HK firm to make luxury bags in RP

MANILA, Philippines - Hong Kong-based firm Luen Thai Holdings Ltd. announced yesterday that they will now manufacture Coach handbags in their plants here in the Philippines for export to the United States and China.

In an interview, Board of Investments (BOI) Executive Director Lucita P. Reyes announced that the Luen Thai chief executive visited her Friday to inform her that they will be building a Coach bag manufacturing plant in Concepcion Tarlac.

Reyes said they expect commercial operations to begin in the second quarter of next year. The new plant will hire 2,000 employees. Initially, the production will be limited to bags and wallets but Reyes said it is possible that Coach will also make shoes here.

“This is part of their expansion because the demand for Coach bags has been increasing,” Reyes said. Coach bags are currently being produced in China. Reyes said they will not be closing their China operations.

At the same time, Reyes said Luen Thai will expand two of its existing manufacturing plants in the country. Luen Thai executives were in Cebu to check an existing plant that they would like to purchase in the Mactan Eco Zone.

The Cebu plant of Luen Thai manufactures Adidas sportswear. It employs 3,000 to 4,000 workers. Reyes said she doesn’t know how much additional investment will be put in for the plant in Cebu.

Likewise, the company will also hire an additional 2,000 workers for its Clark facility. The Clark plant has unused capacity so no additional investment is required. The Clark plant manufactures shirts for Ralph Lauren.

A fourth project is in the pipeline for Luen Thai. The firm would like to produce high-end denim for a US firm. However, the approval of this project is dependent on the passage of the Save Act bill in the US Congress.

The SAVE Act Bill, the bill touted to save the ailing Philippine garment industry, is now filed in both Houses of US Congress. The SAVE Act (HR 3039) was introduced by Congressman Jim McDermott and Congressman Brian P. Bilbray in June 2009 which had a total of 10 sponsors   A companion bill S. 3170 was introduced by Senators Kit Bond and Daniel Inouye.

Under the 809 component of the program, US made fabrics and yarns cut and wholly assembled in the Philippines would qualify to re-enter the United States free of duty. In additions, garments made of US spun yarn or extruded yarn formed in the Philippines.

The Philippine garments export industry, during its peak, employed around 600,000 workers but was whittled down to 150,000 as cheaper garments are being manufactured from neighboring countries.