Domestic automotive parts manufacturers and workers stood behind the Department of Trade and Industry’s (DTI) decision to impose provisional safeguard measure on imported completely built-up (CBU) cars and light commercial vehicles (LCVs) as a step that will arrest further decline in local auto parts manufacturing and save jobs.
DTI Secretary Ramon M. Lopez blasted the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and the Association of the Vehicle Importers and Distributors Inc. (AVID) for their preference over importation.
Lopez gained the ire of CAMPI, a group of more than 20 car players, mostly importers and a few assemblers) and AVID, an-all importers group. The two groups warned the safeguard measure will only further dampen sales and further delay in the recovery of the auto sector.
Lopez said that the position of both CAMPI and AVID only show “they import more than manufacture locally.” The safeguard measure issued on Monday, Jan. 5, 2021, by Lopez slapped a P70,000 safeguard for every imported CBU passenger car and P110,000 for every imported CBU LCV.
“The CAMPI’s concern on sales shows that they are selling more imported cars,” Lopez said stressing that “The safeguard duty is definitely meant to help and boost local manufacturing revival efforts and meant to protect local jobs in the manufacturing of cars and LCVs.”
Lopez said the Philippine Metalworkers Alliance (PMA), the petitioner for safeguard measure, based their complaint mainly on jobs that are declining due to surge in vehicle imports. “Injury to the local industry was proven so we supported the petition of the metal workers alliance,” said Lopez of the findings of the DTI preliminary investigation.
From close to 100,000, there are now estimated 86,000 jobs in local vehicle manufacturing, including the makers of auto parts, metal works, plastic, wiring harness, among others. “These jobs have been affected adversely by the increasing vehicle imports,” he said.
The DTI blamed the declining jobs in the auto sector to the influx of imported CBUs, which jumped from 88,013 in 2010 to 274,847 in 2019.
Despite the imposition of the safeguard duty, Lopez also reminded both CAMPI and AVID that the government is not banning imported vehicles. “Consumers have the option, and the dealers can now sell more of the locally made vehicles such as Toyota Vios and Innova and Mitsubishi Mirage and L300, the prices of which are not changing and therefore will be more attractive. Dealers will still have their businesses. It is maintaining a balance. The imposition of the safeguard duty is in keeping with the law. If we don’t impose this safeguard, after finding Injury to local industry, then we are risking the remaining jobs of the Filipino workers.”
DECLINING AUTO PARTS MANUFACTURING
Domestic automotive parts manufacturers and labor union group hailed and backed the DTI Secretary’s decision.
The Philippine (Auto) Parts Maker Association (PPMA) noted the decline of the local car manufacturing sector due the influx of imported CBUs.
According to PPMA, CBU imports accounted for 20 percent only of total vehicles in the country in 1997. In 2019, total CBU importation galloped to 88 percent of total sales and the locally assembled or the completely knocked down (CKD) vehicles share at a mere 12 percent.
As a result, domestic auto parts manufacturing drastically reduced and PPMA membership went down from 128 firms in 2015 to 49 companies by end of 2020. Worse, the remaining firms are no longer on commercial operation because there have been no orders from clients.
“Our vehicle manufacturing industry has been swallowed by all these free trade agreements to the detriment of our workers. We understand that it is cheaper to import CBU’s than locally assembled these units, but how can we develop our supply base if we discourage local vehicle assembly,” said PPMA President Ferdinand Raquelsantos.
If not for the CARS Program of Toyota Vios and Mitsubishi Mirage, Raquelsantos said “We probably don’t have anymore Passenger Car Assembly, like what happened to Honda City and Honda BRV.” PPMA believes the safeguard measures will address this concern.
“We need to sustain our local manufacturing and re-create jobs for our workers, whether in the vehicle assembly plant or in the parts maker side,” he said.
Labor group SENTRO, an affiliate of the auto safeguard petitioner PMA, congratulated PMA for successfully convincing DTI Secretary Ramon Lopez to issue provisional safeguard duties for 200 days to protect the Philippine auto industry and its workers.
“This provisional measure as provided under Republic Act 8800 (The Safeguard Measures Act), will protect the local industry which has been reeling from the surge in imported vehicles in the past couple of years, which has caused the loss of jobs for thousands of Filipino workers and threatens the employment of many more workers,” Sentro said in a statement.
According to the labor union, the local automotive industry, both assembly and auto parts manufacturing, directly employs almost 40,000 workers, primarily in Region 4-A.
Equally important they said is the fact that the industry and its workers in turn buy supplies, equipment, goods and services from countless MSME’s, informal workers, vendors, and even from large local corporations. It is estimated that the number of workers directly and indirectly employed by the industry is around 340,000 formal and informal workers.
“Thus, countless workers and their families are able to provide for their basic needs, send their children to school, provide for their healthcare, and patronize various entities for their entertainment, rest, and relaxation. In short, the protection of the local auto and auto parts manufacturing industry is crucial to the very survival of the Philippine economy,” said Sentro.
In 2019 alone, Sentro said, more than 1,000 automotive workers have been laid off by car manufacturers and their supply chains. Considering that due to the Covid-19 pandemic the Philippine economy is the worst hit in Asia if not the world, Sentro said the protection of Filipino jobs is vital and cannot be overemphasized.
“The local autoparts manufacturing industry and the auto assembly industry are crucial lynchpins to a more diversified local economy, and nurturing a dynamic manufacturing sector is crucial for this endeavor,” the group’s statement added.
The measure issued by Secretary Lopez shall take effect on January 25, 2021 and will be in place for 200 days. Meanwhile, the Tariff Commission shall conduct formal investigation, including public hearings, after which it will submit its recommendations to the Secretary, who could then impose a definitive safeguard measure.