Manufacturers scramble to tighten operations as costly energy bites
Philippine manufacturers are recalibrating operations to absorb rising energy costs driven by the Middle East crisis, shifting production to off-peak hours and adopting more flexible work setups to keep factories running.
In a statement on Wednesday, the Federation of Philippine Industries (FPI) said uninterrupted production remains the top priority for local manufacturers, even as higher fuel prices ripple through electricity, transport and raw material costs.
“Firms are prioritizing uninterrupted production while safeguarding workforce stability, even as margins tighten,” FPI chair Elizabeth Lee said, noting that mitigation measures are being intensified across operations.
These include rescheduling production to off-peak hours to manage electricity expenses, deploying cross-trained workers who can take on multiple roles as needed and shifting nonproduction functions to remote work, if feasible.
Lee said companies are also tightening cost controls across their operations, including renegotiating supplier contracts, improving energy efficiency in production lines and streamlining logistics to reduce fuel consumption.
Oil shocks
The adjustments come as oil price spikes linked to tensions in the Middle East tighten global supply conditions and push up operating expenses for manufacturers, particularly those reliant on imported raw materials and fuel-intensive logistics.
As such, President Marcos has declared a state of national energy emergency, triggering the rollout of the Unified Package for Livelihoods, Industry, Food, and Transport (Uplift), a whole-of-government response to cushion sectors from global energy shocks.
The FPI described the Uplift framework as “timely and necessary” to help industries manage the spillover effects of the Iran war. Meanwhile, the Philippine Chamber of Commerce and Industry (PCCI) said the move was a first step toward ensuring sufficient energy supply and stabilizing prices.
In a separate statement, the Philippine Exporters Confederation Inc. (Philexport) said higher oil prices are driving up logistics, shipping and production costs, potentially eroding the competitiveness of Philippine exports in an already challenging global market.
As such, Philexport urged the government to complement Uplift with targeted support for exporters, including temporary relief on fuel and logistics costs, faster rollout of fuel subsidy programs and closer coordination with logistics providers to prevent excessive rate increases.
Pressures ‘expected’
Lee earlier warned that a weakening peso and rising energy costs could deliver a double whammy for Philippine manufacturers, especially domestic-oriented industries, as both drive up fuel prices and the cost of imported inputs.
“These pressures are expected under current conditions,” Lee said. “Manufacturers are responding with a strong focus on continuity, cost discipline and resilience.”
Beyond short-term measures, the industry is also accelerating longer-term adjustments, including diversifying supply chains and expanding local sourcing where viable to reduce exposure to global shocks.
“This crisis magnified our country’s vulnerabilities,” Lee said. “Reforms that will deepen and expand local manufacturing as a national imperative will help the Philippines secure resilience, drive job creation, and help better shield the Philippine economy from global energy shocks.”
For PCCI president Ferdinand Ferrer, a conflict dragging on for two to three months would not bode well for the Philippine economy.
“We should rethink and reset our priorities locally so that our country will not panic in times of crisis,” Ferrer said. “We should learn from our neighboring countries in Asia like Japan, which has reserves sufficient for eight months.”
