Japanese automotive giant Mitsubishi has acquired the manufacturing facility that American carmaker Ford shut down last year, in line with plans to expand the former’s vehicle assembly operations in the Philippines.
Next year, Mitsubishi Motors Philippines Corp. (MMPC) will transfer its operations to Ford Philippines’ former plant and will abandon its current 18-hectare Cainta, Rizal facility.
“Recognizing the sustained growth in the economy and the coming age of motorization in the Philippines, MMPC acquires the 21-hectare closed manufacturing plant of Ford Motor Co. Philippines situated in Greenfield Automotive Park in Sta. Rosa Laguna. The acquisition of the plant is part of Mitsubishi Motor Corp.’s (MMC of Japan) strategy to further strengthen MMPC’s role of expanding sales and production capacity which is part of its new stage of growth mid-term plan until the end of 2016 fiscal year,” MMPC said in a statement Monday.
Ford Philippines last year stopped assembly operations for both the export and local markets, citing a small domestic market as well as the lack of government incentives for automotive manufacturing.
“MMPC plans to relocate to this new site and start vehicle production by January 2015,” the company added.
In a telephone interview, MMPC vice president for marketing services Froilan G. Dytianquin said all operations, including marketing and sales, would be transferred to the bigger Laguna site.
All of the about 800 employees will be retained, and as the larger facility means there could eventually be more production, more people will be hired, Dytianquin said.
A Nikkei report said Ford’s former factory was purchased at 10-15 billion yen or about P4.4-6.5 billion, but Dytianquin said “the acquisition cost that Nikkei reported is overstated.” The MMPC executive, however, declined to divulge the acquisition cost, citing a non-disclosure agreement with Ford Philippines. There are no immediate plans for the soon-to-be abandoned Cainta facility, he said.
MMC and MMPC are now studying what additional models can be assembled in the Sta. Rosa factory, as part of the companies’ commitment to expand operations in the Philippines, Dytianquin said.
MMC chief executive Osama Masuko himself made the pledge to invest further in the country during MMPC’s 50th anniversary celebrations last year.
“The acquisition of the Sta. Rosa factory will further strengthen our assembly operations, utilizing heavy stamping machines, advanced equipment and facilities engineering that will support MMC’s business objectives for the new mid-term business plan,” MMPC president and chief executive officer Hikasaburo Shibata said.
“It’s easier to plan expansion in the Sta. Rosa facility because it’s within an industrial zone. In Cainta, the vicinity of the current plant has become crowded with other establishments,” Dytianquin noted.
The Cainta facility has an annual capacity of 30,000 units but only 15,000 vehicles were assembled there last year. MMPC assembles the Adventure, Lancer EX and L300 being units sold locally, while the other models are imported from Japan and Thailand.
Despite the utilization of only 50 percent of the production capacity, Dytianquin said MMPC was confident that the company’s expansion would be supported by the growing domestic vehicle sales. Last year’s auto sales zoomed to a record 210,000 units, and 230,000 new vehicles are expected to be sold nationwide this year.
MMPC last year sold 43,176 units, breaking its previous sales record that was posted before the Asian financial crisis struck in 1997.
Auto sales in the Philippines, however, are not sizeable compared to its Asean neighbors Thailand, Indonesia and Malaysia.
MMPC may also assemble vehicles for export, but any plan to do so will be dependent on the fiscal perks that the government would grant to carmakers, Dytianquin said.
“We’re waiting for the new motor vehicle roadmap being drafted by the BOI (Board of Investments). When we have a clear policy and also incentives for exporters, that when we will definitely expand,” he said.
Automotive assembly in the Philippines is also a laggard in the region, as Thailand, Indonesia and Malaysia are all producing more vehicles, and Vietnam is not very far behind the Philippines when it comes to output.
Assemblers have been blaming the long-delayed release of the auto industry roadmap—which will detail strategies to strengthen production mainly by providing incentives to manufacturers—as a deterrent to their expansion plans. The Department of Finance (DOF), for one, had been vocal in opposing the grant of any incentive that would become a revenue leak. The Department of Trade and Industry (DTI), meanwhile, had set high production quotas under the proposed roadmap, which carmakers deem cannot be easily attained.