The anchor we need to rebuild our industry

Industrialization is not about chasing the “latest” shiny technologies. It is about building a productive base that raises skills and incomes through the discipline of making things. In my previous article (see “Reflections on PH’s industrial decline,” 1/9/26), I discussed how we lost our lead. Today, the thesis is how we can regain our footing in a transformed global economy.

Any serious attempt to restart manufacturing must move beyond rhetoric. We need a foundation—an “anchor industry”—and the household appliance is the perfect candidate to catalyze this revival. The appliance sector—refrigerators, air-conditioners, and washing machines—is a unique industrial “sweet spot.” Unlike basic assembly, world-class appliances require a robust ecosystem: reliable power, precision tool-and-die shops, chemical processing, and electronic controls. These products sit at the critical intersection of infrastructure, engineering, and consumer markets, exposing structural inefficiencies while rewarding process discipline.

Historically, the Philippines was a regional leader here, but today we are heavily import-dependent. The Philippine household appliance market is valued at $1.8 billion annually. With a growing middle class and housing backlog, the market is projected to grow by 5.5 percent annually through 2028. In terms of value, 80 percent to 85 percent of major appliances sold here is captured by imports from China, Thailand, and Vietnam. Reclaiming even 30 percent of this market would keep over P30 billion within our economy annually and create thousands of jobs.

We cannot outproduce China on volume, nor displace Japan at the premium end. Our battleground is the mid-tier market. However, simple assembly—putting together imported kits—is a dead end. Our advantage lies in “Tropicalized Engineering”: Designing appliances for high humidity, intense heat, and voltage fluctuations for countries like us. By focusing on these factors, we create a niche that generic imports cannot fill.

To accelerate this strategy, we need joint ventures that prioritize technology transfer, aiming for a “best of both worlds” model: South Korea’s rapid scaling and Japan’s benchmark for durability. The goal is Japan-level quality at Korea-level prices, achieved through local supplier development. Small and medium enterprises are the “vital ingredient” here. An appliance has hundreds of parts, requiring tool-and-die shops, metal stampers, and plastics processors. These SMEs form the productive core of an industrial nation. Without them, factories remain shallow assembly points that can be uprooted the moment labor costs rise. The “Tatak Pinoy” (Proudly Filipino) Act is a step forward, but intent must translate into execution. Incentives should be performance-based and SME-linked, providing fiscal support only to firms that commit to localizing at least 40 percent to 50 percent of their supply chain within a specific timeframe. Shared facilities for tooling, testing, and certification are more important than large-ticket prestige projects, as they allow shops nationwide to meet rigorous global standards.

As former chair of the National Renewable Energy Board, I see an opportunity in the nexus of manufacturing and energy. Electricity prices in the Philippines are among the highest in Asia. By building a domestic appliance industry, we can lead in energy-efficient “inverter” technology tailored for our climate. High efficiency standards for local products help households lower power bills while creating a “green” barrier against low-quality, energy-hungry imports.

The “China Plus One” strategy means multinationals are seeking alternative hubs to diversify risk. In the short term, this requires providing competitive, reliable power and cutting bureaucratic red tape. In the medium term, we must rebuild industrial depth—suppliers, tooling, and components. Eventually, these capabilities will “spill over”: Precision stamping for a refrigerator can be adapted for automotive parts, and electronic controllers can be used in renewable energy equipment. Industrial recovery is not about reviving failed protectionist formulas. Our neighbors have already proven that the path from student to master is through manufacturing, not just service sector growth. If we don’t integrate our SMEs, fix our power costs, and commit to an anchor industry today, we are effectively choosing a future where our children’s greatest contribution to the world is their absence from home.

The window for a “third chance” is open, but it is narrowing. We must decide if we will finally be a country that builds or remain one that merely consumes.

—————-

Pete Maniego is an engineer, lawyer, industry executive, former professor at the University of the Philippines College of Engineering and Ateneo School of Government, and past chair of the National Renewable Energy Board, Institute of Corporate Directors, UP Engineering Research & Development Foundation, and Energy Lawyers Association of the Philippines.