DTI dangles safeguard measure to keep Honda car production

Published February 24, 2020, 12:00 AM

by manilabulletin_admin


The Department of Trade and Industry (DTI) yesterday dangled the likelihood to impose safeguard measure on imported completely built up (CBUs) cars as a last-ditch effort to keep Honda’s car production operation in the country even as it disclosed that some global automotive brands, including Chinese and South Korean, are exploring potential manufacturing operations. (Related story on B-3)

DTI Secretary Ramon M. Lopez said yesterday after meeting with Honda Cars Philippines, Inc. (HCPI) officials led by its president Noriyuki Takakura to explain their decision to stop production of their BR-V and City models at its Sta. Rosa, Laguna due to cost competitiveness issue.

Lopez said that DTI Undersecretary Ceferino S. Rodolfo informed him of other car brands asking around for car assembly plants.

“As you know, there are new brands that are in the market, right now these are just imported. Given certain volume, it’s possible for them to open an assembly here as well, especially the realization that with the coronavirus and the difficulties in China…, sometimes you have to diversify resources and production sources,” he said.

Mostly, he said, the inquiries came from China and Korea noting that new brands in the market are the Chinese-owned FAW, MG, Foton and Geely.
Lopez was hoping that the planned tariff protection would make Honda hold off their decision.

HCPI officials, however, told Lopez that it its their regional Oceania headquarters based in Thailand which will make the decision.

Already, HCPI officials expressed apprehension on the imposition of safeguard duty as it will make CBU imports more expensive than locally produced units.

“We hope that could be a factor for them to decide to stay. It’s beyond the local operations. Maybe the HQ can consider that in the future. We are not saying they will go back, come back here, but considering all factors, these are possible basis.”

HCPI has no plans yet on what to do with its assembly plant in Laguna, which shutdown would displace 387 factory workers. HCPI has also 7 major parts suppliers, including Honda Parts Manufacturing Corp. (produces manual transmission) out of the total 47 parts suppliers but which also supply to other car manufacturers in the country. City has local content of as much as 30 percent while BR-V has 28.

“Hopefully, if there is a change of heart, they change their mind, they can easily come back because they have a plant,” he said.

The sad fate of the demise of the HCPI manufacturing operation by next month as announced by the Honda Oceania headquarters has led Lopez to strongly push for protection of local car assemblers.

“Thus we really have to study the need to impose safeguard duty and other measures to provide at least a level of support to the local assemblers,” said Lopez.

Meantime, diversification and rationalization of sourcing was largely driven by the global slowdown of the automotive industry, which was first dampened by the US-China trade war. Lopez said the trade war could have been over but the COVID-19 global epidemic is causing more disruption in the already challenged auto industry.

Lopez was only informed of the plan by Honda to abandon the Philippine production pf BR-V and City on Sunday, a day after the headquarters announcement on Saturday, Feb. 22.

During the meeting, HCPI officials also clarified the decision to abandon the Philippine manufacturing operation was made by their headquarters, basically, headquarters for this part of the region Oceania in Thailand.
It is also part of the Japanese car firm’s worldwide, rationalization.

“It’s a more competitive industry so they have to make this rationalization and distribution of resources. In essence, it’s not only Philippines that they are closing but also production hubs in UK, Turkey, Argentina, Mexico and more could be in the offing.