Toyota threatens to close facility

REPORT FROM BUSINESSWORLD LOWER IMPORT duties within Southeast Asia are threatening local automotive production in the Philippines, which could lead to a closure of its manufacturing plant, Japan’s top car maker Toyota Motor Corp. said. Tokuichi Uranishi, head of Toyota’s global planning operations, said the company has been having "difficulties" with regard to maintaining competitiveness due to lower tariffs. "I understand your government reduced the import tariff to 5%, that means the local production cannot compete with the importation from other countries," he told reporters. "If import duty is drastically reduced, local production cannot have enough competitiveness against importation. What may happen is a serious problem in the business of the local production activity," he added. The region began embarking on economic integration in 1992 when ASEAN established a free-trade area. The Common Effective Preferential Tariff scheme required that duties levied on a wide range of products be brought down to no more than 5% and eventually to zero. Mr. Uranishi said the threat could lead to a closure of Toyota’s local operations, but stressed "this (plant closure) is a sensitive issue." "We have many shareholders. We have to justify our operations. It’s a very difficult operation but it may be too late since the tariff was already reduced." He said Philippine operations "don’t have competitiveness compared with other Asian countries," citing poor supplier capability and smaller production volume. "The Philippine plant is smaller compared with other countries. We are explaining the situation to your government but so far there’s no action yet," he said, adding "if the Philippine government seriously wants to keep operations, we have to maintain competitiveness." He said Toyota expanded its transmission operations to help boost competitiveness. Toyota Motor Philippines Corp. posted increase in sales for January to August, to 27,037 units from 24,249 over the same period last year. The company cornered about 36.75% of the total market share. The company sold over 38,200 units in 2006 and captured more than 38% market share in overall sales. Toyota Philippines expects to sell 41,000 vehicles and corner 40% of the local automotive market by end-2007 as interest for new models increases; and 42,500 next year mainly due to growing consumer interest for Toyota Vios and Innova. Meanwhile, the workers who staged illegal strikes against Toyota Philippines in 2001 are not entitled to separation benefits, the Supreme Court said. This, as the high tribunal affirmed the lower courts’ findings that 227 members of the Toyota Motor Phils. Corp. Workers Association staged illegal strikes in several incidents in 2001 leading to their dismissal from the company. "They [management and union] both have the same goal [in business], even if the benefit that results may be greater for one party than the other. If this becomes a source of conflict, there are various, more amicable means of settling disputes and of balancing interests that do not add fuel to the fire," the high court’s second division said in a 49-page decision penned by Associate Justice Presbitero J. Velasco, Jr. After collective bargaining agreement discussions collapsed, the union staged a picket in front of the Bureau of Labor Relations in Intramuros, Manila on Feb. 21 to 23, 2001. As a result of the lack of manpower, the firm allegedly incurred losses of about P53.85 million. The strikes intensified when the management dismissed the union members. As a consequence, the workers barricaded the gates of the firm’s Bicutan and Sta. Rosa plants from March 28 to April 12, 2001. Sensing the issue has escalated into a case of national interest, the Department of Labor and Employment Secretary later assumed jurisdiction. Despite this, the union still conducted strikes on May 23 and 28 that year. The case was forwarded to the National Labor Relations Commission who ruled in favor of the management on Aug. 9 that year. The Court of Appeals later affirmed the decision of the labor arbiter but ordered the management to pay the union members separation benefits as a form of "social justice." The high court said the union officers and members employed unlawful means such as refusing the entry of other workers and clients to the plants. — Bernardette S. Sto. Domingo and Ira P. Pedrasa/BusinessWorld