Cauayan City, Isabela-based Agricomponent Machineries and Construction Corp. (AMCC), one of the top suppliers of modern agricultural machineries and equipment in the country, experienced business challenges in its operations during its fledgling days. It had limited fabrication equipment, resulting in inadequate production capacity and low production due to slow production processes from 1993 to 2012.
Betis Crafts Inc. (BCI) in Concepcion, Tarlac, needed the assistance for the introduction and adoption of cutting-edge woodworking technologies, to upgrade the existing processing facilities and address quality issues to be able to meet the quality and quantity demand of current and target markets.
The Bohol Bee Farm Resort and Franchising Corp. needed upgrading of its homemade ice cream, processing technologies to increase production capacity and to extend product shelf life. Furthermore, it also aimed to upgrade the skills of its workers through technology.
These micro, small and medium enterprises (MSMEs), and many others, turned to the Small Enterprise Technology Upgrading Program (Setup) for succor.
A creation of the Department of Science and Technology (DOST) in 2002, Setup aims to support Filipino entrepreneurs in key metropolitan areas and economic hubs in the countryside and provide MSMEs distinct competitive advantage, DOST-Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD) said.
MSMEs
The DOST recognizes that MSMEs sector is a vital cog to the economy. Philippine Statistics Authority (PSA) data cited that MSMEs compose 99.5 percent of the 900,914 establishments in the country as of 2015. It generated a total of 4,784,870 jobs in 2015 against 2,981,819 by large enterprises.
Moreover, MSMEs contributed almost 61.6 percent of the total jobs generated by all types of business establishments. Of these, 29.4 percent, or 2,285,634 jobs, were generated by micro enterprises; 25.3 percent, or 1,968,452, by small enterprises; and 6.8 percent, or 530,784, by medium enterprises.
Aware of the impact of the MSMEs as growth driver, the DOST assumed the role of enabling the MSMEs through the appropriate use of science, technology and innovation to move them higher in the value chain.
Setup
Through Setup, the DOST is able to respond to the public’s demand to improve access to technologies and breakthroughs developed by the different DOST facilities. Setup’s objective is to help MSMEs utilize technological innovations and scientific processes that improve business productivity and efficiency.
Setup assisted MSMEs to improve their productivity and increase efficiency through the infusion of appropriate DOST technologies.
MMSEs, especially those based in the provinces, are empowered by providing them with technologies that offer stronger capability to become more productive, competitive (locally and globally) and bankable. Thus, MSMEs are given the opportunities to become major players in the international arena of commerce and industry, the DOST said.
Setup focuses on facilitating technology transfer and assessment but also assists MSMEs through different interventions: 1) seed fund for technology acquisition, 2) equipment acquisition, 3) technical trainings and consultancy services (Hazard Analysis and Critical Control Points and Good Manufacturing Practices, Quality and Environmental Management System), 4) packaging and label design; 5) database information system, and 6) support in the establishment of product standards including testing and calibration of equipment.
Game changer
In its 15th year, there is no doubt that Setup is a game changer and has invigorated and transformed the MSMEs with technology-backed business activities and strategies. These innovations have opened up a new avenue of economic growth that will promote inclusive growth, the DOST-PCIEERD said.
Setup has since accomplished several milestones:
- The total funding assistance for Setup beneficiaries as of 2016 is P3.336 billion;
- The total number of assisted enterprises as of 2016 is 4,363 with a record of 37-percent productivity improvement;
- The total number of jobs generated as of 2016 is 167,939; and
- The number of technology interventions as of 2016 is 50,370, consisting of consultancy services, training, packaging assistance, design and labeling.
Setup beneficiaries
AMCC: The company sought the support of the DOST’s Cagayan Valley office through Setup. The DOST provided assistance worth P2.165 million. It enabled AMCC to acquire a highly mechanized equipment. The Hydraulic Press Brake was purchased and series of technical trainings were provided to improve AMCC’s services.
As a result, its production capacity increased and the skilled workers were able to craft high quality and innovative outputs. Over the years, AMCC’s market expanded and is now sharing its success to other firms and people. The company is outsourcing metals and job contracts to DOST-assisted MSMEs, including Genez’s Welding Shop, Pablo’s Welding Shop, Matallog’s Welding Shop and Sammy’s Welding Shop.
The firm also extends on-the-job trainings for Technical Education and Skills Development Authority students.
Besides, AMCC has its own research and development plan. It has developed innovative products, which are now being commercialized. Also, the company accepts customized fabrication and after sales services for their clients.Through Setup’s assistance, AMCC’s stature got a boost resulting in becoming a member of the Equipment Manufacturing Cluster (EMC) R2, an organization for metal equipment manufacturers in Cagayan Valley, and in Metals International Association of the Philippines.
It was also able to develop a good working relationship with the other members of EMC, as they allowed the corporation to use their materials. These materials are fabricated and purchased by local and international enterprises, including local start-up businesses. The growth AMCC’s business enabled them to establish a production center indicating AMCC’s business continue to soar even higher.
BCI: Before the DOST’s intervention in 2012, BCI produced 11,236 furniture units, including beds, chairs, cabinets and tables. After utilizing and maximizing the technologies provided by Setup, BCI achieved a 40-percent increase in production volume to 15,757 furniture units in 2016.
In 2016, after BCI have fully utilized and maximized the woodworking technologies provided by Setup, a volume of 15,757 combined furniture units were produced which is equivalent to a high of 40-percent increase in production. This increase means a significant return for the business.
Before the Setup intervention, the gross sales was P102.254 million in 2012. In 2016, BCI posted an increase of 64 percent to P167.88 million annual gross sales, five times higher than the projected increase of 11 percent. Furthermore, the 2016 sales was the highest recorded sales in the history of BCI and is expected to increase in years to come. BCI attributed the increased in gross sales to the expansion of export market.
BCI also beefed up its work force. The 240 regular employees in 2012 increased to 270 workers in 2016. On top of this, the additional 225 man-year project-based and extra workers were hired from 2012 to 2015.
About 95 percent of production volume is exported to Europe, Midde East, North America and Asia, and 5 percent are sold to domestic buyers. The firm has individual and institutional buyers in Iran, Dubai, Qatar, Kingdom of Saudi Arabia, the United Kingdom, Belgium and the US.
BCI regularly participates in furniture shows/trade fairs/exhibit in Singapore, China, France and Italy. One of these, is the Maison & Objet Show in Paris, the premier furniture exhibit that showcases world’s leading designers and artisans.
BCI also maintains a showroom in Guagua, Pampanga, for its walk-in clients and local buyers. The firm also participates regularly in exhibits organized by Philippine International Furniture Show, Manila Fame and Center for International Trade Expositions and Missions.
Bohol Bee Farm: One of the recent top 5 finalists among the 16 regional finalists in the Search for Best Setup Adoptor, Bohol Bee Farm sought the expertise of the program for upgrading of its processing technologies to increase production and to upgrade the skills of its workers through technology in its earlier years of operation.
Setup provided consultancy services and technical assistance. Consultancy services included the manufacturing productivity extension program and food-safety consultancy. Technical assistance were the provision of food safety and good manufacturing practice, processing plant layout, training on basic food sanitation, hygiene and current good operation/manufacturing practices, product packaging and labeling and product development to increase product shelf life.
After availing itself of Setup’s expertise, Bohol Bee Farm’s income from its homemade ice cream reached P8.16 million, from P4.68 million before intervention. Gross sales increased to P16.32 million after Setup intervention, from P9.32 million before the intervention.
This year Bohol Bee Farm was cited as Inspiring Tourism/Negosyo Entrepreneur Award by the Department of Trade and Industry, Go Negosyo. In 2013 the company was cited as the top taxpayer of Bohol by the Central Visayas office of the Bureau of Internal Revenue.