Coconut oil producer, appliance retailer reduce working days

published March 23, 2009 in BusinessWorld and Leyte Samar Daily Express

TACLOBAN CITY — The economic slowdown has become a reality for workers in a coconut processor and an appliance dealer in Eastern Visayas, with their employers resorting to reduced working hours and cutting pay.

Forter G. Puguon, regional director of the Department of Labor and Employment, said SC Global Coco Products, Inc. based in Baybay, Leyte has reduced workdays to only 10 to 15 days a month starting February. The company’s 66 workers had to take a pay cut as a result.

Gillamac’s Marketing, Inc., a Cebu-based appliance distributor with branches in Calbayog, Maasin and Ormoc in Eastern Visayas, also reduced working hours as part of a cost-cutting strategy. A total of 19 employees were affected.

"The appliance store claimed in their report submitted to us that they are affected by the global financial crisis. The firm did not indicate in its report the details of the flexible work arrangement," Mr. Puguon told BusinessWorld.

The Labor department has been closely monitoring the operation of eight coconut oil mills in Eastern Visayas.

"We had a meeting with the owners earlier to ask them to immediately report any changes so that we can extend necessary interventions. The general information we got is that they are still able to face the effects of crisis in terms of their market," Mr. Puguon said.

The official said strong ties with the local market should allow coconut processors to survive and preserve jobs.

"We consider the coconut oil mills and our overseas Filipino workers as the most vulnerable sectors. Our contingency plan has been focused on how to help them," Mr. Puguon added.

The Filipino-run SC Global owns a coconut oil refining facility with a capacity to produce 39,600 metric tons of coconut oil a year for export.

"The company has been experiencing weaker export activities prompting them to depart from the traditional or standard workdays and workweek. They have to shut down production from time to time," he said.

Mr. Puguon said the department has tied up with the local government of Baybay to help SC Global employees, who are being considered for emergency employment in road repair work.

Aside from the global slowdown, SC Global’s coconut-based products have also lost ground to alternative products like palm, soya and rapeseed oil.

SC Global’s chief operating officer, Emmanuel Licup, earlier sent an e-mail to the Philippine Coconut Authority (PCA) to explain that the unusually high copra price in early 2008 — "at a staggering P43 per kilo" — had made coconut oil less competitive than alternatives like palm, soya and rapeseed oil.

Experts have said that higher demand for coconut oil for use as feedstock by local biodiesel producers and a need to boost domestic stocks would slow down coconut oil exports in 2009.

Major exporters Philippine Associated Smelting and Refining Corp. and the Philippine Phosphate Fertilizer Corp. have assured Labor officials that they won’t lay off workers this year.- Sarwell Q. Meniano