US BRANDS ORDERING LESS: 21K garments workers to be laid off

Around 21,518 workers of garments companies exporting to big name brands of apparel, bags and shoes in the United States are to be retrenched until the end of the year as orders slump by as much as 50 percent.

The string of retrenchments also highlighted the Philippines’ dwindling cost competitiveness aggravated only by the quarantine restrictions experienced by garments companies.

Industry leaders said these drove some of them to realign operations to countries that offer cheaper and more predictable business environment.

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Marites Agoncillo, executive director of the Confederation of Wearables of the Philippines (Conwep) said the number of workers to be retrenched, culled from an assessment last July, represents about 35 percent of the group’s 112,000-strong workforce. Around 20 percent have been furloughed since the pandemic.

The country’s garments industry has more than 280,000 workers.

Two of the country’s biggest exporters, Mactan Export Processing Zone-based Sports City Group and Yuenthai International which supply to sports brands that include Adidas have laid off last week 4,000 and 200 workers respectively with more layoffs happening in Bataan, a center for the manufacture for export of designer bags, including Coach.

Most CONWEP members are located in Regions 3, 4 and 7. About half of orders are supplied to the US.

Retrenchment activities started in June. Outside of CONWEP, layoffs started as early as April.

According to Agoncillo, CONWEP exports are expected to recover a bit around the holidays but would still end the year down 40 percent.

The group sees the decline to continue until the first quarter, especially with uncertainties brought by the US elections as well as the ongoing trade rift between Washington and Beijing.
Spring and summer orders which are expected around this time are not being booked.

The group does not discount the possibility some manufacturers may have moved some of the orders to Vietnam and Cambodia, which have long overtaken the country in garments, due to cost considerations.

Agoncillo said exports of CONWEP members have plunged to $192 million in the first five months of the year, from $380 million in the same period in 2019.

She said the labor and trade departments were informed as early as May of the possibility of the retrenchment activities to ensure workers will get government assistance.

Yuenthai, which is part of the Luenthai Group that runs several factories in Luzon, has been operating in Mactan since 2005.

Sports City, considered the biggest exporter of sports apparel in the country has about 21,000 workers in its seven factories, all of them in Mactan. It has been operating in the country for 32 years.

“They are retaining their factories here; they are not shutting down,” Agoncillo added.

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