Two of the country’s biggest garments exporters have laid off 9,000 workers over the past two years as part of the rationalization of their operations amid soft global demand post-pandemic, according to Marites Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines (Conwep).
This has led to the dismal export performance of the industry, down 21 percent in the first seven months of 2023 and with all segments posting declines.
Taiwanese-owned Mactan Group, one of the country’s oldest exporters, has let go of some 15,000 workers after it started merging its companies in 2021. In 2020, the group had 21,000 workers.
From seven entities, Mactan Group will be down to five after the last merger which is ongoing is finalized, Agoncillo said.
She added the four companies subject to the merger were all operating at a net loss.
“It was a business decision to merge these companies to survive,” Agoncillo said.
All of Mactan Group’s factories are located in Cebu and produce sports apparel for the US and Europe markets.
One major sports apparel brand had earlier pulled out of the Mactan Group.
Agoncillo said garments manufacturer Luen Thai meanwhile has trimmed down its workers, laying off 2,000 workers in a factory in Pampanga in the middle of the year.
She said Mactan Group, Luen Thai and a third major player, Reliance Hamlin which produces high value ladies apparel, account for 50 to 60 percent of the $900 million apparel exports of the Philippines.
Agoncillo said Reliance has done some minor retrenchments to adjust worker size after seasonal demand.
According to Agoncillo, buyer pullout, low productivity and wage increases have been cited by the companies in their decision to layoff workers.
“The market has softened because of the looming global recession. Everybody is trying to hold on to their cash. They say the US out of (recession) but they are not buying,” Agoncillo said.
Agoncillo said Conwep intends to appeal to the government to reconsider a looming legislated wage increase.
Conwep data showed total garments exports fell 23 percent to $912.29 million from $1.16 billion in the same period in 2022.
Exports of apparel, the biggest segment in garments exports, fell 19 percent to $397.59 million from $489.83 million.
Travel goods exports declined 27 percent to $318.17 million from $436.57 million.
Shipments of footwear lost 8 percent in value to $52.93 million from $57.59 million while exports of textile dropped 19 percent to $143.6 million from $175.63 million.
