a business decision. But then again, this is definitely a big blow to some 50,000 workers including those in the upstream and downstream industries dependent on the parts making industry. With most of our members’ plants operating at below 50% of their rated plant capacities and the increasing importation of completely-built units (CBU), this would be another obstacle in our attempt to get back on our feet”, he adds.
Ford Group Philippines last week stunned the local auto industry with the announcement that by December 31, 2012, they will close their production plant in Sta. Rosa, Laguna. Reasons cited for the plant closure were below-par operational efficiency, the low consumer demand resulting in a sales volume not enough to give them economies of scale and problems on the availability of some parts locally and the lack of a broad domestic supply base. The good news is that Ford will continue with their national sales activities and all related services.
“It is about time that the government takes a look at why Ford is closing shop. Why are companies like them relocating their production operations to our neighboring countries like to Thailand, India, China or even Vietnam? Why are some investors shying away from the Philippines? What incentives are given to them by our neighbors that we do not give? Why is our demand low? Why are our production costs and prices relatively higher? Over time, why have we not developed our local supply base? What needs to be done to make local auto parts making and vehicle assembly catch up with our Asian neighbors? These are but just some of the questions that we hope to see answers to and concrete solutions taken in the next few months if we ever hope to see the industry recover”, Raquelsantos adds.
MVPMAP Vice President Rommel Juan explains that for starters, maybe the government should take a second look at EO 877-A or the Motor Vehicle Development Program which was approved two years ago. ”A firm decision must be made as to whether this should be scrapped altogether and be replaced with another one. If acceptable, then the proper implementing rules and regulations must be crafted for everyone’s benefit. What we want to see is a firm resolve on government’s part to put in place an MVDP that would provide fiscal and non-fiscal incentives not only to assemblers but to end users as well. It has to be one that will encourage local manufacturing rather than just trading” he adds.
“The government must also look into helping fast track the approval of pending legislative bills that would aid the sunrise industries in the local auto market such as the Alternative Fuel Vehicles bill that would help grow the LPG, CNG and electric vehicle market in the country. In the end, what we want to have is a business environment that would induce foreign investments then have them stay for good”, he concludes.