Asian crisis drives local car parts makers out of business

The decline in the automotive sector has forced some 20 percent of local car parts makers to shut down their operations, the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) revealed yesterday.

This developed as a US suppliers' mission arrived in the Philippines to scout for potential parts suppliers mainly for the three biggest American automotive companies -- Daimler-Chrysler, Ford Motor Co. and General Motors.

MVPMAP said yesterday that 92 of its members have either suspended their operations or closed shop altogether due to declining demand from car makers who have been cutting back on production due to high inventories.

Complaining of the lingering effects of the Asian crisis, MVPMAP asked the Board of Investments (BOI) to extend the so-called local content rule for another year, requiring domestic assemblers to source 40 percent of their parts requirements from local parts manufacturers.

MVPMAP president Feliciano Torres told reporters yesterday that although local parts makers want to take advantage of the opportunities presented by the US mission and make inroads in the US market, the industry is determined to keep itself protected with the extension of the local content rule.

The rule ensures that at the very least, local automotive assemblers will buy 40 percent of their requirement from local suppliers, making it a captive market for the local parts manufacturing industry.

The industry is expecting to get a boost from the US mission headed by the US Automotive Trade Policy Council president Stephen Collins.

The ATPC represents the big three American car giants that have so far invested a total of $1.5 billion in South East Asia.

Automotive parts and components are the country's third strongest export, generating $1.1 billion in foreign revenues last year. Japan is the biggest market for these products but the US market accounted for 26 percent of total shipment. The BOI revealed that wiring harnesses are the Philippines' best selling car part export, accounting for 46 percent, following by anti-lock break system control, transmission gear boxes and car stereos. --