MANILA, Philippines (2ND UPDATE) - Ford Philippines, a unit of US automaker Ford Motor Company, is closing its only car assembly plant in the country next year, saying the market is too small.
Ford ASEAN president Peter Fleet on Wednesday said the company decided to cease assembly operations at its plant in Sta. Rosa, Laguna due to lack of economies of scale and small parts supply base, which could not generate acceptable returns for shareholders.
In a press conference, Fleet said the company has been looking for reasons to keep assembly operations in the Philippines, given that its operations are small and the capacity is only about 30,000.
He maintained the decision to close the plant was "purely business" and not linked to any issues with the government.
"The biggest issue we are facing in trying to bring new investment to the Philippines is the size of local supply base. Is it yet on a scale that makes new investment decisions very straightforward?" he said.
Around 250 workers are expected to be affected by the closure of the plant. The workers are given the option of joining overseas plants or become part of the sales company.
In a statement, Ford Group Philippines President Randy Krieger said the closure of the Ford plant leaves the Philippines without a motor vehicle exporter.
"This is a very difficult decision. The company studied every possible scenario and opportunity, but we could not make a strong enough business case for future manufacturing," Krieger said.
The last Escape vehicles will be rolled off the Sta. Rosa plant by the end of the year.
Ford had invested $270 million in the Sta. Rosa plant, which opened in 1999. The company said it had exported more than 80,000 vehicles worth $1 billion over to Thailand, Malaysia and Indonesia since 2002.
In preparation for its shutdown, Ford stopped production of other models in the Philippines such as Mazda Tribute in November 2009, Mazda3 in January 2012 and Ford Focus this year.
However, Ford will still have sales operations in the Philippines. Fleet said the company is even planning to launch 8 new vehicles and double the number of its dealerships by 2015.
This is the second time the US automaker has pulled out of the Philippine market. It pulled out of the Philippines in 1980s before restarting in 1999. - With Agence France-Presse