Another one bites the dust

So the automotive industry’s worst kept secret is finally out. 

After producing less than 130,000 vehicles over the last 13 years––80,000 of which were exported––in a 21-hectare facility with an investment cost of almost 300 million dollars, it didn’t take a 99 cent app to figure out that Ford needed to shut down their Santa Rosa Plant. And that’s just plain sad.

Sad for the 250 or so employees who face unemployment by the year’s end, even sadder for the 100 million or so other Filipinos whose government can’t seem to hold down a meaningful relationship with any foreign investor. 

Oh, I’m sure the same government officials can wave all sorts of convoluted figures, bilateral agreements, nauseating reports or road maps to the contrary, but the simple fact is that these marriages never seem to last because they always get caught in bed with someone else––which in this case are smugglers.

Although I have been banging on this drum for over a decade now, nobody banged louder than Ford when at one point illegal imports were outselling the legitimate industry. Over the years, Ford, as well as the rest of the industry, with the support of local media, lobbied heavily against this practice as a last ditch effort to protect manufacturing here in the Philippines; and although there was eventually a decline in outright smuggling, sadly, it seems to have been replaced with technical smuggling––which is basically the undervaluation of brand new, officially imported vehicles. 

While outright smuggling received a lot of ink in the local press, and places like Port Irene, Cebu and Subic have become the posters for all of the automotive industry’s woes, many automotive executives I have spoken to feel that the silent killer here are the official importers that are undervaluing their cars––some by up to 70 percent, giving them an unrealistic price advantage over the locally manufactured units. 

This practice not just robs the Philippine government of its due, of course, but chokes the legitimate players into complete corporate affixation. 

As the price tag to do business legitimately in the Philippines no longer remains competitive with our Southeast Asian neighbors, it’s no wonder then that Ford have chosen to get rid of the heavy baggage and take the fight to level ground––but the bigger worry now is, whether Toyota, Honda, Mitsubishi and Nissan will follow. Drastic as it may seem, it is only a matter of time before these companies look long and hard at the relationship they have with the government, or more importantly, what relationship the government is having with the one next door.