Exporters struggle with strong peso-A A +A
Wednesday, December 5, 2012
CREATING new markets or finding uncontested ones can help exporters remain competitive amid threats of a continued strengthening of the peso following a 7.1 percent third quarter economic growth.
âThe US dollar is going to be under extreme pressure in the coming months due to the burgeoning budget deficit of more than $16 trillion. A gross domestic product (GDP) growth of 7.1 percent will definitely boost the peso further as this will raise foreign investorsâ confidence in this country,â said Philexport Cebu executive director Fred Escalona.
The government is closely monitoring the strong appreciation of peso against the US dollar.
Exporters warned that the continued appreciation of peso, which is now trading below the 41-level, will push companies to lay off workers or shut down operations.
âThe growth in GDP is good because of the service sector but it disregards the plight of artisans (and those in) the manufacturing sector like us in (the) export business that is supposedly creating a greater impact,â said Philexport Cebu president Venus Genson, who owns Arts âN Nature Manufacturing Corp.
Philexport Cebu will hold seminars on process control in order for companies to improve their bottom line by controlling their processes and cost structures.
According to Escalona, the overall export volume for the country in the first semester this year was $26.8 billion, of which Region 7 accounts for $1.9 billion.
Exporter and Gift, Toys and Housewares (GTH) Foundation Inc. â Cebu president Ramir Bonghanoy said GTH members already felt the impact of the strong peso, making their export products less competitive in the global market.
Amid reports of a recovery, Bonghanoy said the export industry in the Philippines is still facing many challenges that hinder its full recovery such as the slow growth in US and Europe economies, P20 wage increase, natural calamities and the strong appreciation of the peso.
He said that his business, Bon-Ace Fashion Tools Inc., is not as affected by the impact of the strong peso because they already established presence in the Europeâs high-end market and they invested in changing designs of their products. Still, Bonghanoy said they had to downsize from 350 to 285 employees to streamline operations.
By next year, he plans to lay off 30 to 50 more employees.
âThe global market is still not doing well for exports compared the previous years.
But as soon as the export industry and the economies of our market fully recovers, we can always re-hire these employees we have laid off,â Bonghanoy said.
Escalona said he is sure there are other companies retrenching employees. He said they already warned the Regional Tripartite Wages and Productivity Board of possible job losses in the exports sector should they increase the minimum wage.
Bonghanoy is urging other export companies to institute reforms in their business through investing in new technologies, adopting innovations and widening their market to stay alive and competitive in the global market.
Published in the Sun.Star Cebu newspaper on December 06, 2012.