Eight months ago, Ford Group Philippines shut down their manufacturing operation at their facility in Santa Rosa, Laguna, a big blow to Philippine-based automobile manufacturing as they also exported to the ASEAN region.

FGP Plant, Santa Rosa, Laguna

The plant has been effectively mothballed since December but recently, however, we've been getting reports that two parties are interested in acquiring the former FGP Santa Rosa plant.

The first is just a rumor: the new Volkswagen Philippines under the newly formed Automobile Central Enterprise, Inc. (ACEI). Given the fact that their models will have to come all the way from Europe and not the VW plant located in mainland China (unit prices are the same), it's understandable why they would be interested, but there's no confirmation as to the validity or whether it would progress beyond a rumor.

Such is not the case for the other company according to our sources as Mitsubishi Motors Philippines Corporation is showing real interest in the plant, an indication that's in line with their intent to manufacture the upcoming Mirage G4 (Attrage) in the country.

The former Ford Group Philippines plant stands as a viable manufacturing location for Mitsubishi as the plant still has all the equipment that FGP used to manufacture and assemble the previous generation Mazda3, Ford Focus, Mazda Tribute and Ford Escape.

Acquiring the plant means that Mitsubishi would take possession of all the heavy equipment and tools there such as the welders, jigs and even the robotics. Also, the plant has the necessary workstations such as the paint shop, body shop, and assembly lines already in place. Also, the large grounds of the Ford plant houses plenty of storage and even a small test track for quality control.

The key factor is the presence of the steel stamping presses (for automotive body panels), as that would mean that the Mirage G4 (or any model they so desire) would actually be manufactured and not merely assembled out of a complete knock down (CKD) kit from Thailand.

Mitsubishi's manufacturing base in the Philippines is located at their headquarters in Cainta, Rizal. Back in the late 90's, Mitsubishi had planned to relocate to their larger property in Tanauan, Batangas, but was put on hold with the advent of the Asian Financial Crisis of 1997. Today, their Batangas property is being activated as a stockyard given its proximity to the Port of Batangas where models from Thailand and Japan are shipped to.

According to our sources, acquiring the plant hinges on an upcoming meeting on August 14 that involves the Department of Trade and Industry (DTI), the Board of Investments (BOI), the Department of Finance (DOF) and the leaders of the automotive manufacturing industry.

In that meeting, the government will present their proposal for the future of automobile manufacturing in the Philippines. The industry is asking for the government to match the USD 1500-1800 manufacturing handicap per unit using incentives (tax breaks, etc.), though it would likely come with conditions such as the proposed use of 40% components of local origin/manufacture, as well as a proposed 40,000 roll out target on a per model, per year basis for 5 years.

The manufacturing target is important as given our local new car sales volume, it would mean that every model has to be geared for export as well. It would be difficult to say the least, given that the Philippines is one of only 4 countries in ASEAN that are left hand drive/right hand traffic, the others being Cambodia, Vietnam and Myanmar. The large automotive sales volume countries are all left hand drive/right hand traffic, and that includes Indonesia, Thailand and Malaysia.

Needless to say, we'll be keeping a keen eye on what goes on at that August 14 (Wednesday) meeting.