is closing its Santa Rosa, Laguna, assembly plant in the Philippines when production of the last-generation Ford Escape cross/utility vehicle ends later this year.
The U.S. auto maker opened the $270 million facility located south of Manila in 1999 with annual production capacity of 27,000 units, which since has been boosted to 36,000.
Total new-vehicle sales in the Philippines reached 166,496 units last year,says.
The auto maker says in a statement the decision to close the plant is part of its ongoing restructuring of regional manufacturing operations to improve efficiencies and costs. Local production will be replaced with imports, mainly from Thailand.
Ford Group Philippines President Randy Krieger says closing the facility, along with the loss of 360 jobs, was a difficult decision. “The company studied every possible scenario and opportunity, but we could not make a strong enough business case for future manufacturing.”
The move marks the second time Ford has ended assembly operations in the Philippines. Local production was halted in 1984 and didn’t resume until 1999.
The auto maker opened a truck assembly plant in Manila in 1955, and in 1967 inaugurated Ford Philippines Assembly Operations in Manila, where it built the Ford Escort, Cortina, Granada, Laser, Telstar and Fiera.
Manufacturing operations began again in Manila in 1999 with production of the 4-door Lynx and since has included the Ford Ranger pickup, Focus C-car and Escape. Ford also made the Mazda3 car and Tribute CUV.
The Escape is the only model still being produced, accounting for just 10% of local Ford sales. The rest of the lineup is imported.
Ford says it was the first and remains the only auto maker to export vehicles from the Philippines. Since 2002, the auto maker has exported 80,000 units, with a value of $1 billion. Vehicles are shipped to Association of Southeast Asian Nations member countries, primarily Malaysia, Indonesia and Thailand.
The Philippine Daily Inquirer reports ASEAN President Peter Fleet saying in a news conference the closure of the plant will have no impact on pricing and availability of Ford products and services in the Philippines.
Ford says it plans to introduce new vehicles and double its dealerships by mid-decade. This includes launches of the all-new Ford Ranger, Focus and Mustang this year, as well as the opening of 12 new Ford dealerships in key locations around the country.
The Malaya Business Insight newspaper quotes Fleet as saying the closure purely is a business decision and is in no way linked to government issues.
“The biggest issue (Ford is) facing in trying to bring new investment to the Philippines is the size of the local supply base,” he says. “It is not yet on a scale that makes new investment decisions very straightforward. With this, Ford is not able to meet the required 40% ASEAN content in the vehicles that it assembles and exports.
“We’ve managed to do that with previous vehicles we assembled. It’s different if you are bringing in a new platform, where it has to bring in new parts and components.”
Fleet says the second issue is one on economies of scale. “If you look around the world, the way (Ford operates), we like to manufacture in scale, fully integrated manufacturing facilities at 300,000 units-plus in terms of assembly. That’s not practical in the Philippines.
“Some of our competitors choose to run differently, (having) small operations in different markets,” Fleet says. “(Ford doesn’t) intend to operate like that; that is not how we choose to assemble vehicles.”
Says Krieger: “We are absolutely committed to an aggressive growth strategy through our national sales company, Ford Group Philippines, which will continue to support our marketing, sales and service operations moving forward.”