Manufacturings

The Philippines is still one of the less developed countries. Manufacturing, therefore, accounts for a relatively small share of total employment about 15 percent, including construction and mining. Nevertheless, manufactured goods today account for the major share of exports: 60 percent in the late 1980s. This is a tenfold increase from the 6 percent share in 1960. In short, while the percentage employed in manufacturing jobs has not increased greatly in the past three decades, the contribution of manufacturing to the national economy has increased dramatically.

The traditional function of manufacturing was food processing. For example, mills were built to process rice and corn or refine sugar. Soon after independence in 1946, the nation embarked upon an import replacement program. This means that factories were established to make goods that had previously been imported. Plants that bottled, packaged, and assembled goods made overseas were established along with steel mills, fertilizer plants, and the like. The goal was to make the country less dependent on such imported goods. Unfortunately, the strategy did not work particularly well, because components still had to be imported and
local markets were small.

More recently, many less developed nations like the Philippines have changed to a strategy of manufacturing for export, as Japan has done with great success since the mid-1950s. The emphasis becomes making goods specifically for export sales instead of local consumption. This goal has led to the establishment of export processing zones (EPZs) where multinational corporations have built factories to take advantage of tax and export fee exemptions and, of course, of cheap labor.

By the early 1990s the EPZ plants had only a minimal effect on the national economy, except for the limited employment and training they provide. The EPZs are located on the peninsula of Bataan, near Manila; on Mactan Island, near Cebu; and in Baguio, on Luzon. These plants produce or assemble a wide variety of products, including textiles and clothing, electronic goods, and watches. The two leading exports in the early 1990s were electronics and clothing.

Local entrepreneurs, often with foreign financial partners, continue to process primary commodities for export. These products include plywood, refined sugar, canned pineapple, copra, and coconut oil. Other industries that have operated in the Philippines, especially in Manila, for a long period are the manufacture of footwear and of tobacco products.

The bulk of manufacturing is concentrated in the Manila area. The city is the principal point of entry for raw materials and other goods. It has a huge local market, a pool of skilled labor, and large financial institutions along with the presence of cultural institutions and the central government. The metropolitan area contains more than half of the total manufacturing employment.

Another area with a heavy concentration of industry is northern Mindanao around Iligan. Heavy industry began there in the 1950s because of the hydroelectricity generated at nearby Maria Cristina Falls. An integrated steel plant, chemical and fertilizer plants, and cement factories are among the dozen or more largest factories in the area. Unfortunately, due to the low demand for the products of these plants, they have rarely produced to full capacity. In the Cagayan de Oro area, also on the northern Mindanao coast, a number of establishments are located, including a steel plant and a pineapple processing factory that cans pineapples for
a nearby plantation.

The second and third largest metropolitan areas, Cebu City and Davao City, also have significant concentrations of manufacturing. These include plywood and lumber mills, furniture firms, food processing plants, and cement factories. Cebu City is a world center for the making of rattan furniture and also has a well-known shell craft industry. Small, often family-operated firms, or cottage industries, produce traditional handicrafts to meet tourist demands and local needs. Some of these handicraft products wood carvings, basketry, woven items, brassware, matting, and pottery are exported.

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