Automakers cutting costs, making ‘tough decisions’

MANILA, Philippines - Local car makers are enforcing stiff cost-cutting measures to fend off job cuts and keep profits, amid threats of slowing demand as a result of a slowing global economy. But officials said they were ready to "make tough decisions," including layoffs, once economic conditions worsen. "[Despite] the downturn, we are [doing well] as of this time. But we need to trim the fat if there is any," Universal Motors Corp. Executive Vice-President Elizabeth H. Lee said in an interview Tuesday. Universal Motors, a local unit of Japanese auto giant Nissan, sells light commercial vehicles that include models like the Navara and Urvan. Ms. Lee, who is also the head of the Chamber of Auto Manufacturers in the Philippines, Inc. (CAMPI), noted that while the business environment remained tough, job cuts could still be avoided. "Of course, it is going to be more challenging, that’s for sure," she added. The Ford Motor Co. Philippines, Inc. recently gave 28 employees, including 18 assistant vice-presidents, early retirement packages to help the company cut expenses in light of the global economic downturn. "These were offered way back in September," Glen Dasig, the Ford Group’s assistant vice-president for passenger cars, told BusinessWorld. He insists Ford was not about to fire people in response to the economic slowdown. He added that Ford would have still turned a profit even without letting any employees go. "The measure [was done] to cement our financial position," he added. Mr. Dasig said among the other measures the company has adopted is making service operations more efficient, which reduces expenses and improves customer satisfaction, as well as making employees work more. He said the Ford Group Philippines, whose parent in the US is one of the big three car manufacturers seeking a bailout from the US government, expects to hike profits by a fifth this year. Next year, Ford plans to become more aggressive, with plans to grow its local market share to 5% from 4.6% this year. This is equivalent to an increase in sales of around a tenth. Ford sold 594 units here in November, 16% lower than the 707 cars it sold in November last year, CAMPI said in a report on Monday. Universal Motors, which expects to post double-digit sales growth this year, said it would be more conservative next year. "We cannot discount the fact that there will be a spillover from the crisis next year," Ms. Lee said. But local car makers would not be affected as much as their US counterparts, she pointed out. The company sold 382 cars in November, more than three-quarters higher than a year earlier. Meanwhile, local market leader Toyota said it would adopt a cost-cutting scheme in line with the spending cut of as much as 40 planned by its Japanese parent next year. "We have also been instructed to adopt a policy of [being] cost-conscious," said Rommel R. Gutierrez, Toyota Motor Philippines Corp. vice-president of corporate affairs. The CAMPI report showed a 0.7% decline in Toyota sales in November to 4,137 units, from 4,168 in November last year. "We want to cut costs where we can cut, [but] we have no plans [to lay off employees] as of this time," he said. But he did not ruled out job cuts if conditions worsen. Ford noted that while it had no plans to lay off workers, the decision would ultimately depend on the economy. He said the company expects the slowdown in sales to last only until the first half of next year. Universal Motors’ Ms. Lee said they had no plans to cut jobs, adding that their operations are lean enough. Total car sales went up by 8.3% to 114,365 units in January to November from a year earlier. The industry hopes to sell 125,500 cars by the end of the year. Next year, however, CAMPI is projecting flat sales growth due to sluggish demand.