The Confederation of Wearable Exporters of the Philippines (CONWEP) said Monday it may take a longer time for the garments and apparel industry to rebound from the downturn of the global apparel market due to the Uyghur Forced Labor Prevention Act (UFLPA) enforced by the United States Customs and Border Protection (CBP).
CONWEP executive director Maritess Agoncillo said major garment suppliers in the Philippines, Nicaragua, Cambodia and Indonesia were hurt by the UFLPA, with several shipments flagged for detention by the CBP, affecting the supply chain of major US and European apparel brands.
“This is an industry-scale problem. Next to Nicaragua, the Philippines has the most shipments detained by the CBP. While some have been released just a week and a half ago, there remain several shipments on hold,” Agoncillo said in a briefing.
The Department of Trade and Industry (DTI) has been instrumental for the release of the detained shipments, she said.
The Uyghur law prohibits the use of cotton sourced from Uyghur, China over labor issues, causing business interruption and order losses of about $5 million to $6 million to Philippine suppliers in the 2023 Christmas season until February 2024.
Buyers whose shipments arrived in late April were forced to sell at a discount in US and European outlets to recoup their investments.
The group said that aside from the 2,000 workers retrenched by Luen Thai Clark, several smaller brand manufacturers placed about 80 to 200 workers on forced leave.
L&T International Group Philippines Inc., the retail apparel arm of the Luen Thai Group, failed to optimize the capacity of its facility in Clark, running at 25-percent capacity due to low demand as a result of the retrenchment.
The Luen Thai workforce was cut to half from 7,000 to 3,500 and further to 1,500 after the latest company retrenchment.
L&T said the termination of some 2,000 workers was done with utmost respect to ethical business standards, following the continued softening of global apparel market.
“This action was closely coordinated with the Department of Labor and Employment [DOLE] to ensure transparency, fairness, and adherence to legal standards, underlining our dedication to ethical business processes. All affected employees received the comprehensive severance package that meet legal standards,” Agoncillo said.
The affected employees received retrenchment packages of P70,000 to P75,000 each and might be called back once the industry shows recovery.
Luen Thai serves the demand of different US and European brands on apparels, bags and accessories. US and European buyers for apparel look for 14 different brands.
CONWEP said that despite its strict adherence to the sourcing protocol under the UFLPA, association members were still required by CBP to prove the origin of the raw material, particularly cotton that has led to prolonged delays in clearing recent US shipments.
“Looking to the future, we are hopeful for a rebound in business. Once these conditions improve and orders resume, our goal is to rehire our skilled workforce and restore normal operations,” the group said.