IT must be nice to live in a world that extends intellectually only as far as the eye can see. It makes thinking about issues easy if not accurate or complete. It comes down to either some of these folks have flawed and incompetent analysis or they are intellectually dishonest, perhaps, on purpose.
The headline reads: “Honda factory closure affects 387 workers in Laguna.” That is unfortunate for those workers and their families, as well as a minor problem for the Philippine economy. And this headline makes perfect sense: “Honda Cars PH closure shocks workers.” However, even the workers union admitted that the company had recently reduced the production of its BR-V models from 35 to 38 units to only about 18 a day. Further, it had already been announced that the factory would stop production of its “City” model starting this February.
The “thought-leaders” rushed to discover that the Honda factory was closing because of the Tax Reform for Acceleration and Inclusion tax law, “political uncertainty” and, of course, all things “Duterte.”
Except, Honda Motor Co. announced as early as 2017 that it was reviewing its global manufacturing with the thought of restructuring its production. The company has more than two dozen primary facilities around the world. Guess which factory closing they announced first. October 15, 2017: “Honda has just announced that it will close one of its traditional assembly plants in Japan as part of a restructuring of its resources.”
If the “experts” took at least 30 seconds to do some cursory research, they would have discovered this. February 19, 2019: “Honda has today announced it will restructure its global manufacturing network. This restructure comes as Honda accelerates its commitment to electrified cars. The significant challenges of electrification will see Honda revise its global manufacturing operations, and focus activity in regions where it expects to have high production volumes.”
Not only are Electric Vehicles changing the automobile industry but sales are falling. This came out about the same time as the Honda announcement. “Car sales around the world are expected to see their steepest year-over-year decline in 2019 since the financial crisis. Global car sales are expected to fall by about 3.1 million in 2019, a bigger drop than in 2008,” Fitch Ratings economics team said.
February 2019 was a busy news month for Honda. “Honda to end production of Civic models at Turkey plant in 2021.” Also on February 19, 2019: “Honda has confirmed it will close its Swindon [UK] car plant in 2021, with the loss of about 3,500 jobs. The Japanese company builds 160,000 Honda Civics a year in Swindon, its only car factory in the EU.” Also on that same day: “Honda says it will stop making autos in Argentina in 2020.” A week later, “Honda plant closings shift work to North America.”
Honda has only a 5-percent share of the Philippine automobile market and its sales declined by 12.6 percent between 2018 and 2019. Nissan’s sales increased by 22 percent and industry leader Toyota posted a 5.9- percent increase. Overall auto sales went up 3.3 percent.
Yes, Wells Fargo bank is closing its Philippine operation and moving to India with the loss of 700 jobs. Wells has 12,000 employees in India and just paid a $3 billion fine for fraud. Nokia is closing its R&D center with also 700 jobs lost. Note that Nokia’s global revenue is down over 50 percent since 2008.
Maybe there is more to business decisions than what the thought-leaders think there is. Or maybe they just do not care about the facts.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.
