Cebu furniture exporters still struggling

CEBU, Philippines - Although the country’s construction, tourism and services industries enjoy significant growth, the export sector lamented it is  struggling to survive in the domestic and global markets.

Cebu Furniture Industries Foundation (CFIF)  Consultant Ruby Salutan said in an interview that local exporters are actually battling with the weakening of the dollar, aggravated further by the projected US$1=P30 forex  by P30 in January 2013, the partial recovery of the international markets after the global crisis, and the recently-approved minimum wage increase of P22.

She added that the sector,  as an export-driven and dollar-oriented industry,  suffered additional burden after the global economic crisis in 2008 that greatly hit its major markets in the United States and Europe.

“God forbid it (US$1=P30 forex )  will not go to that level. Our markets still have not fully recovered and even if they have, it is not the same where it used to be prior to the crisis. The minimum wage increase is really not helping the industry if we relate it to the markets we serve. They have to realize it is very hard to make a turn-around in this industry,” she said. 

Unlike before, she noted,  that the entire supply chain and business have changed with buyers eagerly asking for extension of payments after the delivery even without giving down payments or allowing cash advances from the exporter. 

Coming up with a furniture roadmap, Salutan cited that the local players are redirecting their niche in other markets such as the Asian and domestic markets as an alternative although shipping costs within the country are more expensive.

The organization, which only now has 89 active members from its 180 companies before the crisis,  is seeking the government’s support to be considerate enough to the export sector as the latter badly needs help for their survival. 

“The industry is still much challenged. At this point of time, it is very hard to do business. We are hoping the government will help us particularly with financial support. The export sector is a big employer in the country but with the present problems, more companies will close, laying off more workers and we do not want that. We really need a lot of support to help the industry that is still surviving, trying hard to survive,” she stated. 

Marie Booth, vice president of Mehitabel, Inc., also expressed her sentiments saying that the sector confronted with challenges is currently at a “devastating” state. 

What adds to their burden is the rising cost of raw materials, power rates, the required holiday benefits and 13th month payment for workers, she said. 

She also noted  tough competition with other furniture companies in Vietnam and Thailand which offer cheaper products due to more competitive labor rates. 

She said Mehitable  used to ship at least 20 containers a month before the crisis, but now they are lucky if they can ship two to three containers monthly.

Booth further revealed that the indoor furniture company had to lay off workers from its 1000 employees in 2008 to only 350 at present.

“We are striving to keep our employees in their jobs. We don’t want to lose these people with incredible craftsmanship, knowledge and talent,” she continued. 

Local exporters are urging the Regional Tripartite Wages and Productivity Board to grant them an exemption taking into consideration their sad plight.

“The government also has to intervene with the currency. We are suffering to survive.  Our customers pay in dollars but majority of our expenses are paid  in pesos. The P45 could be the ideal foreign exchange rate since it is still doable. Put the wage increase, currency and poor rate together --- it’s  a perfect storm for us. It’s terrible,” Booth added.  

She, however, expressed happiness with the growing Philippine economy due to the good performances of the construction and tourism sectors but said that it has not been the same case for the manufacturing industry. 

She noted that even with the construction boom, industry players are not helping the manufacturers since they prefer to buy China-made products that are cheaper than those locally-produced.

“The United States has always been the biggest market for us but it’s where the problem is. But even if we redirect ourselves to the other markets, we are not even competitive in our own market,” she said. (FREEMAN)