Texas Instruments Phils. Inc (Tipi), located at the Baguio Economic Zone Authority (Beza), retrenched 392 of its employees last December, triggering fears that other big companies located at the economic zone might do the same. Tipi also relocated 100 employees to its Clark-Subic branch.
Juan Ngalob, regional director of the National Economic and Development Authority in the Cordillera, said Texas Instruments may be retrenching a smaller number in a second batch.
While Tipi admits it has not been spared from the global economic crunch, Ngalob, like other officials, says it is too early to tell how other companies will fare or respond to the crisis.
In an interview during the Christmas holiday with US Ambassador to Manila Kristie Kenney, she said the move by Tipi, an American company, did not necessarily spell doom for the rest of the businesses here, even if Tipi is known to be the biggest contributor to the Cordillera region’s economy.
“None of us really know yet how other companies will fare. There are many American corporations in Baguio, like Citel [one of the first and biggest call centers, located also at Beza] and Moog, another Beza-based manufacturing company, but each company will have their own circumstances,” she said.
She said some of these moves may be temporary depending on the company and the world situation.
Kenney said much depends on the economic-recovery package of President-elect Barack Obama. “We will just have to give him time. While he sits as new president on January 20, new mayors, governors and Cabinet secretaries will have to take their positions, too. We are all waiting for what he says on his inaugural speech,” she said, adding that economic recovery will certainly be the first thing he will attend to.
“Some industries may even find the Philippines a better place for them for a good-quality work force,” Kenney said.
Ana Dione, regional director of the Cordillera Department of Labor and Employment (DOLE-CAR), expressed the same opinion, saying that in fact Moog is priming for expansion.
She said Nokia, Tipi’s biggest market, has withdrawn its business with Tipi for this year. Tipi manufactures and provides Nokia’s integrated circuits.
Despite the rapid upgrading of cellular and computer technologies, Dione said it is a known fact that people and companies are just holding on to their present mobile phones and computers due to the crisis.
She added that in the Philippines, Nokia is also taking a toll from imitations of its units from China which sell at much cheaper costs.
Dione assured that Tipi’s retrenchment package is a good one, disclosing that it allowed a period of planning and discussion with her office before the final terms were laid out.
“First, the retrenchment was carried out on a voluntarily basis,” she said, adding that many employees were happy with the move. She said it was not considered as an early retirement offer but a retrenchment, with Tipi saying the company has been experiencing a major drop in its net units manufactured (NUM) since the start of 2008.
In a letter to the DOLE, Tipi said, “Our near-term NUM demands have drastically dropped and we expect this trend to continue for the foreseeable future.”
But Tipi also said it has taken a number of steps to ensure reduction in its cost and has sincerely attempted to minimize any personal hardships to its employees.
Some of the steps taken were zero overtime work, use of vacation and sick leaves and lowering facilities’ operating costs.
The business showed no signs of improvement, though, and the company was thus constrained to resort to termination of employees' services.
Complying with the law, Tipi gives one-month basic pay for every year of service and payment of monetary value of unused vacation and sick leaves.
Tipi has added half month’s pay for every year of service, and additional amount based on Tipi’s Employee Benefits Program.
The company also assured that in the event business improves in the near future, resulting in a need for new hires, retrenched employees will be given priority.
Source:businessmirror