Automotive Industry in Calabarzon includes the vehicle manufacturing products classified as either completely built units (CBU) or completely knocked down (CKD) parts. The highest employment number was on 2015 for the Vehicle Manufacturer (3,558) and in 2017 for the Parts and Components Manufacturer (8,531). There was an increase in employment from 2013 to 2015 of automotive industry in Calabarzon. The value of output shows yearly average increment of 11.94% increase of both types of manufacturers. The yearly average increase in the tax contribution of both types of manufacturers had increased by 17.55%.
Automotive industry in Calabarzon indicates the needs of the vehicle manufacturers in terms of manpower such as the engineers. The parts and components manufacturers need design engineers and market researchers. Strategies done recently to improve products or services of the automotive industry included annual review of product features as requested by the customers. They added more features on the product through time. For the parts and components manufacturers, they implemented extensive process inspection to improve product quality, incorporate technology on the product produced. They also adopted and conducted KAIZEN activities. At present both the vehicle manufacturers and the parts and components manufacturers does not need additional machineries and equipment in their production operation. Vehicle manufacturers delivered their finished products through car carriers, roll on roll off vessel when products are to be delivered in Visayas and Mindanao regions. Customers pick up the products in their plant and some are delivered by their own trucks to the dealers or distributors for the parts and components manufacturers. Vehicle manufacturers have their own training facilities for fresh graduates and on-the-job trainees especially in the field of metal works and tinsmith. Parts and components manufacturers need training in painting technology, welding and computer numerical cControl machine operation. Vehicle manufacturers do not need additional capital for its business operation. While the parts and components manufacturers’ avail of a 60-day credit term from their input suppliers.
The Philippine electronics industry began in the 1960s when electronics companies from the United States and other liberalized countries located their subsidiaries in the country primarily due to rising labor costs. From then on, the Philippine electronics industry has expanded and has become an important export base of electronic products. In the mid-1990s, agricultural products were overtaken by electronics products as the leading exported products of the country. In 2011, electronic products shared almost half of the total exports of the Philippines. Moreover, the electronic industry contributed significantly to the manufacturing sector’s total output, investments, as well as on employment generation (NTRC Tax Research Journal, Vol. 25.2, 2013).
The Electronics Industry in the Philippines is classified into two, namely; Semiconductor Manufacturing Services (SMS), with 73 percent, and Electronics Manufacturing Services (EMS), with 27 percent. It generally covers the following subsectors: components and devices (semiconductors), electronic data processing and computer-related products, automotive electronics, consumer electronics, office equipment, communications and radar, telecommunications, control and instrumentation and medical and industrial. Most of the electronics businesses in the country operate in four key areas: Metro Manila (42 percent), CALABARZON (48 percent), Northern/Central Luzon (three percent) and Cebu (seven percent).
As of first quarter 2013, there are over 424 electronics firms in the Philippines. Majority of these electronic firms are found in major hubs such as those in Baguio, CALABARZON, Cebu, Clark, and Metro Manila located in Economic Zone or BOI-registered. Electronic companies in the country are ISO-certified, highly technical labor-intensive business. They also practice the best-known methods in manufacturing such as JIT (Just in Time), TQM (Total Quality Management), 5s method (sorting, setting in order, sweeping, standardizing and sustaining the practice), GJ, BSC, and QPIC. Their capabilities range from IC Packaging, PCB Assembly, and Full Product Assembly. They also offer better compensation packages, among others. Among the firms investing in the country are Texas Instruments, Toshiba Information Equipment, Inc., Amkor, HGST (A Western Digital Company), and Fairchild Semiconductor (Phil.), Inc., Analog Devices, ON Semiconductor, Cypress, Maxim, NXP, STMicroelectronics, and IMI Electronics.
The Information Technology-Business Process Management or IT-BPM industry started as early as 1980s in the Philippines when SPi Global offered data-entry services to various companies under the Fortune 500. Animation companies from the United States, Japan, and Australia began to outsource animation projects in the Philippines starting in 1983, earning the country the distinction of being the animation capital of the world in the ‘80s. During that time, around 90% of the world’s animation projects were outsourced in the country (Lee, et al., 2014).
The development of telecommunication infrastructure in the 90s, and eventually internet facilities in the 2000s, attracted more IT-BPM investors to open their business in the Philippines. From being just a voice-based industry in the past, the industry, since then, has expanded into seven sub sectors. These seven sub sectors are listed and defined by the DTI (n.d.) as follows:
- Contact Center. Consists of in-bound and outbound voice operation services for the purposes of sales, customer service, technical support, and others.
- Back Office. Services related to finance and accounting (e.g., bookkeeping, accounts maintenance, claims processing, asset management) and human resource administration (e.g., payroll processing, benefits administration, human resources data management).
- Data Transcription. Provision of transcription services for interpreting oral dictation of health professionals, dictations during legal proceedings, and other data encoding services.
- Animation. Process of giving the illusion of movement to cinematographic drawings, models, or inanimate objects through 2D, 3D, etc.
- Software Development. Analysis and design, prototyping, programming and testing, customization, reengineering and conversion, installation and maintenance, education and training of systems software, middleware and application software. Engineering Development. Includes engineering design for civil works, building and building components, ship building, and electronics.
- Digital Content. Creation of products that are available in digital form, such as music, information, and images that are available for download or distribution on electronic media.
However, Lambregts et al. (2015), citing the work of Bunyaratavej (2011), note that business process outsourcing firms are gradually moving away from the thought of hiring cheaper labor, but tapping the potential of skilled workers they find hard to find home.
At 1.3 million-strong direct employment in 2016, the industry has become a key player in the Philippines with revenues of USD 4.3 billion (2.9% of GDP) in 2007, USD 13.4 billion (5.4% of GDP) in 2012, and a whopping USD 25 billion in 2016 (Lee, et al., 2014; De Rivera, 2016). At present, the industry is the second largest contributor to the country’s GDP, next only to Overseas Filipino Workers’ (OFW) remittances.
The steady increase in revenues became the industry’s driving force for growth and expansion. Lee, et al. (2014) report that the unprecedented expansion of the industry in the country was spurred by rapid infrastructure development, overwhelming government support, and availability of talented, yet relatively cheaper manpower compared to other countries. Peter Ryan, a lead BPO and Contact Services Analyst, in a series of interviews with key BPO experts conducted by Read (2011), argue that in spite of the risks like natural disasters, political instability, unstable currency, and competition with other contact centers who decided to put up their business elsewhere, the Philippines still remains to be the most ideal location to start or expand a BPO company.
At present, India enjoys the status of being the number one IT-BPM country, but more and more companies have been transferring to the Philippines because of the greater number of employable graduates (30%) compared to only 10% of India (De Rivera, 2016). Lee, et al. also added that companies choose the Philippines despite greater salary obligations to employees compared to that of India, because of the ability of Filipinos to speak the “neutral accent” – an accent that is closer to the American accent, and thus more familiar for customers.
The Philippine Metalworking Industry Profiling Study by MIRDC-DOST on 2013 stated that welding, tool &die and machining industries are located mostly in CALABARZON economic zones, operating 24 hours a day. Owners/managers/supervisors are difficult to organize and convene considering their schedule and location. The said study also utilizes plant visits and personal interview in gathering data giving convenience to the respondents and at the same time convey accurate understanding of the questions.
There is only 1 Petrochemical company in CALABARZON, JG Summit Petrochemical Corporation located in Batangas. And there are only 6 companies in the country.
The chemicals sector is primarily a capital-intensive rather than labour-intensive industry, providing few direct employment opportunities. Employees in the sector typically have a minimum of post-secondary technical training (approximately 50% of the workforce), with a large portion (20%) of chemical and mechanical engineers and chemists. Firms highlight that technician training, along with government certification, is provided by Technical Education and Skills Development Authority (TESDA), while the professional staff draw from primarily local universities.