Ford to shut down Philippine assembly operations means BUSINESS

MANILA - (UPDATED 5:43 p.m.) Ford Motor Co. Philippines will close down its Sta. Rosa, Laguna factory by the end of the year.

The company said the closure stems from the country's small automotive market and the global phase-out of the US carmaker's remaining Philippine-assembled model, the Ford Escape SUV.

“Today we announced that our Santa Rosa manufacturing operations in the Philippines will close at the end of this year. The plant closure is part of the restructuring of our regional manufacturing operations to improve efficiencies and costs, and better leverage economies of scale. During a lengthy and extensive assessment, Ford looked at every possible opportunity and scenario to bring a new product program to the Philippines, but ultimately we could not build a strong enough business case,” the company said in a statement issued on Wednesday.

Located at the Greenfield Automotive Park in Sta. Rosa, Laguna, Ford's $270-million factory can assemble 36,000 vehicles a year, across four different vehicle platforms. Besides the Escape, the Laguna plant used to assemble the Ford Lynx sedan, Ford Ranger, Mazda Tribute SUV, Mazda3 sedan and Ford Focus.

The factory employs 360 people, but its closure would displace 250, with the remaining 110 to stay on and support sales and marketing.

During a briefing, Peter Fleet, Ford Motor Co. Asean president, said management will sit down with the affected employees to have "personal conversations" so that they would be able to get an idea as to what the workers' options are.

"Clearly we will have a redundancy program for our employees but we will continue to have a sizeable national sales company in the Philippine, which will continue to offer employment. We clearly have opportunities with our dealers too, where we are growing our dealer network, doubling it by 2015,” he said.

Ford was the only participant in the Philippine government's auto export program, having shipped 80,000 units worth more than $1 billion since 2002. Besides the Escape, the company had shipped the Focus and Mazda3 models to other Asean countries, including Thailand, Indonesia, and Malaysia.

The company ended local assembly of the Ranger in December 2002, followed by the Tribute in November 2009, the Mazda3 in January 2012 and the Focus this month.

Edward Krieger, Ford Philippines chief, had said the cost of building and shipping out a Focus from the Philippines was $1,500 more expensive than in Thailand. This gap was "too big" to justify the export of the model, he said.

The $400-per-unit fiscal incentive the Philippine government gave to the company expired two years ago. The company asked the Aquino administration to reinstate this fiscal perk to keep local production of the Escape to no avail.

Ford was one of the local car assemblers that had lobbied for a new motor vehicle development program, aimed at sustaining domestic manufacturing. The Aquino administration however had opted not to pursue the program.

Ford's domestic sales fell to 675 units last month from 677 in April. Domestic sales were driver by the Ford Fiesta and Ford Explorer, both completely built up units imported from other markets. The company also imports CBUs of the Everest, Ranger, Expedition, and Chateau Wagon models.

“Although we are closing the Santa Rosa manufacturing facility, Ford remains absolutely committed to the Philippines. Our national sales company (Ford Group Philippines) will continue to support the marketing, sales and service of Ford vehicles through our growing nationwide network of authorized Ford dealers,” the company said.

“Ford is poised for continued growth in the Philippines, supported by the introduction of eight all-new One Ford vehicles by mid-decade, including all-new Ranger and all-new Focus, as well as the Ford Mustang this year. We are also planning the continued expansion of our authorized Ford dealer network, which will include opening 12 new dealerships this year and doubling the network by 2015,” the company added.

With reports from Likha Cuevas-Miel and Ben Arnold O. De Vera