Manufacturers: Yearlong war in Iran spells ‘trouble’

By Beatriz Marie D. Cruz, Reporter

MANUFACTURERS can absorb the impact of the Iran crisis without disruption to their operations if fighting ends soon, though they expect to undergo a round of “belt-tightening,” the Federation of Philippines Industries, Inc. (FPI) said.

“The immediate thing that we need to do is to tighten our belts and be more efficient,” FPI Chairman Elizabeth H. Lee told reporters on the sidelines of an event Thursday.

“If this war is not prolonged, then that will be okay. Plans can still continue,” she said. “If it’s going to be a year, we might be in trouble.”

Some measures manufacturers are looking into include conserving electricity, reducing overseas travel, and carpooling, Ms. Lee said.

Some producers are also considering shortening factory hours to four or five days a week, from the usual six-day production week, she said, adding that  downsizing is not yet on the table.

Ms. Lee called on the need to upgrade to high-value manufacturing, which she said will be more resilient against external shocks.

“Right now, majority (of operations involve) assembly. We need to move up to higher-value manufacturing so we can absorb more labor instead of sending people outside of the country,” she said.

The Philippines should also turn more decisively to renewable energy because manufacturing is sensitive to high fuel costs, she added.

Ms. Lee said that one of the positives is that the rise in import costs will dampen smuggling.

Separately, the Persian Gulf crisis has pushed many firms into a “wait-and-see” mode instead of proceeding with their expansion plans, Management Association of the Philippines (MAP) President Donald Patrick L. Lim said. 

“Business will always want to operate with a certain level of certainty. If there’s a lot of uncertainty, ang hirap tuloy mag-planning (planning becomes more difficult)” he told reporters on the sidelines of an event Wednesday.

He noted that MAP members are studying the possibility of a two-day work-from-home setup to conserve energy and ease transport costs.

“We might consider that. But of course, nothing yet carved in stone, because everyone is still exploring,” he said.

The private sector has also focused on weekly planning to better anticipate the effects of the crisis, Mr. Lim added.