Ford to shut down RP assembly operations

Contrary to President Aquino’s claim that businesses are rushing to invest in the Philippines, the local unit of US auto giant Ford Motors announced yesterday it will close its local vehicle assembly plant in the Philippines by the end of the year, with the loss of 360 jobs, as part of an ongoing restructuring across Asia.

The decision will leave the country without a motor vehicle exporter, Ford Group Philippines president Randy Krieger said in a statement.

Ford Philippines is the first and only volume exporter of vehicles from the Philippines and has supplied the Ford Focus, Ford Escape and Mazda3 to Association of Southeast Asian Nations (Asean) markets that include Thailand, Indonesia and Malaysia since 2002.

“This is a very difficult decision. The company studied every possible scenario and opportunity, but we could not make a strong enough business case for future manufacturing,” he added.

The company said it has exported more than 80,000 vehicles worth $1 billion over to Thailand, Malaysia and Indonesia since 2002.

Ford invested $270 million in the 36,000 vehicles per year factory in Santa Rosa, Laguna that opened in 1999.

Krieger earlier said Ford had undertaken a study on how had fully utilize its assembly plant in Sta. Rosa as it transfers output of most models to its new $450-million factory in Rayong, Thailand.“We are phasing out the production of the Focus in the Philippines by the mid-year. But we’re continuing to build the Escape, which is still selling well for us,” Joseph R. Hinrichs, Ford Asia-Pacific & Africa president, said.
“The Escape will be assembled there until at least the end of this year,” he continued.

Most of Ford’s supply base is located in Thailand and parts account for the largest chunk of the vehicle cost, Mr. Hinrichs said, noting that the Philippine supply base does not have much scale or capacity.
“We have a strong interest in staying in the Philippines. We have a great workforce, a nice facility, and we have been in the country for a long time. But there is no decision yet,” he said.

Ford is still analyzing which of the vehicles in its global portfolio will make sense in the Southeast Asian market, he explained. Moreover, it would have to “make business sense” to assemble the model in the Philippines.

“If it’s a smaller volume product, then it would make sense to put it in the Philippines,” Hinrichs said.
Peter Fleet, Ford Asean president, added: “There is a serious study underway, including private discussions with the government. We will need a couple more months to come up with a major decision.”

The local Ford unit seemed to have been stumped by a sales dip since floods in Thailand last year crippled major factories that supply parts that are assembled in the country.

It ended 2011 on a high as December sales rose by a quarter, while the full-year figure jumped by half to a high of 9,778 units.

Heavy flooding in Thailand that hit its factory, however, has stalled the automaker’s production schedule for the entire region and consequently sales in the Philippines fell by 46.65 percent in January and 49.27 percent in February from a year ago.

Among the models severely affected by the Thai flood crisis were the Fiesta and the Everest which are “primary sales drivers” in the local market, according to Krieger. The Fiesta contributed about 300 units a month, while the Everest accounted for 200 to 300 units. –Tribune