Phaseout of 3 vehicle models threatens thousands of workers

About 7,000 workers employed in small- and medium-scale automotive parts manufacturing firms may lose their jobs this year following the scheduled phase out of select car models that couldn’t comply to stricter fuel emission standards, a top official of the Parts Makers Association Inc. (PPMA) said.

Isuzu Philippines Corp. (IPC) and Mitsubishi Motors Philippines Corp. (MMPC) are scheduled to stop the assembly of some car models later this year, in preparation for a government mandate to have more environment-friendly vehicles on the road by 2018.

By January next year, only cars equipped with Euro 4 compliant engines will be allowed to enter the market. However, this move may adversely affect thousands of workers in companies that supply parts for these models.

“Unfortunately, there are (parts manufacturing) companies that are scheduled to be closed down,” PPMA president Ferdinand I. Raquelsantos told the Inquirer.

“This is because of the Euro 4. Our estimate is that 7,000 employees would be affected with the shutdown of the three models,” he said, referring to IPC’s Crosswind and MMPC’s L300 and Adventure models.

Raquelsantos said the impact was mainly on the parts makers supplying to Isuzu and Mitsubishi.
He said the 7,000 workers represented the combined workforce of less than 10 small and medium companies that would be affected.

“That’s where the local parts makers are really affected and we are hoping that the CARS program would be the ‘filler’ once production of these three models were stopped. The problem, however, is that the SMEs weren’t included in the CARS program,” he said.

The government’s P27-billion Comprehensive Automobile Resurgence Strategy (CARS) program was expected to provide big opportunities for local parts makers.

However, based on the initial batch of local suppliers, CARS participants prefer to get their parts requirements from large companies, setting aside SMEs.

Under the CARS program, three car makers are expected to produce 200,000 units each over a six-year period. The program requires registered car makers to eventually increase their local content to at least 50 percent of the assembled vehicle by weight.
The two auto makers registered under the CARS program—Toyota Motors Philippines Corp. and Mitsubishi Motors Philippines Corp.—work with large parts makers, mostly affiliates of Japanese firms.