Auto parts makers want safeguards vs car imports

MANILA, Philippines — With over 1,000 auto parts workers to be displaced due to the shutdown of the production facility of Honda Cars Philippines Inc. (HCPI), the Philippine Parts Makers Association (PPMA) is urging government to hasten the implementation of safeguard and retaliatory measures against Thailand by imposing tariff on vehicle imports to support local automotive assembly operations.

PPMA president Ferdinand Raquelsantos said in a text message to reporters yesterday that the group estimates HCPI’s plant closure would lead to 1,200 job losses from 35 direct parts maker companies as well as from tier 2 and 3 indirect contractors including logistics and production supplies.

While there are originally 47 parts suppliers for both the BR-V and Honda City assembled by HCPI in Laguna, there will be only 35 suppliers left with the termination of production for the City at the end of its model life.

Raquelsantos said the group is hoping Japanese-owned Q-Shakai Suppliers, composed of seven companies established in the Philippines to supply specifically to HCPI, would not leave the country following HCPI’s announcement as Filipino parts makers supply to these companies.

“All suppliers follow a three -month firm order, plus three months forecast and about another six months lead time for raw materials ordering. With the forecast of

4,600 units of Honda BR-V model for the next 12 months, inventory to this pipeline will turn dead. We estimate this inventory to be around 240 million plus the tool and die, assembly fixtures that will turn useless,” he said.

While the group believes HCPI would comply with its obligations to pay for component parts and raw material inventory, he said parts makers are now looking for new job assignments to affected workers.

As the Department of Trade and Industry (DTI) has started its preliminary investigation on the Philippine Metalworkers Alliance petition for safeguard measure on vehicle imports, and as the agency is considering slapping duties on vehicle imports from Thailand as a form of compensation for non-compliance to a World Trade Organization ruling on a cigarette tax case the Philippines won, the country’s parts makers would want these actions to be fast-tracked.

“As we urge the DTI to expedite the implementation of safeguard measures for local assembly and hopefully for the retaliation proposals, we believe this will be the key to sustain whatever local assembly we have and even entice new entrants to promote additional employment,” Raquelsantos said.

The government is allowed by Republic Act 8800 or the Safeguard Measures Act to impose safeguard measures or duties on products from overseas when a surge in imports of such hurt domestic industry.

Should government decide to impose safeguard measure or duty on vehicle imports, Raquelsantos said this could be realized as soon as the end of the second quarter.

“This will mean that prices of locally produced, completely knocked-down vehicles will be competitive versus the imported completely built-up units,” he said.

“Likewise, if the Flag Law will be re-imposed, a 15 percent incentive will be given to locally produced products,” he added.

HCPI is closing its assembly plant on March 25 as part of optimization efforts in production operations in Asia and Oceania.

“There was a need to close the Philippines’ plant because of low production volume,” HCPI spokesperson Louie Soriano said, noting the plant, which has an annual capacity of 15,000 units, churned out only 8,000 units last year.

HCPI’s plant closure will affect 387 workers.