Starting from next month, Japanese automaker Honda Motor will halt its car production in the Philippines. Accordingly, the decision is part of the company’s global restructuring.
In the company’s statement, Honda said it considers ‘efficient allocation and distribution of resources’ to offer ‘reasonably priced and good quality products.’ For that reason, the Santa Rosa-based sales and after sales office will remain operating.
“After consideration of optimization efforts in the production operations in Asia and Oceania region, Honda decided to close the manufacturing operations,” the Philippine branch stated.
The venture started its adventure in the country in 1992, manufacturing passenger vehicles BR-V and City. However, the production hit low as it only created 7,000 units in 2019, far smaller than the target of 30,000 units a year.
Concerning the situation, Honda Philippines decides to shift its model from locally producing to importing vehicles. This decision is actually understandable since its biggest manufacturers in Southeast Asia are in Thailand and Indonesia.
How the Philippines Responds to Honda
Considering Honda’s decision, the Philippine Department of Trade and Industry has decided to address the issue. Accordingly, the government is currently trying to negotiate with the company executives.
With the possibility of unemployment number that might reach up to 2,000, the government attempts to mitigate the risk. The government, additionally, understands that importing might be the better choice the company currently owns.
“The cost structure of their local car assembly, which has about 380 workers, is basically challenged and there’s no tariff protection, thus making imports of vehicles as a cheaper alternative,” the government said.
The company’s sales slowdown started to happen right after the government imposed taxes on car purchases in 2018. The impact had caused the company’s sales to go down by 12.7% last year.
, told Kyodo News that on top of the almost 400 regular employees of the company, many more at companies supplying parts to Honda Philippines would be out of work.
“The bigger problem is the 1,000-2,000 end-of-contract and contractual workers who work in six Honda parts suppliers. We have sent our lawyers there,” said Alan Tanjusay, spokesman of the Trade Union Congress of the Philippines.
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