By Beting Laygo Dolor, Contributing Editor
The country’s labor sector was stunned at the announcement last week that a major car assembly plant as well as one of the biggest hotels in the Makati business district would be shutting down soon.
Nissan Motor Philippines announced it would be ending its assembly operations in Laguna province by March 1, this year, the day after the Makati Shangri-La hotel said it would shut down for an undetermined period starting February 1.
Thousands of workers and small-l to medium-sized downstream businesses connected to both companies would be affected by both closures.
The hotel and the car assembler said they would extend to their employees all the benefits due them, while the Trade Union Congress of the Philippines said it would help them “get the best separation benefits they can get out of the years of service they rendered” to their employer.
The Department of Labor said that displaced workers of both Nissan and Shangri-La would be entitled to cash assistance from the government, as both closures were due to the Covid-19 pandemic.
They will be given a one-time cash assistance of PHP5,000 (about US$104).
Nissan said the closure was part of its “transformation plan” and would continue its other Philippine operations such as marketing and after-sales service.
When informed last January 20 of Nissan’s plan, Trade Sec. Ramon Lopez said the announcement was “regrettable, as these developments all the more demonstrate the critical situation of the local motor vehicle industry.”
Lopez added that “provisional safeguard measures need to be immediately put in place to protect the domestic industry from further serious injury.”
For its part, Makati Shangri-La, considered the country’s top business hotel, said its closure would be temporary but did not say when it expected to resume operations. In the meantime, most of its employees would be considered re-trenched owing to what the hotel’s management said were “uncertain business conditions.”
In a statement, the hotel’s management said, “Despite our best efforts, the prolonged recovery timeline has resulted in increasing financial pressure on the company here in the Philippines.”
The hotel, however, promised to give displaced employees a compensation package “that is higher than local guidelines.”
That package includes extended healthcare coverage and grocery support until the end of 2021.
The hotel and the car assembly plant both cited the negative effects on the economy, specifically their markets, of the global coronavirus pandemic, which forced countless businesses to shut down beginning last March.
And while many medium-sized and small hotels and resorts were among the tourist facilities forced to shut down, Shangri-La is the first of the five star hotels to cease operations. Some of the big hotels opted to downsize operations by closing down entire floors in order to drastically cut costs.
A businessman who operates a couple of laundry businesses expressed shock at the closure and said his own company would be affected since the Makati hotel was among his top clients.
He told the FilAm Star that “a large chunk” of his monthly income came from Shangri-La, and it would now affect his plan to open a new branch of his business.
As for Nissan, the closure of its assembly operations was not unexpected as there have been more car brands in the market in the last few years. The new players import their motor vehicles rather than set up assembly plants, as this makes more sense economically.
Like its competitors, Nissan Philippines will now depend on imports of its products from such neighboring countries as Thailand and Japan.
Earlier, Honda Cars Philippines also shut down its local assembly plant and has since relied on imports for products to sell to the local market.
As for Makati Shangri-La which has been in operation for three decades, management said it looks forward to reopening at a later date when business conditions have improved.
The global chain operates six hotels in the Philippines, with the Makati hotel serving as its flagship.