Jetro says export firms taking a hit

Published by rudy Date posted on March 31, 2011

MORE than a fourth of Japanese firms operating in the Philippines have suffered delays in production resulting in the cancellation of orders because of the disaster in Japan, according to the Japan External Trade Organization (Jetro).

In its emergency survey on the Japan disaster, Jetro said 46.6 percent, or 76 companies “acknowledge” the impact of the Japan earthquake and disaster.

Of the 76 companies, 43 are engaged in manufacturing and 33 in non-manufacturing.

Another 11 percent of the respondents said the disaster had no impact, while 4.3 percent said the impact was unknown.

The survey was done between March 15 and 23 among 621 Philippine-based Japanese companies. Of the total number of companies, 163 responded for a recovery ratio of 26.3 percent.
Eighty-five manufacturing companies and 78 non-manufacturers were polled.

The survey was conducted among members of the Japanese Chamber of Commerce and Industry Philippines Inc., and the Japanese Chamber of Commerce and Industry Cebu Inc.

“Generally speaking, the largest of the current impacts accounted for relate to delivery delays for both exports and imports. The effect on exports from the Philippines can be seen based on the stagnation of baggage at Narita,” Jetro said.

Japan’s exports promotions agency said the second largest impact based on the survey pertains to difficulty in procurement of goods and materials, which was the general consensus among companies importing from Japan.

The third highest number of answers pertains to difficulties in their Japan head office transactions and business stagnation.

“In relation to the survey answer the reduction in orders and production [including reservation cancellations] was stated,” Jetro said.
“For the non-manufacturing companies, particularly those in the hotel, tourism and transportation industries, most of the current impacts that they have stated are with regards to reduction in travel and cancellations,” the agency said.

Looking forward, Jetro said 48.5 percent acknowledged that there would be an impact, while 14.1 percent said the future impact was unknown.

“This shows that although the current impact is still unknown, the fact that a lot of companies felt uncertain about their future prospects indicates the severity of this disaster,” Jetro said.

The agency said an ambitious desire to look for new customers in overseas markets was observed given the disaster in Japan. Some respondents also were looking at making use of the excess time generated due to production adjustments, for the education of employees.

Local parts sourcing urged
The Board of Investments (BOI) said Japanese vehicle assemblers should obtain more parts in the Philippines to mitigate the impact on the automotive supply chain.

“We gave car companies an option: source spare parts here. Filipino parts manufacturers can be a stopgap,” Trade Undersecretary and BOI Managing Head Cristino Panlilio told reporters on Tuesday.

Panlilio said vehicle manufacturers have expressed concern they may
be unable to secure automotive parts from Japan, where production has been disrupted by the unstable power supply.

Local assemblers mostly import parts and components from Asean to tap the zero-tariff regime but some still source from Japan.

Antonio Gimenez, executive director of the Motor Vehicle Parts Manufacturers Association of the Philippines Inc. said its members are ready to supply domestic assemblers.

“Parts makers are running below capacity right now. They can do the parts immediately if given the chance,” he said.

Vicente Mills, Pilipinas Hino Inc. president, said it helped that the plants of the company’s Japanese principal Hino Motors Ltd. are in central and south Japan so there was minimal impact on domestic assembly operations.

“There were some delays, but no stoppage,” Mills, who is also Truck Manufacturers Association president, told The Manila Times.

“‘Just-in-time’ production was affected,” Mills however said.

Sixty percent of the completely knocked down packs that Pilipinas Hino uses in assembling trucks and buses come from Japan, while the rest of the parts are sourced locally, Mills said.

Before the current crisis, local parts sourcing has been minimal, with assemblers blaming this on the limited types of components available from domestic suppliers.

Toyota Philippines sources only about a fifth of its parts requirements locally, while Honda Philippines taps about a tenth. Ford Philippines has a higher local content at a third. –Darwin G. Amojelar, Senior Reporter With report from Ben Arnold O. de Vera, Manila Times

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