August 16, 2012
Why Ford closed business in the Philippines 0
Ford confirmed last month that they will close a plant in Sta. Rosa, Laguna. The company have put reasoning behind the fact that the demand in the country is simply too small. The returns for shareholders were deemed unacceptable.
The market demand was not justifying the amount of business that goes through the factory, with only a small scale parts supplier being used.
The last Ford Escape vehicles will come off the production line at the end of the year. $270 million was invested into the factory since being established back in 1999.
Capacity stands at 30,000 at the factory. Ford Philippines did try their best to justify keeping the factory alive but in the end it was decided that ending production would be the best way forward. Ford did confirm that the decision was a business one. There were no issues relating to the countries Government with believing that this was one of the factors in the factory closing down.
250 workers were let go after the plant closes. They will have the option to apply for jobs overseas or work within the countries sales team.
This will also mean that the Philippines will now not have a main vehicle exporter. Approximately 80,000 vehicles were exported to Thailand, Malaysia and Indonesia which were worth $1 billion in business.
Randy Krieger, the Ford Group Philippines President said “This is a very difficult decision. The company studied every possible scenario and opportunity, but we could not make a strong enough business case for future manufacturing,”
It has been a long time coming. Ford ended production of the Mazda Tribute in November 2009. In 2010 they ended the production of the Mazda3 and earlier on this year the last Ford Focus’s were rolled out.
The news doesn’t mean that Ford are cutting all ties within the country. They will continue to have a sales team in the country. 8 new Ford models are set to hit showrooms by the year 2015.
Ford have has a history of withdrawing from the Philippine market. Back in 1980 they first exited the country but made a return in 1999. Will they make another return in the future? It will all depend on the behaviour of the market and if there is more demand.