Cebu still favorable investment hub

CEBU, Philippines - After Lexmark International Inc. announced the closure of its inkjet supplies manufacturing plant in Lapu-Lapu City, local industry players said that the restructuring plan is not an implication of a downbeat business climate in the province.

They also believe that Cebu will still remain as a favorable investment hub.

Lexmark officials recently confirmed the company’s plan to shift its inkjet printer business from hardware-centric to an end-to-end solutions company.

Its restructuring actions will include the exiting of the development and manufacturing of the company’s remaining inkjet hardware, reductions in inkjet-related infrastructure and downsizing of 1,700 positions worldwide, 1,100 of which are manufacturing employees in Cebu, by the end of 2015.

Cebu Chamber of Commerce and Industry President Prudencio Gesta said that the probable closure of the Cebu facility is a business decision affecting their global operation and not driven by a negative business environment in the area.

“I believe Cebu remains a good business choice for other type of businesses despite Lexmark closure in 2015,” he stated.

Mandaue Chamber of Commerce and Industry President Philip Tan, on the other hand, believes that the Philippines will be the last to close, taking into account the country’s cheap labor and operational costs. 

He also expressed that talented employees will not have a hard time finding another job particularly those working in research and development.

Ludwig Federigan, president of Bosconian International Chamber of Commerce, considered the 2015 plant closure as sad news but commended Lexmark with its earlier announcement to its workers who will be affected.

He cited that with such action, both the employees and the government will be able to come up with a plan to seek other opportunities with other business enterprises.

He added that the company’s plan to offer job vacancies in its departments such as shared services and research and development will not only provide employment opportunities to its workers but also strengthen its manpower at the same time.

In a press conference with the local media, Lexmark Research and Development Corp. President and Chief Executive Officer RL Bandy clarified that the strategic change involving the closure of the Cebu inkjet facility is not an indictment of the performance of its people.

“We definitely feel the Cebu workforce is innovative, creative and hardworking. Cebu will remain as one of the top key cities of Lexmark. We are not moving production out of Cebu to another location in other countries,” he said.

The emerging popularity of digital devices such as smartphones and tablets has resulted in the decrease of market demand for printers.

Lexmark has reported a 61 percent decline in its earnings for the latest quarter.

The restructuring actions are expected to generate $85 million savings in 2013, increasing to ongoing annualized savings of $95 million beginning in 2015.

Lexmark also expects a total program pre-tax cost of $160 million with a total cash cost of $75 million.    - THE FREEMAN