Mitsubishi buys Ford’s Sta. Rosa plant for P6.5B, to transfer operations to Laguna

Mitsubishi Motors Philippines Corporation (MMPC) has acquired the shuttered Ford plant in Sta. Rosa, Laguna, in a bid to expand its operations in the country. The company released a statement confirming the acquisition. In a telephone interview, MMPC vice president for marketing services Froilan G. Dytianquin said all operations, including marketing and sales, would be transferred to the bigger Laguna site.

All of the about 800 employees will be retained, and as the larger facility means there could eventually be more production, more people will be hired, Dytianquin said.

Ford decided to cease its assembly operations at the end of 2012, with a loss of about 250 jobs.

A Nikkei report said Ford’s former factory was purchased at 10-15 billion yen or about P4.4-6.5 billion, but Dytianquin said “the acquisition cost that Nikkei reported is overstated.” The MMPC executive, however, declined to divulge the acquisition cost, citing a non-disclosure agreement with Ford Philippines. There are no immediate plans for the soon-to-be abandoned Cainta facility, he said.

Ford had pegged the cost of its Laguna  plant at P4-billion. It is located at the Greenfield Automotive Park in Sta. Rosa, Laguna and has a capacity of 25,000 vehicles per year. It is capable of producing at least four different vehicle platforms. The plant had assembled the Lynx sedan and Escape SUV for domestic and export markets, and the Tribute SUV and Protege sedan for export to Thailand and Indonesia. It was the first company to export fully-built units from the Philippines.

MMC and MMPC are now studying what additional models can be assembled in the Sta. Rosa factory, as part of the companies’ commitment to expand operations in the Philippines, Dytianquin said.

MMC chief executive Osama Masuko himself made the pledge to invest further in the country during MMPC’s 50th anniversary celebrations last year.

“The acquisition of the Sta. Rosa factory will further strengthen our assembly operations, utilizing heavy stamping machines, advanced equipment and facilities engineering that will support MMC’s business objectives for the new mid-term business plan,” MMPC president and chief executive officer Hikasaburo Shibata said.

“It’s easier to plan expansion in the Sta. Rosa facility because it’s within an industrial zone. In Cainta, the vicinity of the current plant has become crowded with other establishments,” Dytianquin noted.

The Cainta facility has an annual capacity of 30,000 units but only 15,000 vehicles were assembled there last year. MMPC assembles the Adventure, Lancer EX and L300 being units sold locally, while the other models are imported from Japan and Thailand.

Despite the utilization of only 50 percent of the production capacity, Dytianquin said MMPC was confident that the company’s expansion would be supported by the growing domestic vehicle sales. Last year’s auto sales zoomed to a record 210,000 units, and 230,000 new vehicles are expected to be sold nationwide this year.

MMPC last year sold 43,176 units, breaking its previous sales record that was posted before the Asian financial crisis struck in 1997.

Auto sales in the Philippines, however, are not sizeable compared to its Asean neighbors Thailand, Indonesia and Malaysia.

MMPC may also assemble vehicles for export, but any plan to do so will be dependent on the fiscal perks that the government would grant to carmakers, Dytianquin said.

“We’re waiting for the new motor vehicle roadmap being drafted by the BOI (Board of Investments). When we have a clear policy and also incentives for exporters, that when we will definitely expand,” he said.

Automotive assembly in the Philippines is also a laggard in the region, as Thailand, Indonesia and Malaysia are all producing more vehicles, and Vietnam is not very far behind the Philippines when it comes to output.

Assemblers have been blaming the long-delayed release of the auto industry roadmap—which will detail strategies to strengthen production mainly by providing incentives to manufacturers—as a deterrent to their expansion plans. The Department of Finance (DOF), for one, had been vocal in opposing the grant of any incentive that would become a revenue leak. The Department of Trade and Industry (DTI), meanwhile, had set high production quotas under the proposed roadmap, which carmakers deem cannot be easily attained.

Currently, MMPC’s 18 hectare plant is located at the growing residential area of Cainta, Rizal and has a capacity to produce 30,000 units annually. Last year, MMPC has produced around 15,000 units given its existing completely knocked down (CKD) models such as the L300, Adventure and Lancer EX. MMPC plans to relocate to this new site and start vehicle production by January 2015.

Mr. Hikosaburo Shibata, MMPC President and Chief Executive Officer said that “The acquisition of the Sta. Rosa factory will further strengthen our assembly operations, utilizing heavy stamping machines, advanced equipment and facilities engineering that will support MMC’s business objectives for the new mid-term business plan.”

With report by Ben O. de Vera