Govt expects 60,000 job losses in IT sector

Published by rudy Date posted on January 23, 2009

UP TO 60,000 jobs could be lost in the country’s key electronics sector after Intel Corp. closed its plant in Cavite and Texas Instruments announced a number of layoffs, Labor Secretary Marianito Roque said yesterday.

Intel, the world’s biggest computer chip maker, announced plans Wednesday to close plants in Malaysia, the Philippines and the United States, with the loss of 1,800 jobs in its assembly test facility in General Trias, Cavite.

Texas Instruments, another big US player in the sector, told the government last month it was laying off 400 workers from its semiconductor factory in Baguio due to the global financial crisis.

The cuts highlight the poor state of the electronics industry and could be the beginning of a wave of job losses in the sector.

“The impact of the economic downturn on our business was more severe than we anticipated and the outlook is uncertain,” Intel Philippines said in a statement explaining the closure of its facility.

The laid-off employees “will be offered a severance package,” and various “transition services,” the company statement said without giving details.

Intel was the second largest exporter next to Texas Instruments, generating $5.8 billion in export earnings last year.

A 2004 study by the University of Asia and the Pacific said that in 2003, Intel’s earnings accounted for 0.30 percent of the country’s gross domestic product.

Intel was one of the first to set up semiconductor manufacturing facilities in the Philippines 35 years ago, investing about $1.5 billion over that time.

“The semiconductor industry is already getting hit,” Roque told ABS-CBN television in an interview.

“We have seen this as early as three months ago,” he said.

“We expected that we’ll be getting hit in the first semester of this year,” he added.

Roque said the government was giving counseling to and retraining “about 60,000 workers that could be affected nationwide.”

The Labor Department was “getting daily notices now not only of retrenchments but on the reduction of work shifts, reduction of working hours, and compression of the work week,” he said.

Plants employing 19,000 people had so far reduced shifts or working hours, he added, but did not say how many had been laid off.

“We have to admit that this is not business as usual in the Philippines for the electronics sector and in the garments sector as well,” Roque said.

“These will be the two particular areas that would be affected by the global financial crisis.”

The electronics sector accounts for about 58 percent of the Philippines’ exports and employs 480,000 workers.

Roque said Manila expected the business process outsourcing sector to take up some of the slack, with a “nominal growth” in the call center industry creating about 130,000 jobs this year.

The Philippines also hopes to send its workers to “hotel jobs in Bulgaria and even manufacturing jobs also in some countries like Australia.”

The shutdown of Intel’s Cavite plant was part of a worldwide restructuring of its manufacturing operations that also closed facilities in Malaysia and the United States, in a move that would affect 6,000 employees.

The moves were designed to “align… manufacturing capacity to current market conditions,” a company statement said.

Intel reported last week that the economic slowdown and slumping demand for personal computers sent net profit sharply lower in the fourth quarter of 2008.

It said net profit in the last three months of the year plunged to $234 million, down 90 percent from a year ago.

Intel has also warned that it expects even worse results this quarter than the previous three months, with an expected revenue of $7 billion.

On Tuesday, top Intel officials called on Lilia de Lima, director general of the Philippine Economic Zone Authority, to announce the closure of its plant at the Gateway Business Park in General Trias, Cavite.

Given the scale of its operations, Intel’s pullout is a major blow to the economy. For months, government officials had been working with Intel to find an alternative site for its plant after the company complained of a structural defect in its Cavite site.

De Lima declined to comment on Intel’’s pullout but said yesterday that not all news was bad news.

She said that with Intel’s closure, its sister company, Numonyx Philippines, was expanding its Philippine operations after acquiring Intel’s flash memory division for semiconductor electronics last year.

“While Intel is closing here, Numonyx is also closing down its facility in Pudong, China, [and]… all its machinery would be relocated in the Philippines, so the company applied for expansion,” said De Lima.

Numonyx has so far invested $25 million in the Philippines. In 2007 it hired 600 workers from Intel and was likely to hire more when the machinery from Pudong was brought in, De Lima said.

In its statement, Intel said it would retain its sales and marketing organization of about 20 employees, as well as its involvement in social responsibility programs in the Philippines. –Elaine R. Alanguilan with Roderick T. dela Cruz, AFP

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