MANILA — Thousands of workers in Philippine garment and textile factories could temporarily be out of work in the coming months if the demand for their products overseas remains weak or further dips, industry representatives said Wednesday.

The Confederation of Wearable Exporters of the Philippines (CONWEP) said in an online press briefing they expect temporary closures or partial retrenchment of workers among their member manufacturers in the next few months.

These could follow the layoffs of more than 4,000 implemented by 5 apparel companies in Cebu’s Mactan Export Processing Zone announced earlier this month.

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Maritess Jocson-Agoncillo, CONWEP executive director, said some buyers in the United States, the biggest market for Philippine-produced apparel, have canceled or deferred orders in recent months.

This, she said, was brought about by reduced spending among consumers in the US who are worried about a possible recession.

“Normally, our best season is around June to November period, when our factories are operating at full capacities to complete and deliver for the succeeding year, which is spring/summer season orders. That’s our strength: spring/summer orders,” Agoncillo said.

“Actually, we saw it coming, as orders came in trickles from the US, as early as the 2nd quarter of 2022.”

Agoncillo said the layoffs in Cebu are only the start of the effect on the industry of a slowdown in the global economy.

She added some factories in Batangas and Bataan have already implemented temporary closures in mid-September.

CONWEP estimated between 21,600 to 27,000 workers (8 to 10 percent of the workforce) could be retrenched if market conditions remain the same or worsen.

The wearables industry—which covers clothing, travel goods, and footwear—employs 270,000 workers, according to the group.

Agoncillo added some foreign buyers had also begun sourcing their supplies from other Southeast Asian countries like Vietnam, Cambodia, and Indonesia due to lower labor costs, production flexibility, access to raw materials, and other factors.

The succeeding tranches of the government-mandated minimum wage hikes expected late this year and in early 2023 will also affect the industry’s “competitiveness”, she said.

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‘RIDING THE WAVE’

However, Agoncillo said they are hoping global demand would return soon, which they expect to find out by the end of November.

“It’s not a closure. It’s really, we’re riding the wave,” she said.

“Naka-temporary protection mode ka so that you protect the rest of the business, the majority of the business.”

The garments industry also laid off workers in 2020 when the COVID-19 pandemic halted production and trade globally, but Agoncillo said the reopening of economies helped them bounce back gradually.

“We were able to recover last year and we were able to rehire. So once it clears up we are hopeful we are able to rehire,” she said.

During the first half of 2022, exports of wearables already grew by double digits compared to the same period in 2021, according to data cited by CONWEP from the Philippine Statistics Authority.

Combined exports earned more than $1.15 billion or 14 percent growth, with the biggest growth rate in travel goods at 24 percent.

However, CONWEP said the growth rate was much lower than their projected growth rate of 18 to 22 percent.

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Agoncillo said they have appealed to government agencies like the Department of Labor and Employment (DOLE) and the Department of Social Welfare and Development to extend help to the affected workers and companies.

The industry, she said, is also banking on the discussions made by President Ferdinand Marcos Jr. and trade secretary Alfredo Pascual with their counterparts as well as business leaders in the US during their working visit in September.

CONWEP said it hopes this would lead to strong trade preference in the US for goods from the Philippines and a bilateral agreement benefitting the industry in the long run.

Agoncillo said Marcos Jr. had directed his economic managers to look into the logistics concerns of the sector, such as shipping issues affected by the Ukraine war.

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For now, logistics and diversity in the market prevent them from fully expanding to buyers outside the United States.

They are also calling for amendments to the CREATE Act such as changing the lifespan of incentives and removing the value-added tax on constructive exports.

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