MANILA, Philippines—Ford Philippines will shut down its vehicle assembly operations in Sta. Rosa, Laguna, by yearend due mainly to lack of a broad supply base and economies of scale. The closure will result in the loss of 250 jobs.
In a briefing on Wednesday, Ford Motor Co. Asean president Peter Fleet said, however, that the closure of the plant will have “zero impact” on pricing and availability of Ford products and services in the Philippines.
Even as a vehicle importer, the company will in fact continue to invest in terms of resources in its national sales company, Fleet said.
This will include the launches of the all-new Ford Ranger, all-new Ford Focus and the iconic Ford Mustang this year as well as the opening of 12 new Ford dealerships in key locations around the country.
Ford Group Philippines president Randy Krieger added that this decision, part of Ford’s ongoing restructuring of regional manufacturing operations to improve efficiencies and better leverage economies of scale, was made following a comprehensive assessment of opportunities to bring a new product program to the Philippines.
“The biggest issue we face in trying to bring in new investment to the Philippines is the size of the local supply base, which isn’t yet on a scale that makes new investment decisions very straightforward,” Fleet said. “It’s a different question when you bring in a whole new platform into the plant, getting new supplies, with new components. So that’s the biggest issue—the lack of a broad supply base in the Philippines.”
“The second issue is economies of scale, wherein if you look around the world, the way Ford Motor Co. tends to operate is that we really like to manufacture in scale with full integrated manufacturing facilities, which typically would be at a scale of 300,000 units plus, in terms of assembly capacity in any one plant. The plants being built today in China, India and Thailand, all of those plants have the potential of that kind of capacity should we choose to do that. Clearly that’s not practical today in the Philippines,” Fleet pointed out.
Krieger said, “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.”
The decision will leave the country without a motor vehicle exporter, Krieger said.
According to Fleet, the company has been looking for the past 18 months for new vehicles that could be assembled in the Philippines. However, the lack of scale in terms of supply base and existing facility proved to be the biggest hurdle in the company’s decision to invest further in the Philippines.
Fleet said that the closure of the plant is purely a business decision and does not in any way reflect government issues.
The company said it had exported more than 80,000 vehicles worth $1 billion over to Thailand, Malaysia and Indonesia since 2002.
Ford closed its original Philippine assembly plant in 1983 and reopened a new plant in 1999, citing improved political stability.
Ford invested $270 million in the 36,000 vehicles per year factory. It began its 1999 manufacturing operations with the 4-door Ford Lynx and continued operations since then with production of the Ford Ranger, Mazda 3, Mazda Tribute, Ford Focus and Ford Escape.—With Agence France Presse and Associated Press