Sleeping with the enemy

Last week, I wrote about Ford Philippines closing down its manufacturing plant in Santa Rosa after 13 years of producing cars like the Lynx, the Ranger, the Escape, the Mazda Tribute and the Mazda3. Just to avoid any confusion, I want to be perfectly clear when I say that this does not mean that Ford will be ceasing operations here in the country––to the contrary, Ford have announced plans of doubling their dealerships by 2015. They are just closing down the plant, much in the way that Goodyear did in 2009 because they needed to make a “business decision,” which loosely translated means: manufacturing is not that much fun anymore in the Philippines. 

The reaction was very positive. But among the numerous letters, calls, texts and comments I received in support of the strict enforcement of the illegal used car imports and technical smuggling due to gross under valuation, there were a handful of differing opinions that stood out. 

These are mostly coming from consumers who feel that the used Japanese imports from places like Port Irene and Cebu should be allowed because it keeps the auto industry honest, and banning them only discriminates against lower income families. “Not all of us can afford a brand new car,” wrote one irate reader who prefers to remain anonymous. 

Some even suggested that the media, or more to the point, me in particular, were conspiring with the manufacturers to protect the massive profits being made by the automotive industry by “robbing the Filipino consumers of reasonably priced alternatives to the expensive new cars being offered locally.” 

Two or three also agreed, or cared less about the damaging undervaluation issue, saying, “Who cares if some importers are paying the right taxes? I would rather the savings be passed on to us consumers rather than giving it to the government. So long as I can get a decent car at a decent price, it really shouldn’t matter.” 

Point taken. I appreciate all of your views and the effort you have taken to share it with me. This is a very serious issue and I respect everyone’s opinion here, no matter how polarizing, because while we may still end up disagreeing in the end, I am grateful for the healthy exchange of ideas. But I do have to say, with all due respect, it does matter. 

Because allowing even the slightest infraction to go unchecked, or worse, rewarded, is the first step towards anarchy. To put it as simply as I can, asking some to play by the rules and then rewarding those who don’t is a microcosm of everything that is wrong on Philippine roads––and we all know how that’s turned out. Just think about how you feel when you are lining up patiently in traffic when some imbecile with a wang wang starts counterflowing and ends up way in front of you because the corrupt cop or enforcer at the light just waves them through. Well, for lack of a better analogy, that, in a nutshell, is what is happening to our automotive industry, and it is only a matter of time before the legitimate, proper-tax-paying manufacturers and importers start either following suit or folding up. 

Then there’s the safety, environmental and registration issues. Because as far as the illegal used imports are concerned, all those coming in from Japan need to be converted from right- to left-hand-drive. This is a lot more complicated than it sounds because contrary to how some mechanics are doing it, it is not as simple as shoving a steering wheel and pedals over to the other side. And this is where it gets dangerous, because while the going rate for a conversion is upwards of 100,000 pesos, I have heard of jobs being done for under 10,000. In other words, your life has been placed in the hands of the lowest bidder. 

In some cases, especially when a car has been paid out by an insurance claim after being involved in an accident and then cut in half to avoid its resale, special welding is necessary in key structural points and any mistake can cause the car to collapse, which has already happened to a family I know. 

I could go on and on, but basically, allowing the illegal importation of used vehicles and turning a blind eye to the technical smuggling that arises from undervaluing vehicles is a tumor on the heart of the automotive industry. And it needs to be removed once and for all, because at the risk of painting out the painfully obvious, you can’t have it both ways. 

It is either we support manufacturing and the legitimate industry by offering genuine tax advantages and have a zero tolerance policy on the illegal used imports, or make a decision to become like New Zealand and scrap our auto industry altogether and favor the import channel. Cold as it sounds, there is a business case for that––but the biggest difference here is that they have plenty of sheep. We, on the other hand, seem to have a lot of bull. 

Sleeping with both sides will only lead to inevitable––the legitimate ones will fold, more Filipino jobs will be lost and taxes will end up in some very dangerous hands. And then what? You think those tempting prices will remain the same? Forget it. It becomes a cartel, and you will be at the mercy of supply and demand––all of which will be controlled by a handful of very fat businessmen and a gaggle of corrupt government officials. You’ll look back on the good old days of gleaming showrooms, honored factory warranties, fantastic diversity in models, competitive financing, consumer protection and wince at the thought of how we let it get this bad and ended up shooting ourselves in the foot. Far fetched? Well, as of this writing, another manufacturer is getting ready to shut down its plant. I’m not at liberty to reveal who, but to use the word of the day: inevitable.

Most, if not all, economists will tell you that manufacturing is the only ticket out of poverty for developing nations, yet it seems that the Philippines wants to skip that step and go straight into call centers and exporting our talent to other developed countries so that they can grow even further. As valuable as our OFWs are, and heroic as their actions may be, history has shown us that that alone cannot offer the same long-term solutions that manufacturing does. Case in point: Thailand. 

Now I could bang on the same drum I’ve been hitting on for the last ten years, but realistically, if we really want a fighting chance here, the solution does not just lie with the courts or our authorities, but with you. Yes, you. You have the power to stop this from growing into an epidemic. Do not be tempted by the illegal imports and don’t purchase from anyone whom you know has not paid proper taxes. Because when the buying stops, the killing stops––or at least the killing that is being made by the wrong people.

Just remember, if you’re not part of the solution, then you’re part of the problem. So when choosing your next vehicle, choose what message you want to drive home, too. 

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