The national government should seize the “golden opportunity” to take over the shipbuilding facilities of Hanjin Heavy Industries and Construction Co.-Philippines (HHIC-Phil) Inc. to industrialize the economy.
In a forum on Wednesday, former Dean of the University of the Philippines School of Labor and Industrial Relations (Solair) Rene E. Ofreneo said the government cannot pass up this opportunity because the Hanjin problem affects the economy, national defense and even food security.
Anakpawis Rep. Ariel Casilao, for his part, said that industrializing the country can begin with Hanjin because it could jump-start the implementation of the industrialization road map of the government.
“The Hanjin [case] can be a golden opportunity para maging solid ang industrialization base natin. First step magkaroon ka ng genuine takeover. Hindi ’yung takeover mo temporarily transition pero ’yung two Chinese company naman ay naka-abang na din para mag-invest at doon ibibigay mo. Of course genuine takeover precisely means [the] government within its resources and agencies should manage. [The Hanjin debacle can be a golden opportunity and could become a solid base for industrialization. First step is to have a genuine takeover. This takeover should not be temporary or transitionary while the two Chinese companies are waiting in the wings to invest and the government will give it to them. Of course genuine takeover precisely means government within its resources and agencies should manage],” Casilao said.
Ofreneo added that a development framework for the takeover of Hanjin should be crafted. This will prevent its previous challenges, such as its high debts, to resurface.
Glut in shipbuilding
HE said the debts of Hanjin piled up as a result of the 2008 glut in ship building which led to oversupply of ships with the entry of China.
Despite this problem, the government can capitalize on the country’s geographical position, as well as its 7,100 islands that are always in need of ample supply of various goods and services.
Having a local shipbuilder in the country can help improve transportation and logistics within the Philippines. Agronomist at the University of the Philippines Los Baños Teodoro C. Mendoza said this will benefit the farm sector.
Mendoza said Filipinos do not need to suffer from high prices since field or farm-gate prices are low. The only thing that makes food expensive in the country is the high cost of transportation.
“Very few understand the logistics side of agriculture, and agriculture is not a stand alone industry,” Mendoza said. “We are an archipelagic country, how will you distribute your food? So you will require a lot of ships. Incidentally, water is efficient because there’s no traffic but we don’t have ships,” he added.
Further, the Department of Labor and Employment Bureau of Labor and Employment Director Dominique Rubia-Tutay said she told Labor Secretary Silvestre H. Bello III that the department should support efforts to takeover Hanjin if only to ensure the plight of the workers.
Rubia-Tutay said moving toward industrialization is the only way to give Hanjin workers decent jobs, as well as transform the “Philippines into a shipbuilding capital.”
“Let’s build our own [ships], be the captain in the industry, including the maritime sector because our maritime sector is a strong one,” Rubia-Tutay said.
She said the problem of Hanjin workers will worsen, especially after this week since the last ship that is currently being constructed at Hanjin in Subic will be completed by the end of the week.
On top of that, there are age concerns for many of the workers. Rubia-Tutay said while there were many workers that will be hired because of their expertise as welders and fitters, for older welders, they may have to deal with pay cuts.
Rubia-Tutay said in order to qualify as welders, all workers need to undergo a precision test. But many older welders would have a difficult time passing this test especially if they are already in their 40s.
She said workers in Hanjin, especially those that started working there when the shipyard opened, are already in the 30s and 40s. Some of those who will not pass the test will have to settle for less paying jobs such as fitters.
“If you are a 40-year-old person in Hanjin and you will apply as a welder in some other contractors and companies, your chances really decline because employers would say its a high pressurized tool that they use. What happens is that employers have to retool them and transfer them to other jobs in the construction sector. They said the closest would be [to work as] fitters of steel,” Rubia-Tutay said.
“Of course the pay is different but these options will be evaluated by the welder. But if the option is between being unemployed and being employed but having a lower salary, you might grab [the latter] opportunity because this can be temporary given [the] talk about a government takeover,” she added.
Earlier, local economists such as Action for Economic Reforms (AER) Coordinator Filomeno S. Sta. Ana III said the government has no business running a company that can easily be operated by the private sector.
A government takeover, Sta. Ana said, is not the answer, even if there are sectors that say the troubles of Hanjin was also caused by market failures. He stressed that “shipbuilding is not a public good.”
Unionbank expert: White knight best
Further, Unionbank Bank Chief Economist Ruben Asuncion said taking over Hanjin will also lead to lost revenues, especially given the poor track record of the government in taking over firms.
Asuncion said having white knights is the best option for Hanjin right now. The government does not have experience in running a shipbuilding facility and could potentially lead to “regrettable results.”
One such company is Philippine Airlines, which was sequestered by the national government in the 1970s. It was seized by the late dictator Ferdinand E. Marcos from businessman Benigno Toda Jr. The GSIS acquired 92 percent of PAL shares from majority PAL owner Benigno Toda, returning ownership and control back to the government. Capital increased from P25 million to P250 million.
However, in 1999, the Securities and Exchange Commission approved a rehabilitation plan designed to return PAL to financial viability, following a capital infusion of $200 million by Chairman Lucio C. Tan. PAL exited receivership in 2007.
Image credits: Nonie Reyes