I. The Philippine Metal Industry
II. Directory of Members
A vital link to other industries
The vibrant industry offers a wealth of prospects and opportunities in transforming metals into various downstream products.
The industry serves the requirements of various industries of the economy, e.g., construction, automotive and transport, appliances, packaging, fabrication and repair of machines (agricultural, mining, industrial and other general machines and their replacements parts) as well as that of other allied industries.
These metal products consist of metal components and parts (automotive and other machinery parts) and other metal manufactures. They are classified into the following major metalworking processes: metalcasting; forging; stamping and machining.
The industry still lacks advanced technology inputs primarily as a result of limited market size and external economic factors that constrain economies of scale rather than an inherent competitiveness of the industry. When these external constraints are relaxed or overcome, this industry is projected to immediately take off.
Export Development Plan
The Philippine Export Development Plan includes metalworking as one of the Export Winners. The industry envisions transforming the Philippines into a world-class supplier of metal components and parts eventually a reliable supplier of machines and other finished metal products.
The Export Development Strategy includes the following initiatives:
- modernization of products process so that the industry can attain world class status;
- implementation of quality and productivity improvement program;
- upgrading of engineering and technical education;
- development of technical education;
- development of basic raw metals industries/support industries; and
- pursuance of an aggressive and focused marketing approach in target markets such as the US, Asia and Europe.
The industry has inherent comparative advantages in operating management and labor skills upon which export competitiveness can be built:
- large free capabilities: The industry has only about 60 to 70 percent capacity utilization and can therefore easily accommodate orders from foreign contractors;
- an edge over technically-advanced countries in the production of components that special jobbing work, e.g. products that are not re-ordered in large volumes and therefore cost higher to manufacture in highly industrialized countries;
- ability to produce according to internationally-accepted quality and standards;
- open for tie-ups and joint ventures;
- most firms have the flexibility to produce various types of products;
- available pool of highly qualified technical staff;
- competitive labor cost and support services; and
- ability to localize many machinery parts that can bring about conservation of foreign exchange.
Sources of competitive advantages
- Metal components parts
- Casted parts of various machines
- crushing and grinding machines
- textile machineries
- marine propellers
- soil pipe fittings
- electrical fittings
- brake drum, brake disc, other casted automotive parts
- aluminum alloy wheels/other aluminum casting
- various stamped components and parts of appliances
- stamped OEM components and parts of appliances
- hydro-entrolled machines
- general-purpose machines
- plumbing fixtures
- kiln, boilers and incinerators
- other forged components for automotive, shipping, mining, agricultural, aerospace, other allied industries electrical utilities.
- Other metal manufactures
- wire products
- metal containers (cans, tanks, drums, etc.
- decorative metal trims
- cutlery and handtools
- metal sanitary wares and plumbing fixtures
- Other fabricated metal items
- Metalcasting: The sources of competitive advantage in the metal casting industry are the labor and operating management skills of local firms and the firms’ capacity to run smaller operations in an economical way. In instances when best internationally practice technology were provided by foreign companies, local companies have responded by becoming internationally competitive in price and quality.
- Forging: The main reason why local forging activities will retain a competitive advantage even if the technology is capital intensive and foreign-sourced are the highly skilled labor and operating managers. The forging plants in the Philippines can be set up to generate comparative edge because Filipino skills deliver in two areas: design of flexible forging plants that produce components in smaller lot sizes; and design and fabrication of tool and die requirements.
- Machining: low cost of highly skilled labor for locally-machined products
Exports of metal products are undertaken through any of the following modes: direct to imports and wholesalers; and as indirect exporters (suppliers/subcontractors to direct exporters) through traders and/or suppliers to OEM manufacturers
Please see http://tradelinephil.dti.gov.ph/betp/trade_stat.main for more statistics.
Prospects for higher exports can be principally attributed to the following factors:
- the country continuously enjoys an edge over technically-advanced countries in the production of components that are require special jobbing work, e.g. products ordered in small volumes and therefore cost higher to manufacture in highly industrialized countries;
- increasing production and profits of the big Three Automakers in the US as well in Japan and European countries due to environmental regulations and prohibitive labor costs;
- acceptance of global sourcing by developed countries
- possible joint ventures with the foreign firms from developed countries which are planning to relocate;
- developed countries are looking at the Asia Pacific Region as the growth area and as sources and markets for their products
- due to the closure of some Japanese magwheel firms, production of magwheel shifted to Asian countries. This is expected to further increase demand for the RP made aluminum alloy wheels.
Source: Bureau of Export Trade Promotion (BETP)