No plans to shut Japanese car plants in crisis-ridden ASEAN
No plans to shut Japanese car plants in crisis-ridden ASEAN
SINGAPORE (AFP): Auto sales in key Southeast Asian markets could plunge to 400,000 units this year and take up to five years to rebound, but Japanese makers have no plans to close down plants, an industry spokesman said on Tuesday.
Eiji Yamamoto, chief representative of the Japan Automobile Manufacturers Association in Singapore, said demand peaked at 1.5 million vehicles in 1996 in "core producers" Indonesia, Malaysia, the Philippines and Thailand.
This declined to 1.3 million in 1997 and this year appears "likely to slump to only about 400,000 vehicles," he told an auto industry conference organized in Singapore by the London-based Economist group.
Currency turmoil hit the region in mid-1997 but the full effects on demand began to be felt only this year as high-growth economies went into recession.
Japanese firms produced or had a hand in the manufacture of about 90 percent of the vehicles sold in the region, signifying a "huge commitment." Yamamoto said.
"Now, economic hardship in the ASEAN region is testing that commitment," he said, referring to the Association of Southeast Asian Nations (ASEAN), which includes the four core countries plus Brunei, Laos, Myanmar, Singapore and Vietnam, which have small car markets.
Experts at the conference said car factories could be forced to shut down because of slumping demand but Yamamoto said that was not the Japanese way.
"Closing down plants might sound like the natural solution when customers stop buying products. But closing plants is absolutely incompatible with management philosophy in Japan's automobile industry," he said.
The former Toyota executive said Japanese manufacturers were devising new measures to make operations viable by expanding exports from ASEAN plants, boosting them with new capital and loan financing, and retraining workers.
Some manufacturers have shifted assembly work to ASEAN plants from Japan, and they have begun exporting models formerly shipped from Japan. Parts exports from ASEAN plants to Japan and other nations have started or expanded.
"They know that markets are sure to recover someday in the eternal ebb and flow of demand. Until that recovery occurs, they try to find ways to keep their capacity utilization rates at viable levels," Yamamoto said.
He said this "philosophical orientation" was a reflection of the history of the post-war auto industry in Japan, where labor and management agreed on drastic restructuring in exchange for job security, and later shared profits.
"That spirit also drives our operations in ASEAN," he said. "We know the ASEAN market will require some three to five years to return to the 1.5 million vehicles of 1996. But we are prepared to wait," he said.