Autoparts makers push partnerships with foreign companies

MANILA, Philippines - Automotive parts makers are pushing for partnerships with foreign firms to allow local players to grow and become part of the global supply chain.

According to the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), joint ventures or technical agreements with foreign firms are needed for the local auto parts manufacturing industry to survive.

MVPMAP president Ferdinand Raquelsantos said JVs would allow local firms to not just cater to the local market, but also to break through the regional and global automotive supply chain as well.

“The resulting provisions and upgrades in engineering, R&D, testing facilities and newer, better manufacturing technologies are what we earnestly desire. This will result in better rapport with the OE assemblers that comes with them knowing that we have a foreign partner that they know and is firmly established,” he said.

The release of the automotive industry roadmap, which contains support to be extended by the government to industry players, however, would be needed to encourage partnerships.

“Government support, inclusive of fiscal and non-fiscal incentives, is the main ingredient to spur the ailing local auto parts industry and ultimately, make it a force to reckon within the region. But the support must also be extended to the OE assemblers to encourage them to locally assemble more new models or expand production capacities for models that they already assemble locally. It is academic that whenever there is growth in local vehicle CKD (completely knocked down)assembly, parts makers ultimately benefit from it,” Raquelsantos said.

“This early, government support in terms of providing industry incentives that would bring local SMEs at par with their competitors in the region is seen to be very critical and will play a major role in determining if we make it or not,” he added.

To support the automotive industry and position the Philippines as a regional manufacturing hub for vehicles, the government is crafting a Comprehensive Automotive Resurgence Strategy Program.

Under the program, the government may provide fiscal and non-fiscal support from its national budget to industry players that meet certain production requirements.

While the government has yet to release the automotive industry roadmap, the MVPMAP sees the Philippines’ hosting of the forthcoming Asia Pacific Automotive Dialogue with the theme “Linking Automotive Parts Supplier SMEs (small and medium enterprises) into the Global Value Chains” as a positive development.

This, as the event is expected to identify roadblocks to the efforts of the SMEs to be part of the global value chain and ultimately become a Tier 1 supplier.

“At any rate, we are happy to announce that in this project, five of our local SME autoparts makers have been nominated to go through the process of pre-qualifying to become suppliers in the global OE automotive market and consequently, be global exporters of locally-manufactured auto parts,” Raquelsantos said.