HOW messianic can it get? Ferdinand A. Ferrer witnessed how ash spewed by Taal Volcano smothered the roofs and walls of EMS Group of Companies’ assembly plant in Laguna Technopark. The economic zone in Biñan, Laguna, is just a half-hour drive from Tagaytay City in Cavite, where the picturesque yet unpredictable volcano can suddenly disrupt not a few lives from far and wide.
(The recent eruption in January 2020 coated the Southern Tagalog region in monochrome, which drove workers, tourists and even locals to scamper for dear lives.)
Ferrer also saw the way people surrendered their senses when thrown in a situation where they play tag with death. Just like in the Taal malady, they swamped pharmacies, bought face masks by the bulk, rushed to supermarkets and hoarded food for good measure.
Understanding the need for protective gear, Ferrer considered repurposing a portion of EMS’s factory in Laguna for the production of face masks. After all, his workers need to don them to get to the work site, as it took weeks before the ashes were cleaned up.
In March, Ferrer created and directed a task force to research the process for a 16-year-old electronics manufacturer to recalibrate its facilities and train its workers to produce face masks. But while EMS was studying its cards, the Philippines was to suffer yet another tragedy.
In the days that followed, the entire island of Luzon was declared under a lockdown by President Duterte to contain the transmission of a rampaging pandemic. It forced schools to cut short their academic year, business owners to padlock their stores, workers to lose their jobs, vacationists to cancel their summer plans, and people had no recourse but to stay indoors.
The EMS task force pushed through with its assignment through the first days of the widespread quarantine until the Holy Week. On Easter Sunday, the team submitted to the board of trustees its report with a confirmation: The transition can be done. Yes—as an electronics manufacturer, we can weave face masks. It’s now up to the executives to decide…and take a leap of faith.
Safeguarding livelihood
LIKE it was decades ago, Ferrer narrated this tale in a September webinar hosted by the Board of Investments (BOI).
EMS, where he serves as chairman and CEO, founded the Confederation of Philippine Manufacturers of PPE (CPMP), along with Medtecs International Corp. Ltd., Reliance Producers Cooperative, Luen Thai and Tacca Philippines Inc. The group vows to supply the country with pandemic essentials; particularly, personal protective equipment (PPE).
At the onset of the coronavirus disease 2019 (Covid-19) contagion, BOI Managing Head Ceferino S. Rodolfo summoned industry leaders and reported to them that the government is struggling to import PPEs for health workers, as several countries have prohibited their exporters from shipping their products and redirect their output for domestic use.
Among the five members of CPMP, only Medtecs manufactured medical-grade face masks prior to the health crisis; the rest work on either electronic parts or garments. CPMP Board Advisor Maritess Jocson-Agoncillo said exporters of clothing products were expecting sales to plummet by as much as 50 percent on canceled orders due to the pandemic.
To survive, garment makers were left with two options: to fire workers, or to repurpose facilities. The first seemed the easy way out; the other, the proverbial “path less taken.” Agoncillo said CPMP members opted for the latter in order to safeguard the livelihood of their workers.
As a collective, the CPMP invested a total of $35 million in additional capital for the procurement of new equipment, retrofitting of factories and training of workers. It resulted in the retention of jobs of at least 7,450 workers.
Agoncillo shared the goal was to save jobs of as many workers as possible, and provide them with sources of livelihood at a time of an economic crisis.
Then, there were 22
BASED on BOI data, there are now 22 face mask manufacturers in the Philippines: from only two prior to the pandemic, nine produce medical-grade N88 and KN95. Firms which fabricate face masks for medical use can now churn out 60.6 million pieces per month.
Prior to the contagion, the country could prepare just 6 million pieces monthly, according to Ma. Corazon Halili-Dichosa, executive director at BOI’s Industry Development Services.
Dichosa also told the BusinessMirror there are now 17 firms engaged in the production of PPE coveralls, isolation gowns and medical aprons. The Philippines had zero capacity to make such items pre-pandemic, but can now tailor 3.5 million pieces per 30-day cycle.
She said the BOI is undertaking an ecosystem-development initiative wherein it is trying to complete the PPE supply chain by getting investors to erect dedicated factories for raw materials, such as the fabric for coveralls, and filters for face masks.
“So far, we have one Australian company going into the production of melt-blown non-woven polypropylene, [which is] the middle filter for face masks,” Dichosa shared. “There is also one Filipino firm which will start to produce spunbond NW PP as inner and outer layers of the masks.”
“As a further backward linkage, we are talking to local petrochemical companies to develop the appropriate PP resin grades for the production of melt blown and spunbond NW PPs,” the BOI executive added.
Aside from PPEs, three local manufacturers are now producing ventilators. One is the Ayala-owned Integrated Microelectronics Inc., which is licensed to assemble the Ventura Flow Generator, a ventilator developed by the University College London and Mercedes AMG High Performance Powertrains.
What is govt’s share?
WHEN life gives lemons, make lemonade. When life sows a pandemic, make PPEs.
As much as this venture presents opportunities, it poses risks as well. The government may be first to ask manufacturers to gamble on PPE making, but it was last to pay its share in the bet.
In August, Ferrer said the Department of Health purchased face masks at a low of 30 million pieces to as many as 80 million pieces per month. However, he reported the agency procures just around 10 million pieces from domestic producers, or barely 17 percent of industry capacity of 60.6 million pieces monthly. As such, PPE makers are forced to peddle their products to private hospitals and department stores.
CPMP’s Agoncillo said the group is working with the government in stockpiling PPEs for health workers, as coveralls should be worn before the internal medical-grade fabric starts to deteriorate after two years.
Further, the CPMP is asking the government to develop an economic zone for PPE makers to integrate their operations, link supply chains and multiply production.
At present, the group’s members are scattered all over Luzon: Medtecs is in Bataan, Luen Thai is in Pampanga, Reliance is in Cavite, EMS and Tacca are in Laguna. Should an economic zone be built for them, Ferrer pitched the area to house a testing laboratory to save PPE makers the extra cost of sending samples abroad to obtain product certification.
Beyond Covid-19
“WE believe that the business can be sustained even beyond the pandemic, as the new normal would likely make wearing PPEs a staple already,” BOI’s Dichosa stated.
She explained the government understands the sacrifices PPE makers made in the pandemic. They did what others avoided to do: invest additional capital in an economy battered by recession.
As an incentive, investors in PPE manufacturing may get four years of income-tax holiday and duty-free importation of capital equipment should they register with the BOI, which are provided to them under the Investments Priorities Plan.
Likewise, the government may issue another joint memorandum circular (JMC) exempting from import duties, taxes and fees the importation of raw materials and equipment for production of Covid-19 critical goods.
Dichosa said the JMC may be released once the President approves the guidelines to enforce the second Bayanihan to Recover As One Act.
“Local demand of a population as big as ours, plus the demand in the export market, would make for a viable proposition for companies to continue this business,” Dichosa argued.
After EMS leaders approved the move to repurpose their facilities, import prices for raw materials of face masks ballooned three- to four-fold. At that time, EMS plans to buy 20 million tons of the filters used to weave medical-grade face masks.
Meanwhile, Ferrer said his firm stood by its decision: EMS retrofitted its factory in five weeks’ time, secured a license to operate in May and produced its first 1 million face masks before June.
Most important, it preserved the jobs of around 250 personnel who were on the brink of joining the unemployed.
In terms of keeping body and soul together, at least for those workers, indeed—it is quite messianic.