Tayó-Táyo Industry Associations Consultative Dialogue:
Limited operational capacity and decrease sales top manufacturing industries‘ concerns
The slowdown in eonomic activity and consumer consumption has severely impacted on the operation of manufacuring industies forcing them to reduce labor and manpower hours. This is the conclusion of the Philippine Chamber of Commerce and Industry(PCCI) as its president, Amb. Benedicto Yujuico held a dialogue with PCCI’s industry associatio members.
Mr. Vicente Mills, President of the Federation of Automotive Industries of the Philippines (FAIP), reported that manufacturing sector has gone down 50% across the board. While the manufacturing sector simply reduced manpower hours to maintain employment, he said the situation is different for the sales and services sector, which has been more severly affected by the economic downturn. The FAIP is comprised of the associations of vehicle manufacturers and traders.
Aside from decreased capacity and efficiency, Ruben See, Director and Internal Vice President of the Philippine Food Processors and Exporters Organization, Inc. (PHILFOODEX), notes the problem of the increasing cost of raw material and shipping, as well as managing food safety.
Representing the steel industry, Mr. Roberto Cola, President of the Philippine Iron and Steel Institute (PISI Steel), said that about 85% of demand goes to construction. The freeze in construction projects and slow resumption under the MECQ has compelled the industry to slowdown their operations. Cola added that they have experienced difficulty in complying with the regulations in place during the community quarantines, namely the provision of barracks for construction sites, sanitation facilities, and rapid testing for workers, among others. Small construction projects in provinces under modified enhanced community quarantine (MECQ) were not as severely affected.
For the chemicals industry, Mr. Jeffrey Mijares, Executive Director of Samahan sa Pilipinas ng mga Industriyang Kimika (SPIK) reported that manufacturing has gone down by 26%. Adding on to Mr. Cola’s statement, Mijares said the suspension of construction has also contributed to losses in of the chemical industry since they supply coatings, sealants, and varnishes.
The cement manufacturing industry echoed the concerns of the steel and chemicals industries. Mr. Cirilo Pestaño, President of the Cement Manufacturers Association of the Philippines (CeMAP), shared that their members reported a double digit decline in the first half of 2020 compared to last year‘s. He raised the concern of their members on the continued importation of cement when there is adequate supply. He stressed that locally-manufactured products have better qualilty than imported cement. Imported cement however tend to be cheaper because of the their lower cost of inputs and subsidy provided by their governments. In contrast, the manufacturing sector in the Philippines has to contend with high cost of power, logistics (trucking and shipping), among others.
A common problem raised during the dialogue was the lack of public transportation and the difficulty it posed to the mobility of workers, and the directives mandating workers to face shield (on top of the face mask) and providing an isolation space for every 200 workers to serve as quarantine area.
The Philippine Plastics Industry Association, Inc. (PPIA), for example said their workers cannot come in to work because of the absence of mass transportation - situation that prevents them from increasing their production of PPE suits and face shields.
Mia Florencio, President of the Guild of Philippine Jewellers (GPJI), shared the same sentiments as their small businesses do not have the luxury of providing shuttle services and sleeping quarters
Speaking on behalf of the Semiconductors and Electronics Industry of the Philippines, Inc. (SEIPI), Mr. Perry Ferrer of EMS Electronics pointed out that the requirement to allocate a space is not suitable in a factory setting.
On the other hand, Mr. Richard Lim of the Association of Salt Producers scored the Food and Drugs Administration (FDA) for continuing to make it difficult for manufactures to get their License to Operate even in these challenging times.
There were some encouraging reports. For instance, Mr. Pierre Curay, President-Elect of the Supply Chain Management Association of the Philippines (SCMAP), said that supply chain and logistics saw a lot of support as they are considered essential. The bottlenecks in port operations at the beginning of the pandemic has been resolved with the help of the government. On the other hand, he said that the movement of their people has not been as smooth as the movement of goods.
Mr. Homer Maranan, Executive Director of the Association of Petrochemical Manufacturers of the Philippines (APMP) submitted a report that said overall, their members continued their operations during the quarantines. Although also adversely affected, the petrochemical industry the report said, is generally optimistics as they try to cope up with the current situation. Their members believe there is no need for a massive restructuring of the supply chain in the petrochem industry. Any disruption currently in the supply chain is due to the lockdowns but once these are lifted, the industry is expecting that the situation will normalize. This, the reports says, is just a temporary situation which will not result to any fundamental reshaping of the supply chain, unlike other industries catering to consumer goods which require a lot of social interaction.
Moving forward, the general outlook of many industries is not optimistic. Kelvin Gan, Vice President of the Philippine Stationers Association, shared that despite the opening of classes, demand has only slightly surged at the end of July. They are experiencing the peak now but the future remains uncertain due to the virtual structure adapted.
The industries were united in their request to government: consult businesses first before issuing (new) rules that may disrupt operations. The inconsistent implementation of LGUs were also noted as it disrupts the movement of raw materials and products. The shotgun approach of government adds unnecessary setbacks for businesses that can be solved with a more inclusive decision-making process.
Ms. Emilie Maramag of the the Ceramics Manufacturers of the Philippines called for the government and the private sector to fully promote the Buy Pinoy campaign to help local manufacturers and stimulate the local economy.