Car industry reels from supply woes

UNCERTAINTIES from Europe cast a dark cloud over the prospects of the local automotive industry, with supply woes seen to plague the sector until early next year.

Dr. Wayne Lee, president and chief executive officer of Universal Motors Corp., said during an exclusive roundtable interview with The Manila Times that the twin disasters that hit Japan in March and the massive flooding in Thailand would continue to weigh down on the industry until early next year.

“We were okay with the tsunami and earthquake. What got us was the Thai floods,” Lee added.

Despite these challenges, Lee said that the company performed well in 2011. Vehicle sales of UMC, which concentrates on the production of Nissan light commercial vehicles, was down 6.9 percent to 5,222 units in the first 11 months of the year, from 5,612 in the same period last year.

Philippine vehicle sales remained sluggish at end-November, dropping 1.9 percent to 131,242 vehicles this year from 133,739 last year.

“For next year, Europe is the biggest unknown factor. If Europeans get their act together, the world is fine. But if they don’t, there is [the] threat of a global recession,” Lee said.

But the UMC executive is confident that the company can survive amid these trying yet “interesting” times.

“If you know the history of the company, we’ve been in the corner many times before. We know what the corner looks like. You can expect we will get out of the corner,” he said.

The flooding in Thailand, as well as the disasters that Japan experienced, may present some opportunities for Philippine automakers as foreign players look to diversify their manufacturing and supply chains.

Because of the high cost of power in the Philippines, the country may not be an attractive destination for manufacturing, but the highly skilled Filipino labor force can excel in the supply chain side of the business.

“We have to focus more on human capital intensive part of the supply chain where there is more high value,” Lee said.

He added that the challenge for local companies was not just to create new products, but a total “vehicle ownership experience” by focusing not only on aesthetics, but the product’s functionality as well.

With 54 years of experience, UMC is the country’s largest and oldest 100 percent Filipino-owned assembler and distributor of Nissan light commercial vehicles. –KRISTA ANGELA M. MONTEALEGRE REPORTER, Manila Times