Japan firms dislodge PH auto parts makers

by Othel V. Campos, Manila Standard, Jan. 23, 2017

Local automotive parts makers feel left out in the development of the Philippine automotive industry, as some car assemblers decided to tap Japanese parts suppliers.

The Philippine Parts Makers Association asked the government and the private sector to boost the supply capability of local small and medium enterprises particularly in the automotive sector.

“It seems that the local car assemblers have totally ignored the local SME supply chain and have just focused on their own Japanese-affiliated suppliers. When Toyota was asked on the possibility of other local parts makers to be a supplier, they said it will take four years for the development and if it gets approved, supply phase-in would be in the middle of production life which will be sometime by the end of 2021,” said PPMA president Ferdinand Raquelsantos.

“As for Mitsubishi, a scheduled Wave 1 to 3 phase-in is targeted for the year 2018. Unfortunately right now, no plan for local development of SME suppliers is apparent or forthcoming,” Raquelsantos said.

PPMA, previously known as the Motor Vehicle Parts Manufacturing Association of the Philippines, welcomed the forecast of an increase in employment, including the new in-house production activities that the two car assemblers embarked on.

The group, however, said there was a noticeable downsizing in the operations of small and medium enterprises that might be considered tantamount to, if not near, to closure.

“When the 20 invited Japanese suppliers visited Mitsubishi Motor Philippines Corp. in March of 2016, the local parts association urged them to, not only take over our local businesses, but also to enter into a joint venture agreement or TLA [technical licensing agreement] with local parts maker, especially the SMEs,” Racquelsantos said.

PPMA said there was an observation that Japanese suppliers partnered with their fellow Japanese suppliers who have established operations in the Philippines.

It also noticed that some Filipino local parts suppliers were dislodged in favor of the Japanese companies that were offered TLA by the original foreign suppliers.

PPMA said despite these observations, it was acknowledging the efforts of the Trade Department in supporting and promoting SMEs to the original equipment car assemblers.

PPMA said it remained optimistic that the car assemblers would recognize the importance of developing the SME local parts makers especially via the ongoing incentives scheme―the Comprehensive Automotive Resurgence Strategy (program.

“Our large companies-members are preparing and looking forward in making true forecast of increase in production of about 55 percent. They will definitely be benefitted from this Cars program while the SMEs will continuously strive for their existence,” Raquelsantos said.