Layoffs loom as US cuts orders for PH-made jeans, shirts

The Philippine garment industry might be forced to lay off workers as its number one importer, the United States, grapples with recession fears and supply chain issues.

The Foreign Buyers Association of the Philippines (Fobap) told the Inquirer on Friday that orders for their goods, particularly locally produced garments for popular brands like Levi’s, Zara and Uniqlo, were down by a significant amount.

“Our orders are now down by 5 percent and we expect this to go down further. As it is, 5 percent is already big,” said Robert Young, president and chair of Fobap, highlighting the magnitude of revenues lost.

Young said they usually export $1 billion worth of garments and other wearable goods each year to major destination countries including the United States, Australia, Canada, Japan and many other European nations.

“What will happen is if the orders continue to go down, we have no choice but to lay off some people,” he said.

US inflation

The United States is in the brink of a recession as monetary policy makers rush to raise interest rates to tame inflation.

As a result, Young said consumers are cutting down on their purchases. With a large volume of goods unsold, clients were being forced to order less from them, he added.

“They have a lot of unsold stocks of t-shirts and everything. There’s not a lot of people buying the products,” he said.

He said this subdued consumer spending in now spilling over to other non-US markets, making matters worse for them.

“You know what they say, when the United States catches a cold, the whole world gets it as well,” he said.

A mix of supply-chain issues, from higher shipping costs to port congestion, which started at the height of the pandemic, remained a problem, Young said.

“The shipping lines took advantage of the situation and raised their prices. It’s now what?—double, triple [the usual rates],” he said, referring to freight costs.

Ports around the world are also dealing with congestion, thus increasing the transit time and transportation costs as some rerouting has become necessary.

“Our clients are not able to order as much. And when they do, the freight costs are higher than usual. Of course, this will be passed on to consumers,” he said. INQ