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Metal Casting Technologies : September 2008
Foundry 2008 ASIAN today finds that its Industry has practically been de-listed from the priority list of the MIRDC, leaving the Industry to fend alone for itself. This is the main reason that there are no data and statistics available this year on the foundry industry and its production. Raw materials However, we find that even the “scraps” are being denied the Metalcasting Industry as these are being allowed by government to be exported for the dollar income they generate. Here lies a paradox: While on the one hand, the government professes to help the Metalcasting Industry create and develop an export market for its castings; on the other hand, it refuses to stop the scrap dealers from exporting the Industry’s raw materials. It defies logic. How long can the Industry last under such a situation? Electric power rates Next to the raw material problem, the excessive power rates problem of the Industry still persists. These excessive electric power rates prevailing in the Philippines are now starting to worry many other sectors, too. The Metalcasting Industry, a big user of electricity has been complaining about this since a decade ago without much effect. Nobody listened. It will be recalled that the following statistics on the Philippine electric power rates were reported last year in this magazine and are very revealing, to wit: There is a continually increasing cost of electric power. The charges of the electric utility company for energy (KWH) and demand (KW) are tabulated below showing the historical increases as gathered from the Manila Electric Company (MERALCO – the electric utility company of the region) Billing Department. 50 www.metals.rala.com.au As if the situation wasn’t bad enough, MERALCO announced an intended further increase in its rates. Because of this, one of the incumbent new members of the Board of Directors of the MERALCO, who represents 35.7% of the equity as against a 33.4% share of the present management, challenged the present management to explain the existing power rates and why the need for an increase for clarification. This move has snowballed so that the Philippine Congress has started investigations and asking its own questions. Even the Executive Branch of the national government has made its own moves, subtly threatening to take over the MERALCO. In the midst of, and in response to, all these reactions, the MERALCO recently announced, instead, cuts in the existing power rates starting with the month of June 2008. This move of MERALCO seems to substantiate the fact that it has been over-charging its consumers for the last decade or so. Cost of living The cost of living in the Philippines is still consistently rising as a result of the claimed rising oil prices in the world. This is aggravated by the growing shortage of rice in the whole world making this prime commodity scarcer and so more expensive. The Philippine government has resorted to doling out welfare money to the poorest sector of the country to help alleviate its plight. It is now the middle sector that is left at the mercy of the economy because it does not qualify Item Energy Charge per KWH used Demand Charge per KW max. demand for government aid, while the upper sector with its resources could still bear the consequences. Transportation costs Due to the ever-rising oil prices, the transportation sector is clamoring for an increase in the minimum rates set by the government for commuter fares. The increasing transportation costs also affect the prices of food and other prime commodities, due to higher distribution costs, in a never- ending vicious cycle. Labor costs Finally, because of all the foregoing, the labor sector continues to demand for an increase in the legislated minimum wage Ð which it did not get fully last year Ð in order to cope with the situation. It will be noted that increasing the labor cost further would surely aggravate and increase production costs with the same labor productivity, and the ultimate resultant higher prices would make the manufactured products that much less competitive both in the domestic and the global market. The future In the face of all the foregoing, is the foreseeable future still bright or bleak? Hence, the call for endurance. The Metalcasting Industry is fervently praying for a miracle. 1985 P1.79 1995 P2.94 2005 P6.89 P12.60 P25.001 P382.00 2 2007 P6.43 P542.00 3 Note: 1 By April 1997, this was increased to P220.00 per KW maximum demand. 2 This is an average fi gure (P366.32 to P406.12) as the demand charge was now based on the input voltage. 3 The average demand charge for the year 2006 was P429.39 per KW maximum demand.