In response to rising tariffs and escalating tensions between the United States and China, American companies are seeking alternative manufacturing locations—including the Philippines.
Why? The Philippines is home to some of the newest manufacturing technology, including mirrored SMT systems (like those in the Manila facilities Pivot owns). But there are many additional reasons to consider the Philippines as your next manufacturing destination.
The manufacturing sector is growing, as is the country’s economy
The Philippines has one of the fastest growing economies in Asia, and a quarter of the Philippine GDP derives from manufacturing. Significant manufacturing sectors in the Philippines include “semiconductors, electronic components, refined petroleum products, computer, peripheral equipment and accessories, and processed food.”
The Philippines’ Socioeconomic Planning Secretary Ernesto M. Pernia states that the Philippines’ manufacturing sector is “performing very well. Increases in the purchases of capital and durable goods contributed to the increase and further indicates that there is business and consumer confidence in the domestic economy.”
Production capabilities and manufacturing sectors
Metro Manila is known as the “financial, commercial, and industrial center of the Philippines,” accounting for almost a third of the country’s total GDP. Cebu City, the second-largest metropolis, is also home to a prosperous manufacturing sector that exports everything from furniture to housewares, gift items, and fashion accessories. Many global brands, including Polo, Ann Taylor, and Nike, are already manufacturing in the Philippines.
Plans to improve infrastructure
In 2017, the Philippines announced its plan to allocate $7.6 billion towards infrastructure renovations. President Rodrigo Duterte’s “Build, Build, Build” plan leaves the country “looking to spend $180 billion to renovate and build airports, railways, roads and ports over a six-year period.”
The Philippines was ranked 14th out of 88 countries in the 2018 EF English Proficiency Index. According to the Board of Investors, the Philippines literacy rate is 94 percent. On top of that, 70 percent of the population is fluent in English.
The data above shows that the Philippines labor force possesses higher levels of education than other ASEAN countries. 21 percent of the labor force is educated to the tertiary level and nearly six out of ten of the country’s population has secondary education. Additionally, “in the human capital study done by the World Economic Forum, the Philippines scored well among ASEAN countries in ease of finding skilled employees.”
With a highly skilled and educated workforce, growing manufacturing sector, and infrastructure improvements, the Philippines is a reliable manufacturing alternative to China. Remember, regardless of the unique sourcing needs of your company, staying informed and flexible can help you successfully weather the current trade climate and maintain the health of your supply chain.
At Pivot International, we offer end-to-end supply chain solutions and viable alternatives to China-based manufacturing. As a single-source designing, engineering, and manufacturing company with facilities in Taiwan, Manila, the UK, and the United States, we bring nearly 50 years of experience in optimizing production for your business. If your company is currently confronting production liabilities, we can help. Contact us today.