PH ‘needs’ support industries

TOP officials of Tsuneishi Heavy Industries (Cebu) Inc., the local unit of the world’s leading shipbuilder Tsuneishi Group of Japan, are urging the government to develop the domestic support industries for labor-intensive ventures like shipbuilding.

Tsuneishi Technical Services (Phils.) Inc. general manager Segismundo Exaltacion Jr. said the Philippines could lose its cost competitiveness for failure to develop the supply chain of big industries, which can be sourced locally.

According to Exaltacion, THI only has five percent local content, which includes locally sourced minor steel fittings. Majority of the firm’s requirements are imported from Japan, which can supply the certified steel requirements for shipbuilders.

“The Philippines has no steel manufacturing to begin with,” said Exaltacion. He believes that if the government would push for investments in shipbuilding support industries, it will attract more shipbuilders to locate here.

He said that it is an important requirement for the government to move in parallel with the metal industry so it would be capable in supplying the delivery of vessels to spur the growth of the economy.

He said domestic shipbuilders need steel plates manufacturers and licensed engine makers, although, these require capital-intensive investments.

“Imagine if they locate here and supply to Tsuneishi. That is indirect export because
we are registered with the Philippine Economic Zone Authority,” said Exaltacion.

He said the presence of domestic support industries would also help the country rise from its rank as world’s fifth largest shipbuilding last year. The Philippines was recently dislodged by Brazil in the ranking. In 2010, the country ranked fourth next to Korea, Japan and China.

But amid factory presence in Japan and China, Exaltacion said the Philippines is still very cost competitive because of its efficient operations and labor cost arbitrage.

“We are still bigger in terms of capacity vis-a-vis China and Japan,” he said.

However, he warned then firm could lose that cost arbitrage if it would not improve value addition.

THI employs about 15,000 workers. The company is celebrating its 20th anniversary.

THI president Hitoshi Kono, in a separate interview, said they are studying the possibility of delivering small vessels for the domestic market as part of their plan to position the Balamban-based firm as the mother shipyard in Southeast Asia and the shipbuilding capital of the Philippines.

“We are still in the planning stage as to what kind of vessel we are going to build,” he said.

Kono announced THICI has logged 60 booked ship orders until 2017. It plans to build 25-30 ships per year.

Over the last 20 years, Tsuneshi has delivered 193 ships, including ship orders made in 2014, generating P250 billion in revenues.
Source: Sun Star