Toyota may shift manufacturing hub for Fortuner from Thailand to Philippines

[thailiketoo]

So far we have the Philippine chamber of commerce and some friends of Oscar who think some auto plants might be shifted from Thailand to the Philippines.

[marcusd]

This is absolute RUBBISH.

Thailand is pricing itself out of markets.

You obviously know nothing about costs of importing and exporting and you obviously know nothing about the cost of keeping stupid paperwork up to date for immigration.

The cost of labour is no longer CHEAP or competitive in Thailand and LABOUR is what drives business to seek other countries for manufacturing.

May I suggest you READ OTHER NEWS , other than your own boss's dictates?

See your RUBBISH! and raise you one rubbish. Cost of paperwork is one computer and one clerk. Cost of selling cars in Thailand is less than importing them from Philippines. Suggest you read other news that is not from the Philippine chamber of commerce.

I will raise you 2 more RUBBISH and a throw of the dice... THAILAND is way way more expensive to produce NOW. Irt was not years ago but it is NOW compared to many ASEAN nations. WHY/ Not just a clerk and a computer but 30 days sick leave per year plus 15 public holidays and social security plus the extra wages. Now 30 baht per hour but most in office jobs get more. AND Philippines is cheaper labour, SKILLED better English and the business world is ENGLISH like it or not, and even with corruption the corruption is more UNIFORM and not varied officer to officer as it is in Thailand.

BUT the BIG clincher is this- If you are EXPORTING from nations such as VIETNAM, PHILIPPINES or INDONESIA or MALAYSIA you do not pay IMPORT duties as you do in thialand on products that are going to again be EXPORTED - VEHICLES in this case! So if you are TOYOTA and you need to bring in gear boxes from somewhere else you pay import duties in thailand that are crippling. In the other 3 countries you do not so you cost of production is WAY DOWN. Add in the lower wages and you still have room to move to allow for natural disaster management. WHY DO I KNOW? I have friends doing this and am looking RIGHT NOW to relocate my offices and I do minor import export and I have the same issues as the big guys but on a small scale.

[marcusd]

So far we have the Philippine chamber of commerce and some friends of Oscar who think some auto plants might be shifted from Thailand to the Philippines.

I actually think Malaysia and INDONESIA are bigger threats. Toyota moved their Australian operations there. AND they were offered free electricity - a big factor in car making

[marcusd]

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There is a lot of business in Philippines. The SECOND largest call centre place on the planet and many businesses are moving operations there because of labour costs.

Do you think they care about EMPLOYEE safety? The are other concerns and it is not the well being of staff.

Why are businesses looking elsewhere if Thailand was so great? It is not and it is not a Thai bashing thread.

If Toyota goes it could cause a bigger wave than a ripple. Look what happened to Australia when ONE company said it was closing. Now there will be NO CARS made in Australia at all.

True, but right now the talk is only about the Fortuner being manufactured elsewhere outside of Thailand, not necessarily all Toyota vehicles. I think Thailand will continue to be competitive in terms of pickup manufacturing (if nothing else and besides more than half of all vehicles sold in Thailand are pickups); I don't see that changing to the Philippines or Indonesia, two markets which have practically no pickups at all (for anyone who's ever been to either country that will be very obvious as soon as you step off the plane). Having said that, anything is possible, especially with greater incentives in other markets, lower wages and better political stability. Although the reasons for Australian automotive manufacturing soon coming to an end are very different to Toyota possibly moving Fortuner production away from Thailand to the Philippines (or elsewhere) the one thing both Thailand and Australia have in common is that neither one has a local car brand and are thus at the mercy of the foreign car makers, who can decide at any time to move away and close down local manufacturing if the conditions aren't right.

However, for now I don't see any big exodus by car makers from Thailand though - there are still too many positive enticements to keep manufacturing here. While some types of cars (like the Fortuner) may go, overall the industry still benefits from numerous government incentives, relatively low wages and a highly skilled workforce, the necessary supporting infrastructure and sufficient local and regional demand for it's products thus virtually guaranteeing sufficient output. Of course protectionist policies also help. Unfortunately Australia started killing its industry the moment it decided to lower import tariffs thus flooding the market with cheaper imports some 20-30 years ago; it only got worse with high wages and a strong local currency and limited local demand and foreign exports.

Large waves are started as small ripples in the sea. Australia had a larger LOCAL sales market than Thailand. The Thai market is not enough to keep the companies here. IT IS THE EXPORT MARKET that keeps the companies alive and that is being killed slowly by costs.

Moving one product is testing the water. WHY did Toyota RAMP up the factories in Indonesia recently for CAMRY/ COROLLA / ALTOS production?

[marcusd]

Toyota seem to be in the middle of moving totally out of Thailand.

Maybe this is why they released the news about Ford still being interested in LOS for its SEA production to sweeten the bitter news.

More like there will be plenty of ready built auto manufacturing plants for them to move into. But then again wouldn't they be questioning why the Japs are dumping Thailand?

Truth is, the Japs now don't have to build here to avoid the disgustingly high excise tariffs on motor vehicles once the AEC kicks in. They can move to more efficient SEA countries with cheaper salaries and better workforces. Then export to Thailand.

Thailand is going to be the big loser come the AEC.

Where did you get your degree in Economics?

Hopefully not the same place as those fools running the stock markets and banks

[thailiketoo]

There has been no announcement from any car company including Toyota that they are moving anything out of Thailand. Correct me if I'm wrong.

[ikke]

The Japanese have had enough of Thailand, it's floods, corruption, lack of law and order, laziness, and unregulated businesses. Have you ever seen Japanese outside the Emporium area, Thonglor 55 or the factories outside central Bangkok in chauffeured cars and their country clubs? japanese never go around walking in Thailand except around Soi 55 and 24 clubs. They don't consider Thailand safe and very high risk. The Japanese are running from Thailand. They have had enough.

Nothing to do with floods nor corruption, it is only because of the political unrest (started by Suthep) and the coup, and as extra but rather small issue, unbelievable stupid immigration rules, (90 day notification) nothing more nothing less.

Toyota will not be the last one to leave Thailand.

When Suthep started the unrest, the down spiral of the economy started, the coup added more oil to the fire !

[Phra Ek]

The new Everest will arrive just in time.

Perhaps the reign of King Fortuna will finally come to an end.

[Tomtomtom69]

The fact they aren't more expensive than a Toyota suggests very heavy taxes are imposed, because a Proton is far inferior to any Toyota. In Malaysia the Protons are a lot cheaper than a Toyota and only a minor part of the difference is down to tax.

Not really - please compare the sticker prices of two comparable models. I don't have exact prices with me, but remember seeing a basic Proton available for 670,000 Baht or somewhere around that. A similar Toyota Corolla costs about the same for the baseline model.

You're just saying that a Proton is far inferior to a Toyota as your opinion. Inferior or not, they are not going to be priced at half the price of a Toyota, maybe only marginally cheaper. And while I agree that Toyota is a better, more established brand, I don't think Proton are rubbish either.

All cars are heavily taxed in Thailand, locally produced or not. Cars manufactured in other ASEAN countries benefit from low tariffs, those imported from third countries outside of ASEAN are taxed to the bone, with tariffs of up to 300% imposed. Clearly this is not the case with ASEAN, otherwise a Proton would cost 1.5-2 million Baht, which nobody would pay for as an "inferior" car as you say. Whatever slightly higher cost is also down to transport costs and marketing and sales costs, thus adding a few thousand dollars (i.e. 100,000 Baht or so) to the sticker price compared to a locally produced vehicle.

It's also worth noting that Proton only entered the Thai market around 2-3 years ago. Prior to that the only Protons on Thai roads were old, derelict models from 20 years ago or Malaysian registered ones, driving mainly near the southern border with Malaysia.

Ummm ....nope...I'm stating a fact...a proton is no where near Toyota in quality or performance or safety....the fact you say a basic model is 670,000 just proves my point, that it is a similar price only due to tax...a basic model in Malaysia is half that price

Well Malaysia clearly protects it's national car maker from foreign competition, which is something anyone who knows the brand and how it operates its business in Malaysia will know well. I simply made a comparison of a Proton model (BTW I'm not very familiar with Proton at all like most of us, therefore can't name any particular model off the top of my head without doing a search on their website, which I'm not going to bother with right now) but I think that if we compare the price of the cheapest Proton model in Thailand, which I believe is something like 540,000? based on what I remember from the motor expo at Bang Na a couple of months ago (670,000 I think is for a model comparable to a Corolla as I already stated), with a more high end model going for up to 880,000 then you'll find that since there are no cars in Thailand sold for only 300,000, irrespective of the brand and where they are manufactured, that either Protons sold in Malaysia are really very cheap because they are subsidised by the government (most likely) and the Thai government's auto taxes are relatively high on all vehicle types. I think you'll find that it's virtually impossible to find any new car in Thailand for less than about 450,000-500,000 Baht. The most basic model Honda Brio sells for something like 420,000 Baht or something, but aside from that there are few other choices.

So my point is that apart from relatively high taxes on ALL types of cars in Thailand, ASEAN manufactured vehicles are subject to preferential treatment in Thailand. Strangely, despite having an FTA between Thailand and Australia known as TAFTA, Australia never managed to obtain fair privileges for the import of Australian made vehicles into Thailand. Non tariff barriers meant a substantial tax (I'm not sure how much exactly) still applied to Aussie vehicles and only 100 Ford Territory SUVs were imported into Thailand in a recent low volume export deal, compared to 170,000 Thai vehicles exported to Australia in the same year, with absolutely no tariffs or non-tariff barriers applied, so 0% import tax. While I don't know their exact sticker prices once sold locally in Thailand, I can imagine the Territories were priced at twice or more of comparable SUVs like the Fortuner or the Chevy Captiva, and they are in exactly the same category. Whereas Protons end up costing about what you would expect for a car of it's type in Thailand, even if Toyota, Honda, etc. are better and more established brands. Having said that, I would probably put Proton as being just a bit below Hyundai, which is now quite a good car maker, unlike the rubbish they produced some years back.

So just saying.

[Tomtomtom69]

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There is a lot of business in Philippines. The SECOND largest call centre place on the planet and many businesses are moving operations there because of labour costs.

Do you think they care about EMPLOYEE safety? The are other concerns and it is not the well being of staff.

Why are businesses looking elsewhere if Thailand was so great? It is not and it is not a Thai bashing thread.

If Toyota goes it could cause a bigger wave than a ripple. Look what happened to Australia when ONE company said it was closing. Now there will be NO CARS made in Australia at all.

True, but right now the talk is only about the Fortuner being manufactured elsewhere outside of Thailand, not necessarily all Toyota vehicles. I think Thailand will continue to be competitive in terms of pickup manufacturing (if nothing else and besides more than half of all vehicles sold in Thailand are pickups); I don't see that changing to the Philippines or Indonesia, two markets which have practically no pickups at all (for anyone who's ever been to either country that will be very obvious as soon as you step off the plane). Having said that, anything is possible, especially with greater incentives in other markets, lower wages and better political stability. Although the reasons for Australian automotive manufacturing soon coming to an end are very different to Toyota possibly moving Fortuner production away from Thailand to the Philippines (or elsewhere) the one thing both Thailand and Australia have in common is that neither one has a local car brand and are thus at the mercy of the foreign car makers, who can decide at any time to move away and close down local manufacturing if the conditions aren't right.

However, for now I don't see any big exodus by car makers from Thailand though - there are still too many positive enticements to keep manufacturing here. While some types of cars (like the Fortuner) may go, overall the industry still benefits from numerous government incentives, relatively low wages and a highly skilled workforce, the necessary supporting infrastructure and sufficient local and regional demand for it's products thus virtually guaranteeing sufficient output. Of course protectionist policies also help. Unfortunately Australia started killing its industry the moment it decided to lower import tariffs thus flooding the market with cheaper imports some 20-30 years ago; it only got worse with high wages and a strong local currency and limited local demand and foreign exports.

Large waves are started as small ripples in the sea. Australia had a larger LOCAL sales market than Thailand. The Thai market is not enough to keep the companies here. IT IS THE EXPORT MARKET that keeps the companies alive and that is being killed slowly by costs.

Moving one product is testing the water. WHY did Toyota RAMP up the factories in Indonesia recently for CAMRY/ COROLLA / ALTOS production?

You're right - Australia actually still does have a slightly larger local sales market than Thailand, albeit only marginally larger these days (by say 100,000-200,000 units sold per year). But I think if there were more incentives for Aussies to buy locally like is the case in Thailand, where protectionist policies almost force any Thai wanting to buy a car to purchase a locally made one AND the Aussie manufacturers had been able to better penetrate a few key export markets (and not trying to compete with markets that sell similar products where they are uncompetitive, like Thailand, despite the presence of an FTA) then maybe the local automakers could still survive, despite high wages and a strong currency (which has recently fallen in value). This is because if they could make better use of technology to rely less on expensive labour (as is the case in Germany, who's automotive manufacturing workers actually earn even more than their Aussie counterparts) AND be able to account for say 1 million out Australia's 1.2 million sales, with a majority of the NZ market too, say 150,000 out of 200,000 sales there plus the middle east market, which has been Australia's traditional automotive export market with who knows, 500,000 potential sales, then the combined total of 1.7 million sales could be enough to keep them manufacturing locally. However the current 200,000 output and almost no incentives to purchase locally made, high costs and everything is not enough to keep them manufacturing locally, sadly. Keeping out foreign competition does work in some cases and thus Australia made the wrong decisions some years back as it's local market, which is of reasonable size nowadays but was never large enough to sustain a situation where 80-90% of consumer sales are made up by foreign imports, leading to the inevitable 100% in just 2-3 years.

Well as far as I'm aware in Thailand's case, around 50% of the manufacturing capacity is for export, with a large share of that going to Australia alone (I think something like 20% of the manufacturing for export or 10% overall, which makes sense since if output is say 2 million units per year, with 1 million for export and 170,000 going to Australia, that's almost 20% of all exports). I think local Thai protectionist policies could actually be enough to keep the manufacturers here, or are at least as important as the export market. Unless you are saying that due to better incentives for manufacturing in say Indonesia, the manufacturers in Thailand could still decide to move away anyway. I think you are right that that is very plausible, besides, the Indonesian market has huge potential for further growth and overtaking Thailand many times over, once per capita income starts to almost match that of Thailand. That's obviously because of Indonesia's much larger population, which is more than 3 times larger than Thailand's.

And so yes, it does make sense to move some types of manufacturing away to places where it is more cost competitive and that includes certain models of cars. It also makes sense that the types of vehicles likely to move away are also popular with local consumers in the countries where they will be manufactured. This is why pickup truck manufacture will, for now at least, continue in Thailand as Thailand is far and away the most popular country in Asia for this type of vehicle and number two globally. Of all the countries in the region, only Australia, New Zealand, Laos, Cambodia, Myanmar and Vietnam (and maybe Malaysia) have any sort of reasonable demand for pickups; Indonesia, the Philippines, China and India, to name a few are countries where pickups are very unpopular. In fact I don't remember seeing even one pickup ever in Jakarta or in India, while in China there's a very small number in rural areas and the occasional one in the cities.

Indonesia and to a lesser extent Vietnam seem to like MPVs such as Innovas and Avanzas, hence why it makes sense to manufacture those models there. Camrys, Corollas etc. seem to be universally popular in many markets straddling Thailand to Indonesia, to Vietnam and many others.

[marcusd]

There has been no announcement from any car company including Toyota that they are moving anything out of Thailand. Correct me if I'm wrong.

They have not yet made any FORMAL announcement in THAILAND but in Singapore in February the Chairman of Toyota made a comment stating they would be moving operations out of THAILAND over the next 2 years to SIMPLIFY production and reduce overall o[peration costs due to global reduction in the need for cars.

[Thai at Heart]

There has been no announcement from any car company including Toyota that they are moving anything out of Thailand. Correct me if I'm wrong.

They have not yet made any FORMAL announcement in THAILAND but in Singapore in February the Chairman of Toyota made a comment stating they would be moving operations out of THAILAND over the next 2 years to SIMPLIFY production and reduce overall o[peration costs due to global reduction in the need for cars.

If they said that, that is a very very serious statement for thailand

[thailiketoo]

There has been no announcement from any car company including Toyota that they are moving anything out of Thailand. Correct me if I'm wrong.

They have not yet made any FORMAL announcement in THAILAND but in Singapore in February the Chairman of Toyota made a comment stating they would be moving operations out of THAILAND over the next 2 years to SIMPLIFY production and reduce overall o[peration costs due to global reduction in the need for cars.

Perhaps you could link that or maybe you meant, "Sources close to Toyota say the engine plant in Altona, Australia will likely be relocated to Siam Toyota Manufacturing in Thailand once the automaker ceases Australian manufacturing operations in 2017.

GoAuto reports that while the company hasn’t officially announced what will happen to the $331 million AUD engine plant thus far, executives inside Toyota Australia have Thailand in mind as a potential new home for some of the tooling currently in use. The factory exports 16 percent of its 2.5-liter four-cylinder engines to Thailand and Malaysia for fitment in Camry and Camry Hybrid models.

Another reason for the move to Thailand? While Toyota Australia builds 100,000 Camry, Camry Hybrid and Aurion models annualy — 70 percent for export markets, such as the Middle East — Toyota Thailand builds 880,000 units annually, exporting a wide range of vehicles to Australia and Association of Southeast Asian Nations — or ASEAN — member states. Furthermore, a free trade agreement between the two countries means vehicles, such as the HiLux and the Corolla, from Thailand enter Australian ports duty-free."

http://www.thetruthaboutcars.com/2014/02/toyota-australia-engine-plant-moving-to-thailand-after-2017/