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Supply Chain
Re-shoring, Onshoring Threaten Philippine Garments Industry
Shifting gears and a change in manufacturing plans could result in the imminent closure of apparel manufacturing companies as well as the displacement of workers.
Global players’ plans to re-shore or onshore manufacturing of clothing and apparel threaten to send the local Philippine industry to extinction, according to Robert Young, trustee for the textile, yarn, and fabric sector of the Philippine Exporters Confederation Inc. (Philexport).
Young said global events such as the recent pandemic and the war between Russia and Ukraine, the dependence on Asia, and the orientation for imports and apparel production are transforming the sector.
Manufacturing companies plan to bring their business operations and processes to neighboring sites or right on the location of the importing country, said Young, also President of the Foreign Buyers Association of the Philippines.
He said plans of reshoring or onshoring of manufacturing can result in the imminent closure of the present apparel manufacturing for the export market and its related industries in the Philippines, as well as the massive displacement of apparel workers. “Thus, it may cause the extinction of such (an) industry,” he added. “This is a big red flag for the Philippine apparel and clothing industry.”To deter the transfer of manufacturing firms, Young particularly cited the need to address the basic root causes of the non-competitiveness of Philippine apparel in international markets, such as their restrictive cost of power, labor, and logistics. “The biggest challenge is the concern of a much higher labor rates component in importing economies,” Young said.
Under the Philippine Export Development Plan (PEDP) 2023-2028, export stakeholders aim for adequate support for export firms’ infrastructure requirements, such as in power, transport and logistics, and telecommunications connectivity.
“The new digital and robotics manufacturing that will play a significant role in the reduction of labor cost is also part of the plan,” Young said. “The government and the private sector must realize the negative impact of these reshoring scheme plans and should join hands in seriously implementing solutions urgently as per the PEDP report for the survival and competitive advantage of the Philippine clothing and apparel manufacturing, thus saving it from extinction,” he added.