Alarm bells for the Cebu furniture industry!

It’s two days before Christmas and I was planning to write something about Christmas cheer. However, there are still many other pressing matters that we have to present to our readers because if we fail to ring the alarm bells… in a few months from now… we might just have an economic disaster in Cebu of epic proportions and when that happens, it would be like squeezing a toothpaste tube, where you can’t return its contents back inside.

I’m talking about a story in The Freeman’s Business section by Ehda Dagooc last Wednesday wherein the furniture makers, through the Cebu Furniture Industry Foundation Inc. (CFIF), virtually blamed the government for their decline. Let me point out that I have always believed in the dictum that the government should help business and industry rather than regulate it to death and we’re writing this story in the hope that the Arroyo administration would go out of its way to help and support our furniture makers at a time when everyone is optimistic that next year will be a better year.

Among the many problems of the furniture industry is a serious lack of raw materials… worsened by log bans due to environmental concerns like the declaration of a log ban in the Autonomous Region in Muslim Mindanao (ARRM). But we all know that log bans are more of a myth in this country. People are illegally cutting logs and profiting from it… from forestry officials to local government officials down to the police.

That leaves legitimate businesses like the furniture industry with huge problems, which I believe can only be solved by the highest level of government. Mind you, this problem doesn’t exist in Metro Manila; hence, you rarely find this story in our national dailies as it is irrelevant to them. Moreover, 80 percent of furniture exporters are based in Cebu, which is why this issue is of grave importance to many Cebuanos.

In case you didn’t know, here are some statistics about the furniture industry. In 2004, total furniture exports reached $294 million. Of that figure, $120 million (41 percent) was contributed by Cebu furniture exporters. The remaining $174 million (59 percent) was from the rest of the country. As of the third quarter of 2005, total furniture exports were pegged at $234 million… and from Cebu, the figure was $90 million. The furniture industry is responsible for the direct employment of 80,000 workers, while indirect employment is pegged at 140,000 workers.

What is disturbing here is a CFIF report that shows the declining growth of the furniture industry in the last five years, pegged at five percent per year, while our ASEAN neighbors have shown hefty increases in their growth rates. This is why we’re sounding the alarm bells now to see whether the Arroyo administration can do all it can to arrest this decline. Let’s see if GMA responds to the distress signals sent by the CFIF.

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In a related incident, still on the troubles of the furniture industry, while the CFIF blames mostly the government for its woes, there are other problems that it is facing. Last week, a furniture exporter friend of mine, Victor Yuvallos of TEC Industries, complained to me about a nagging problem, which I’m sure is not an exclusive problem of his company.

It is a simple case of gross inefficiency of a shipping company, which failed to notify its clients that its containers had already arrived in the Cebu Port a month earlier. Hence, its clients like the TEC Industries were forced to pay demurrage fees when they shouldn’t be blamed for this gross inefficiency. This issue was already written about by Ms. Ruth Mercado last week in The Freeman’s Transportation page. But we’re bringing it up in this corner because I’m sure that it’s also happening nationwide. Here’s the self-explanatory letter of Mr. Yuvallos about the circumstances of his problem:

"Dear Bobit, This is regards The Freeman Transport/Shipping section issue on Dec. 14, 2005. Maersk Sealand corporate affairs manager Ms. Letty B. Franco, in her letter to us, said, ‘It is not mandatory (for) the shipping line to notify clients of arrivals — it is part of our value-added tool afforded to clients.’ She is correct and we don’t argue with that because our company has an Import/Export department with well-qualified staff whose duties and functions include monitoring incoming containers.

"If we have survived in the last 20 years in business, it is because we have somebody in our organization monitoring the timely arrival of raw materials needed in our day-to-day production, which we don’t entrust to the shipping lines. Our suppliers abroad also send notices of shipments and other relevant documents needed to release the cargo upon arrival are sent on time.

"In this case, our principal/supplier had already sent the documents ahead of time for us to monitor and follow up the cargo. Our Import/Export department had also been calling Maersk-Sealand’s office about the time the cargo should have arrived. Ms. Athena Ybanez from Maersk-Sealand informed us that our cargo has not yet arrived despite repeated follow-ups. I don’t know what ‘value-added service’ they are talking about because finally they sent us an arrival notice of our shipment… a month after the container arrived in Cebu!

"Another arrival notice was sent by Maersk-Sealand 19 days after the container arrived and a third container 20 days after it arrived. Because of this ‘value-added service’ from Maersk-Sealand, our company incurred demurrage and penalties amounting to about One Hundred Eighty Thousand Pesos (P180,000). Why then did we incur such penalties and charges?

"First of all, you have (to) pay the shipping lines’ destination charges before you can start the process of clearing the containers from Customs and these charges are reflected on the arrival notice sent by the shipping line to the consignee. Without paying these charges, the shipping line will not release your cargo. You can never get your cargo even if you know that your cargo is already in the port when the shipping line says it has not arrived.

"With all the troubles we had gone through, not a single soul from Maersk-Sealand even bothered to look at the problem and give us a call. You cannot imagine that such a huge conglomerate as Maersk-Sealand, reputed to be the largest shipping line in the world with a vision of ensuring reliable and comprehensive logistics coverage, could turn a blind eye on our case. We can only hope and pray that through your mighty column, we can somehow open their eyes and that they may look at their customers with a different perspective. Very truly yours, Victor Yuvallos, TEC Industries Inc."

Now didn’t we say that the furniture industry was deeply in trouble? Again, let’s hope that GMA will find solutions to these problems.

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A MERRY CHRISTMAS & A HAPPY NEW YEAR TO OUR READERS!

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For e-mail responses to this article, write to [email protected]. Bobit Avila’s columns can also be accessed through www.thefreeman.com. He also hosts a weekly talkshow, "Straight from the Sky," shown every Monday, at 8 p.m., only in Metro Cebu on Channel 15 of SkyCable.