Ford plant closure highlights gaps in PH auto industry

Posted at 06/28/12 5:58 PM

MANILA, Philippines - The closure of Ford's car assembly plant in the Philippines emphasizes the importance of increasing domestic demand and encouraging investment in more suppliers for the auto industry, a Department of Trade and Industry (DTI) official said.

Ford cited those issues as the major reasons for shutting down its plant in Sta. Rosa, Laguna next year.

Trade Undersecretary Adrian Cristobal said the country must address these gaps for investments to come in and for the country to become a major player in the auto industry in the region.

"The suppliers base, the quality is there, the workers are there. We have the basic ingredients to be competitive but we have to grow this base of suppliers... What we have to do is map out clearly in next 5-10 years the gaps in our supply chain, technological needs if we are to become an important player in the region," Cristobal told ANC's Business Nightly.

Meanwhile, Leo Ferreira, director of the Philippine Automotive Association, said it is important for the local auto industry to have suppliers for all the components to be able to compete in the region.

"It is important for us to have suppliers for all components and suppliers who would be equipped with technology and capacity to produce the number of parts that are needed," he told ANC's News Now.

The closure of the Ford plant now leaves the Philippines without a motor vehicle exporter.

"Ford is the only manufacturer who is exporting completely built-up vehicles from the Philippines, while Thailand is exporting almost all of the brands to the region, even Indonesia is doing better than us in terms of exports. Economies of scale would play a big role and for us to be competitive in terms of pricing, I think pricing is a key issue. If we are able to price our cars competitively, then we wil be able to equal or surpass Thailand," Ferreira said.

However, Ferreira sees domestic demand growing by double-digits this year.

"Domestic demand is on the upswing right now. Compared to last year, the total market has grown by 5% and I expect it to grow some more by double-digit increase by end of the year," he said. - With ANC