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NEWS UPDATES Asean Affairs        7  April 2011

Philippine truck production imperiled

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Philippine truck manufacturers are at risk of production slowdown, if not work stoppage as a result of the disruption of the auto parts supply chain in Japan, industry sources said. “Because of the lack of inventory of CKD [completely knocked down] packs from Japan, truck assemblers may slow down or eventually stop production,” a source said, adding that some employees may temporarily “go on vacation.”

“There’s uncertainty,” the source said.

Sources said that compared with cars, trucks and buses have a smaller market in the Philippines, hence stocks of CKD parts and components are kept at a minimum.

Also, some trucks are churned out on a per-order basis, and in such cases parts may be ordered just weeks before their assembly.

Sources said the most likely to be affected by the lack of CKD packs are truck assemblers that have Japanese principals, namely Columbian Motors Corp., which assembles Nissan Diesel trucks; Isuzu Philippines Corp.; Mitsubishi Motor Philippines Corp. (MMPC); and Pilipinas Hino Inc.

These local subsidiaries have existing licensing agreements covering the most important parts and components—including engines and transmissions—with their principals, so such parts come from Japan.

A source from MMPC said the company still has CKD kits for its Canter light trucks, which would last until next month. MMPC keeps a two-month stock of CKD packs for its trucks, while parts for its smaller vehicles have three months’ worth of inventory, the source said.

The MMPC source said Mitsubishi Motors Japan has yet to fully grasp the impact on its operations of the disasters that hit the country last month.

Other truck manufacturers have no problem because they source crucial parts from elsewhere—for instance, Dreamco Automobile Co. Inc. imports from China, while those of MAN Automotive Concessionaires Corp. are from Germany, sources said.

Sales of light trucks, trucks and buses in the first two months of the year more than doubled to 603 units from 280 units in the same two-month period last year, latest industry data showed.

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