More than 6,000 workers lost their jobs with the closure of two apparel manufacturers in Cebu and Bataan, the Confederation of Wearable Exporters of the Philippines (CONWEP) said Monday.
CONWEP confirmed the closure of Mactan Apparels Inc., one of the three biggest garments and apparel manufacturing groups in the Philippines.
“Mactan is suffering from major net loss. From operating seven firms, it is now down to five firms. They merged the four companies that were bleeding into two surviving firms. It was a business decision to save factory workers in the Philippines,” said CONWEP executive director Maritess Agoncillo.
Mactan is a Taiwanese apparel group that exclusively manufactures Adidas wearables in the Philippines. It caters to the US and European markets.
The second company that shut down was a member of the Luen Thai International Group Philippines Inc., which is also part of the apparel triad in the Philippines.
The Bataan-based company which produces premium goods such as shoes and clothing goods laid off 2,000 factory workers in the second quarter, the group said.
“Luen Thai is trimming down. Productivity is low. Wages constantly increase annually. These were part of the reasons why the companies pulled out,” Agoncillo said.
CONWEP said together with Reliance Producers Cooperative, the three biggest apparel exporters represent 60 percent of the total garment exports of the Philippines amounting to $900 million annually.
Based on the January to July 2023 financial report of the CONWEP, combined wearable exports suffered a 22-percent decline to $768.68 million from $983.99 million in the same period in 2022. It said that in July, exports tumbled 18 percent to $128.59 million from $156.93 million.
Agoncillo said that since the pandemic, demand for high value wearables had steadily declined, as people wanted to hold on to their cash.
“They say the US is out of it [recession], but they are not buying. Markets have been soft. Investors are consolidating. The industry does not look positive. We do not have a positive outlook for 2024. Since the start of the year, we are already at a double-digit negative growth,” she said.