In a letter to Tariff Commission Chairman Edgardo Abon, TCMAPI chairman and president Henry Tañedo warned that granting tariff protection anew to NSC would adversely affect the viability of peripheral steel manufacturers such as tin can manufacturers.
Tañedo expressed fears that tariff protection for NSC would increase the cost of production of tin can manufacturers and result in a higher packaging component cost of canned goods.
Tañedo revealed that even at the present zero tariff, the tin can industry is experiencing a migration of customers to mostly imported and cheaper plastic packaging and flexible packaging.
He noted that under the present condition of the economy, "market contraction would worsen, price competition would intensify, loan obligations would not be met and the financial sector of the economy would have severe headaches."
Tañedo also warned that with higher tinplate costs (if tariff is reimposed) and the lowering of tariff for empty cans and finished can goods, "it may become attractive for some of our companies either to relocate to China whose labor and other costs are far cheaper, or cease operations and totally shut down our plants."
Tañedo said a reimposition of tariff protection for NSC would only be justified "if it would help an industry become efficient and competitive within a reasonable period of time."
Unfortunately, Tañedo said, "NSC can never become this competitive industry because of its intrinsic disadvantage of not having indigenous source or raw materials for slab production, not to mention the large amount of capital needed to fully integrate, and its huge outstanding debt."
Furthermore, Tañedo pointed out, "as in the US, the downstream steel industry in the Philippines is far bigger than NSC."
He stressed that "if NSC is reopened, government must ensure that the downstream steel manufacturing sector is healthy because it is essential to NSC’s survival."