Appendix to Philippine Team Study -1

appendix to

PHILIPPINE TEAM STUDY - 1

Rationale:

Undeniably, Filipino women constitute half of the country's population. In this regard, women are as a potential force in effecting a radical transformation in a sick society. The Philippine being a semi-colonial and semi-feudal society must wage a relentless struggle against U.S. Imperialism , feudalism and fascism in order to build a truly independent and democratic society.

As a result of long years of colonization, women suffer from double oppression and exploitation. Filipino women are considered the "weaker sex" and have been seen as mere objects of pleasure. This fact, coupled by the worsening socio-economic-political crises, plays a very insignificant role in the lives of women. With the deprivation of basic human rights goes the suppression of women's rights, such as access to fair wages compared with male workers, and denial of benefits or privileges due to them. But women's struggle can only be effected when linked with the total liberation of the Filipino people. Hence, women's participation in the revolutionary movement is in itself a struggle for women's rights.

Particular Subject Chosen: Women in the Garment Factory

Two Thrusts of the Women's Project;

1. To conduct a research and documentation work on the plight of garment factory workers, majority of whom are women and

2. To make use of this research to serve the workers themselves, i.e. labor organizing-organizing among women along the idea of building a consumers' movement, since the cost of the basic commodities is rising rapidly.

The Present Status of the Project:

The team (male and female) decided to coordinate with another group, an ecumenical one, already doing a survey on the status of garment factory.

In addition to this, the team will have a live-in-experience with the workers which will provide a continuing program ultimately leading towards awareness-building, mobilizing and organizing the workers.

The Two Phases of the Project:

First Phase: Study, Research and Documentation – one-year period

Second Phase: Organizating Phase- the form of the organization will be determined as the first phase develops, and with a general perspective of building a mass movement out of the study, conducted among the workers. During the first phase, the team hopes to form a core group to continually work with the workers.

PRIMER: THE GARMENTS INDUSTRY

1. Define the garments industry

It is the manufacture of wearing apparel of all types, except footwear, and of clothing accessories, by cutting, embroidering and/or sewing of fabrics, leather, fur, plastic, and other materials, except rubber. (At times the industry is called the clothing industry or the wearing apparel and embroidery industry.)

2. What are its principal products? Which is most widely produced?

They are:

a) men's wearing apparel and underwear such as polo shirts, T-shirts, and briefs;

b) ladies' wearing apparel and undergarments such as T-shirts, shorts and lingeries;

c) children's wear;

d) infant's wear;

e) clothing accessories such as gloves, handkerchiefs, socks and stockings. There is a very heavy concentration of undergarments production causing very stiff competition. About 1/2 of the garment firms produce undergarments of which 90% is intended for the local market and only 10% for export.

3. Give the number, size and location of the establishments in the industry.

There are approximately 900-1000 establishments operating in the industry today. About 180 are in the Greater Manila area while the rest are dispersed in the provinces with concentration in Batangas, Bulacan, Laguna, Mindoro, Pampanga, and Rizal. Included in the latter are 14 firms in the Export Processing Zone in Mariveles, Bataan.

Many of these establishments are small-and medium-scale in category. Those at cottage industry level have from three to less than 10 sewing machines. Only about 250 can be classified as garment factories operating on a semi-commercial or commercial basis. The average size of the garment factory producing mainly for the domestic market has between 20-50 sewing machines.

4. Describe the type of ownership of these firms and the nationalities of their controlling interests.

Of the firms in the 1972 Board of Investments (BOI) study, 42% were single proprietorships, 14% partnerships, 43% corporations and 1% industrial cooperative.

40% of the firms were Filipino-owned, 28% under American control and 23% controlled by other nationalities.

5. What is the industry's rate of annual growth?

25%, for the period of 1970-76.

6. What laws or Incentives have supported the growth of the industry?

a) The Embroidery Law (R.A. 3137) of 1961 created the Embroidery and Apparel Control and Inspection Board which regulates, supervises, and oversees the operations of various firms, including the inspection of conditionally tax-free raw materials imported by local embroidery and apparel manufacturers. The law also prevents the re-export of these materials on Philippine-made embroideries and apparel.

b) The Investment Incentives Act (R.A. 5186) of 1967 allows embroidery firms, duly registered with the Board of Investments, to acquire machineries locally or from foreign sources tax-free or under tax-credit.

c) The creation of the National Cottage Industry

by providing technical assistance and necessary credit facilities to small-scale entrepreneurs.

d. The incentives in the Export Processing Zone have encouraged 14 garment firms to start operations in the area.

7. What incentives are offered in the Export Processing Zone (EPZ)?

a) Foreign investors are allowed 100% ownership and control of a zone project;

b) Exemption from payment of export taxes, municipal and provincial taxes and fees;

c) Tax-free and duty-free importation of raw materials, machineries, and equipment;

d) Manpower training for specific skills required by zone enterprises at government expense;

e) Priority in the allocation of foreign exchange for imports.

8. How are firms in the industry generally classified?

According to primary target market, there are two general classifications:

a. firms producing mainly for the domestic market;

b. firms producing mainly for export, which are further classified into:

b.l. the Embroidery firms

b.2. the non-Embroidery firms.

9. What are Embroidery firms?

They operate under the Embroidery Law, are licensed by the Embroidery Board and use the consignment system in their operations.

10. What is the consignment system?

Under this system, the US principal and the local operator enter into a contract of job service. US raw materials are shipped to the Philippines by the US principal for pressing and manufacture into finished garments here. These raw materials are tax free and cannot be sold in the domestic market. The US principal retains ownership of the materials throughout the manufacturing process until the ma-

nufactured articles are re-exported to them. The operator may fan out the job orders to contractors and sub-contractors in the provinces who perform certain stages in the production process such as embroidery, hemstitching and monogramming. Due to the circuitous production process, the production period takes 1 1/2 to 2 years. The re-exportation must be done no later than two years from the arrival of the raw materials. The only value that is added and exported from here is the labor that goes into the manufactured articles.

11. What are non-Embroidery firms?

They do not operate under the Embroidery Law. Rather they operate based on incentives granted by the Board of Investments, these firms include those operating in the EPZ. Unlike the Embroidery firms, they sell directly to the importer/agent, large store groups or wholesale agents.

12. Name the outstanding Embroidery firms.

According to 1976 export performance, these are Philippine Apparel and Gelmart Industries. Philippine Apparel was the top export earner among the garment firms in 1976. It is 99% American-owned and has a tie-up with Alfor Imports, Ltd. of New York. It employs 2,857 workers and value of 1976 exports was US $6.62 Million.

Gelmart Industries' parent company is Gelmart Industries, New York. It is the top private employer in the Philippines with a labor complement of 13,224. Exports in 1976 reached US$5.62 million.

13. Name the outstanding non-Embroidery firms.

Also according to 1976 export performance, Levi Strauss (Phil.), Inc., was the only top performer not operating under the Embroidery Law. It is .99.99% owned by Levi Strauss Inc. (California) and exports totalled US$5.60 million in 1976. Stating local operations in 1972, it now exports 70% of its production to Malaysia, Singapore, Japan, Hong Kong, and Thailand while 30% is sold in the domestic market.

One example of an EPZ enterprise is Amce Manufacturing (Phil.) which is 100% Australian-owned, employs 181 workers, and has annual net dollar earnings of $1,008,000.

14. How are those firms organized?

Firms producing mainly for the domestic market have two trade associations:

a. the Garments Business Associations of the Philippines

b. the Textile Producers Association of the Philippines.

Embroidery firms have two associations:

a) Philippine Association of Embroidery and Apparel Exporters, Inc. which is composed of 17 large apparel and embroidery manufacturers, mostly alien-controlled, and accounts for about 80% of the garment industry's export to the US for both cotton and man-made textile products.

b) Filipine Chamber of Embroidery and Apparel Products, Inc. which has a small number of Pilipine-controlled firms as members.

15. What are the top firms in the industry?

In the 1978 Security Exchange Commission (SEC) list of the top 1,000 corporations, the ranking is as follows; (see table A in the next page)

16. Describe the export performance of the garments industry

Garments as an export product appears fourth in the list of the top ten Philippine exports for 1976, trailing behind sugar (concentrated and refined), coconut oil, and copper concentrates. It was 6th in 1975. Earning IS $184.66 million in 1976, representing a 72.5% increase over the past year, it was the top export revenue earner of the year among the products registered under Export Incentives Act or among the so-called non-traditional exports.

17. Compare the Export performance of Embroidery and non-Embroidery firms.

The growth of the non-Embroidery sector of the industry has been described as phenomenal. Export earnings increased by 41,016.5% during the period 1971-76, registering an average increase of 323.48% per year. The banner years were 1972 and 1973 when exports increased by 438.62% and 332.12% respectively.

Exports of Embroidery firms, also called re-exports, increased by 190.64% during, the period 1972-76 registering an average increase of 38.12% per year.

Over-all, the non-Embroidery firms appear to be de-

veloping very rapidly. While they took only 0.5% of the export share in 1970, in 1976 they went up to 43.4%.

18. Identify the export market.

While the trend is one of diversification, the IS remains the principal market. It has absorbed an average of 53.33% of total exports (excluding re-exports) of clothing during the years 1970-74.

In 1965, clothing was exported to 7 countries only, in 1970 to 12 countries and in 1974 to 44 countries. In 1976, the US share was down to 60% as against 75% in 1975 and 79% in 1974. Nearly 23% of total garment exports went to Europe in 1976 compared to only 5% in 1974.

The export figures for 1976 are:

West Germany

United Kingdom

$110.2-M

15.5-M

10.7-M

Japan

Canada

Australia

7.9-M

6.8-M

6.5-M

France

Netherlands

5.5-M

4.2-M

Philippine Exports of Garments (see table B)

19. What are quota refugees?

They are foreign garment companies in the Philippines. They came from Korea, Taiwan and Hong Kong and set up here and in other countries to compete with local manufacturers in filling up the US garment quota. The EPZ's policy accepts quota refugees.

20. Chart the production process.

Design-Making	/Sample-Making	/Pattern-Making	/Cutting /Spreading /Marker-Making /Chopping /Position-Making (optional) /Shading /Bundling
Inspection and Revision	/Sewing	/Embroidery
Finishing	/Cleaning	/Pressing	/Final Inspection and Revision
	/Shipping	/Folding and Packing

21. How are production costs distributed?

Any Security Exchange Commission study gives an

idea of the distribution: (see Table C)

22. What means are resorted to reduce costs?

A common solution is the laying off of workers. To keep down overhead costs, the number of contractual workers is also reduced.

23. Describe the number and characteristics of the labor force in the industry?

The industry employs more than 500,000 workers both in the urban and rural areas. The greater bulk is composed of cottage industry workers paid on piecework basis. Rural workers are mostly married women who work in snatches between or after household chores. The rest of the labor force are employed as cutters, sewers, inspectors, engineers, etc.

24. What are the skill requirements of the industry?

These are, in decreasing order of necessity, sewing and embroidery, operating a specified kind of machine, design-making, cutting and linking, pattern-making, revising and seamstress.

25. How long is the training program for workers in the industry ?

The length varies. Sewers take 3 months; spreaders and cutters, 3 months; graders and markers, 6 months, forewomen and supervisors, 6 months; pattern-makers, one year.

26. What are the compensation rates and terns?

Based on the 1973 Wage Commission study of the industry, employers are paid monthly (8.37%), daily (51.83%), or on a piece-rate basis, (39.80%). Of the total daily wage employees, 53.69% were statutory-minimum wage earners, with the rest earning more than the daily wage rate. Over-all percentage of minimum wage earners to total employment was 28%

27. Compare the wage rates in the Philippines and other Asian Countries. (see Table D)

28. Define the extent of labor organization in the industry.

Workers in the industry are not very well organized. In the Wage Commission study, 30% had labor unions while 70% were not unionized.

29. Which labor federations operate in the industry?

These include GATCORD, ALL, PLAC, NAMAWU, AND TIPAS.

Table D

Compare the wage rates in the Philippines and other Asian Countries

Country

Minimum monthly wage (US$)

Mean monthly wage (US$)

Australia

Hong Kong

India

Japan

Korea

Malaysia

Philippines

Singapore

Taiwan

Thailand

Vietnam

Indonesia

375

259

112

113

449

269

112

306

137

114

Table A

Rank

Name of firm

Net Sales and other Income

Net Income Before tax

Net Income After Tax

1976

290

383

485

534

727

754

834

863

894

1975

317

340

617

955

762

864

863

Levi Strauss (Phil) Inc.

Golmart Industries

Triumph International

Filtox Manufacturing Corp.

Mariveles Apparel Corp.

Novelty Philippines Inc.

Oxford Manufacturing Corp.

International Garment Manufacturing Corp.

Squires Bingham Mfg. Co., Inc.

P61,996,993.00

48,366,525.00

37,908,376.00

33,887,845.14

24,162,399.00

23,119,361.00

20,714,976.25

19,757,673.21

19,186,610.00

P1,968,968.00

1,121,896.00

33,053.00

664,814.53

64,014.00

459,411.00

269,411.00

(3,502,148.04)

1,377,875.00

P1,289,830.00

741,595.00

24,790.00

442,128.80

64,014.00

256,503.00

184,830.72

(3,502,148,04)

1,377,875.00

Table B

PHILIPPINE EXPORTS OF GARMENTS

By Type of Manufacturer 1970-1977/a

(FOB Value in US Dollars)

Year	Embroidery Firms	Percentage Share	Percentage Increase	Non-Embroidery Firms Value	Percentage Share	Percentage Increase	Total Value
1970 1971 1972 1973 1974 1975 1976 1977	36,019.520 35,250,139 16,214,819 46.794,180 70.722,691 74,287,732 104,690,583 49,466,305	99.5 98.6 93.3 80.7 75.1 69.4 56.6 47.19	- (2.13) 2.73 28.69 51.13 5.04 40.90 -	194,495 479,921 2,584,972 11,170,229 23,403,343 32,741,943 79,969,594 55,357,294	0.5 1.4 6.7 19.3 24.9 30.6 43.4 52.81	146.75 146.75 438.62 332.12 109.51 39.90 144.24 -	36,214,015 35,730,060 38,799,791 57,964,409 94,126,034 407,029,675 184,660,177 -

Table C

COSTS OF PRODUCTION OF 44 SEC-REGISTERED ESTABLISMENTS

Year

1972

1973

1974

Raw Materials

P57,175,200

(0.7514)

105,134,700

(0.7713)

122,4l8,100

(0.9414)

Direct Labor

6,230,100

(0.0814)

10,003,500

(0.0733)

2,835,400

(0.0218)

Manufacturing Overhead

12,655,900

(0.1662)

21,165,700

(0.1554)

4,790,800

(0.0868)

Total

76,061,200

(1,000)

136,303,900 (1,000)

130,044,300 (1,000)