By Alithea De Jesus
With the recent decision of Nissan Philippines to stop its operations in the Philippines for the car assembly operations, Trade Secretary Ramon Lopez emphasized the need for provisional safeguard measures on the automotive industry.
Nissan informed on January 20, 2021 the Department of Trade and Industry (DTI) that Nissan will cease assembling its Almera model in the country in line with the group’s global plan to optimize production and efficient business operations in the Association of Southeast Asian Nations (ASEAN) region.
“The announcement of Nissan to close their assembly operations in the country is regrettable, as these developments all the more demonstrate the critical situation of the local motor vehicle industry. Thus, the provisional safeguard measures need to be immediately put in place to protect the domestic industry from further serious injury,” the Trade Secretary said.
Based on international news reports, since 2019, Nissan had already closed plants across Europe, US and developing countries and have laid-off approximately 42,500 workers globally. Moving forward, it plans to further cut its global production capacity by 20% as well as its number of models offered to the market.
In the Philippines, Nissan Almera’s sales of around 4,500 represents just 1% of the total vehicle market and its assembly activity employs 133 workers. Introduced in the country in 2011, the current 3rd generation Almera had likewise over-extended its model life cycle.
The stoppage of assembly was expected as in its earlier discussions with the DTI, Nissan has intimated that they already contemplated on closing last year given weaker volume sales and low market share of the Almera. They have in effect extended their stay. Their major sales come from imported pick-ups and sport utility vehicles (SUVs).
Nissan, however, reassured DTI that the 133 workers will be provided reasonable compensation packages and that only assembly workers are affected, as operations of their marketing and distribution network will continue – selling units imported mainly from Thailand and Japan.
Moreover, the Department of Labor and Employment (DOLE) and the DTI regional offices will collaborate in providing affected workers with manufacturing jobs.
Sec. Lopez also stated that “The stoppage of Almera’s assembly operations, following closely that of Honda and Isuzu, only highlights that the local auto assembly industry is critically impacted by the surge in imports and will thus benefit from the time-bound safeguard duty.”
“Alongside the modernized incentives being made available under the CREATE Bill, the DTI is undertaking a comprehensive approach to revive the auto industry – employing coherent policy measures while still maintaining fair trade and the contestability of the market for imports. This, together with the major reforms we are doing—such as the Public Service Act, the Rice Tariffication Law and the Build, Build, Build program, and many more—will bring about a more attractive investment climate moving forward,” the trade chief added.
It should be noted that the Philippine auto market is one of the most open among the larger ASEAN member countries. For instance, Thailand imposes an 80% Most Favored Nation (MFN) tariff rate on completely built-up units (CBU) originating outside ASEAN. Meanwhile, with various non-tariff measures on motor vehicles in place, Indonesia has effectively discouraged imports and, as a result, imports account for only 7% of Indonesia’s domestic market. This is in stark contrast to the Philippines, where locally assembled light commercial vehicles account for only 7% of the market.
Nissan is currently leasing the manufacturing facility owned by the Taiwanese company, Yulon Group. Accordingly, the plant itself will be kept, similar to how the Honda’s facility, remained intact.
The Secretary expressed hope that the plant can be used for the next entrant to a local assembly of cars when the business climate improves after the pandemic.
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