Mitsubishi boss bets on Filipinos

TOKYO—Osamu Masuko, the 67-year-old chairman, president and chief executive of Japanese automotive manufacturer Mitsubishi Motors Corp. has high hopes for the Philippines.

Even as his company takes a new direction as it joins the Nissan-Renault alliance, Masuko says the Philippines will remain a strategic part of the group’s growth strategy.  MMC is building a stamping plant in Laguna province to produce body panels for subcompact vehicle Mirage and its variant Mirage G4.

Mitsubishi Motors Corp. chairman, president 
and chief executive Osamu Masuko
“We would like to contribute to the development of the automotive industry in the Philippines through promotion of local production, expansion of local parts procurement and promotion of employment,” Masuko tells Filipino journalists who were invited to visit MMC’s headquarters in Tokyo and its world-class production facility in Okazaki.  The Okazaki plant is highly automated, employing hundreds of workers and robots to produce nearly 1,000 vehicles a day, which undergo strict quality check and testing.  MMC produces more than 1 million vehicles each year from its various production plants around the world.

As excellent as the Japanese market is, Masuko is more excited about the Philippine market and what it can become by 2020.  “The Philippines has a population of over 100 million and it has a very young population.  It is stable politically and economically. There is room for economic growth and demand for automotive. I have high expectations for the Philippines,” he says.

Mitsubishi auto gallery in Okazaki
Masuko says as Japan, MMC’s home market, has an aging population, the growth in demand for vehicles will come from dynamic economies such as the Philippines.

“English skill is another advantage for Filipinos.  You have a big advantage in speaking in the global arena.  You have a stable economy, even with the change in administration,” he says.

Masuko says while sales volume of vehicles in the Philippines remains low, representing just a third of those in Thailand or Indonesia, this indicates a strong potential for growth.  “That means we can grow more. Compared to Japan, you have a very bright future,” says Masuko.

Mitsubishi Motors Philippines Corp., the local unit, is the first company to register in the Comprehensive Automotive Resurgence Strategy or CARS—the Philippine government’s incentive program for the automotive industry.

Masuko says MMPC has acquired an old facility of Ford Philippines in Sta. Rosa City in Laguna and developed the site into its own production base.  “The annual production capacity of this plant is 50,000 units, but with additional investment, that capacity can be expanded to 100,000 units,” he says, adding that the plan also involves exporting Mirage (hatchback) and Mirage G4 (trunked version) from the Philippines.

“MMPC first started the investment of about P4.3 billion, implemented the expansion of the passenger car production line as well as construction of a new stamping plant,” Masuko says.

“The production of Mirage G4 will start in January 2017, followed by Mirage [in May 2017] and the new stamping plant is planned to be completed in January 2018. In addition, we would like to further make use of production capacity in the future and make further investment,” says Masuko.

MMPC president and chief executive Yoshiaki Kato says the stamping plant in Laguna is already under construction and is expected to be completed by January 2018.  The plant will enable MMPC to produce body panels for Mirage and Mirage G4 subcompact cars.

“For the first time, we will have a stamping plant in the Philippines.  It is a challenge we would like to take.  We could increase capacity to 100,000 units,” says Masuko.

Mitsubishi already enjoys a large market share in the Philippine automotive market, ranking seventh overall in the Asian region.   Demand for vehicles in the Philippines has been growing at a double-digit rate in the past few years, reaching a record 323,928 units in 2015. Mitsubishi alone sold nearly 55,000 vehicles in the country last year.

In the first nine months of 2016, total vehicle sales in the Philippines jumped by another 20 percent.  Mitsubishi accounted for 45,329 or 17.3 percent of total sales in the nine-month period.

To support the expansion and start the local assembly of Mirage and Mirage G4, MMPC hired 400 new Filipino workers to bring the total workforce to 1,400.   “Furthermore, when the stamping plant is completed, we are planning to increase headcount up to about 1,500,” says Masuko.

“I hope that the government will keep supporting the CARS program. If volume goes up, you can eventually export,” he says. “By 2020, you will need six times more cars than today.”

“That is why we requested the government for incentives so that we can produce more.

We requested and now it was realized [through the CARS program]. It is our responsibility to deliver,” says Masuko.

Masuko says MMC’s expansion plan in the Philippines will not be affected by Nissan’s equity investment of 237 billion yen ($2.18 billion) equivalent to a 34-percent equity stake in the company.  He says Nissan chief executive Carlos Ghosn wants to keep the brands separate and independent.

The triple alliance between Nissan Motor Company Ltd., Groupe Renault and MMC created one of the world’s top three automotive groups, with a goal to sell 10 million vehicles in 2016. Masuko says the alliance aims to become the leading producer of electric vehicles in the world.

“The alliance has the basic spirit of respecting each other’s brand, history and management autonomy. The brand, marketing and sales network will be kept separate as in the past,” Masuko says.

“On the other hand, we aim for greater synergy impact in the field of purchasing, vehicle platform, development of advanced technology, growing markets, joint plant utilization and financial services,” he says.

Mitsubishi Motors Corp. executive officer, corporate general manager at business administration office Koichi Kitamura says aside from MMC, the whole Mitsubishi Group is big in the Philippines. Mitsubishi Group traces its roots to a shipping company established in 1870 by  Yataro Iwasaki.

Now, it is involved in automotive, mining, real estate, banking and insurance, construction, oil and gas, food and beverage, chemicals, steel, aviation telecom, electronics, energy and heavy industries.  

Kitamura says Mitsubishi Group includes 40 companies, including Asahi Glass Co. Ltd., The Bank of Tokyo-Mitsubishi UFJ Ltd., Kirin Holdings Company Ltd., Tokio Marine & Nichido Fire Insurance Co. Ltd., Nikon Corp. and NYK Line (Nippon Yusen Kabushiki Kaisha).

Twenty-nine of the 40 companies form the so-called Mitsubishi Friday Club, with total employees of 762,000, total assets of 58 trillion yen (P126.8 trillion), net profit of 2.6 trillion yen (P1.2 trillion), total assets of 400 trillion yen (P185 billion) and market capitalization of 30.3 trillion yen (P14 trillion).

“These 29 core companies with 760,000 employees worldwide and total sales of 58 trillion yen account for a little more than 10 percent of GDP of Japan,” Kitamura says.

“Mitsubishi companies are covering most industries in Japan and worldwide.  Out of those, some Mitsubishi Group companies have significant relations with the Philippines,” says Kitamura.

These include Bank of Tokyo-Mitsubishi UFJ which has a capital alliance with Security Bank Corp., Tokio Marine & Nichido Fire Insurance Co. Ltd. which provides marine insurance in the Philippines, Mitsubishi Electric Co. which is involved in elevator business in the Philippines, Mitsubishi Heavy Industries which is a main contractor of the government, Kirin Breweries which is working closely with San Miguel Corp., Mitsubishi Corp. which is developing power, water supply, transportation and construction projects, NYK Line (Nippon Yusen Kabushiki Kaisha) which operates a maritime academy in the Philippines and Mitsubishi Motors.

In the Philippines, Mitsubishi Motors Philippine Corp. is operating with business partner Sojitz Corp.

“The Philippines is one of the most strategically important markets for Mitsibushi Group,” says Kitamura. 

Topics: Mitsubishi Motors Corp. , Osamu Masuko , Nissan-Renault alliance , Philippines , Mirage , Mirage G4
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