Manufacturing Revival: A Noble Quest for Philippine Industry
In the bustling halls of the Monday Circle Forum last February 23, Dr. Jesus L. Arranza, chairman emeritus of the Federation of Philippine Industries, delivered a passionate plea for the resurrection of Philippine manufacturing. Like a modern-day Don Quixote, Dr. Arranza continues his decades-long crusade to restore the sector that once drove our nation's economic growth.
The Current Manufacturing Landscape
Today's Philippine manufacturing industry faces a sobering reality. As Dr. Arranza candidly admits, our sector "lacks the scale, depth, innovation, and domestic integration into the rest of the economy" needed to drive substantial industrial growth or create quality employment opportunities.
The numbers tell a stark story. Manufacturing now accounts for approximately 15.7% to 16.2% of GDP, significantly lower than neighboring Vietnam and Thailand, which boast 24% and 25% respectively. This represents a dramatic decline from the golden era of the 1950s to 1970s, when manufacturing was a primary growth engine during our import-substitution industrialization period.
Tales of Lost Industries
Dr. Arranza's narrative becomes particularly poignant when he recounts the fall of once-thriving local industries. The textile sector, which made the Philippines a global powerhouse in the 1970s and 80s, has been devastated by rampant smuggling and the proliferation of ukay-ukay.
"We had 1.5 million spindles before. One spindle can hire 35 people on a 24-hour shift. Today, we only have 100,000 spindles courtesy of ukay-ukay," Dr. Arranza explained, highlighting how corruption and misdeclarations circumvented Republic Act No. 4653.
Similarly, Marikina, once proudly called the "Shoe Capital of the World," has seen its registered manufacturers dwindle from over 2,000 in the 1980s to roughly 300 today. Most survivors operate as small boutique shops rather than large-scale factories, unable to compete with smuggled goods sold below the cost of raw materials.
Structural Challenges
The manufacturing sector has largely transformed into an "assembly-type" industry, focusing on putting together imported components rather than developing local production capabilities. This approach offers little domestic value-added and fails to build the supply chains, design capabilities, or high-tech competencies seen in countries like Vietnam, Thailand, and Malaysia.
Dr. Arranza identified several critical factors hampering growth: high power costs, inefficient logistics, port congestion around Metro Manila, bureaucratic red tape, and inconsistent regulatory enforcement. These challenges collectively discourage large-scale industrial investments that could revitalize the sector.
Signs of Hope Under Marcos Leadership
Despite these challenges, Dr. Arranza remains optimistic about the sector's future under President Ferdinand Marcos Jr.'s administration. The manufacturing sector showed recovery in 2025, with GDP reaching approximately P1.15 trillion by December.
"Investors read more than headlines, they read a leader's posture and direction," Dr. Arranza observed. He praised President Marcos' calm and steady demeanor amid political challenges, noting that this leadership style instills confidence in investors and provides hope for manufacturing advocacy.
The stock market's strong rebound serves as evidence of returning confidence, potentially leading to fresh investments in the manufacturing sector. Dr. Arranza believes the President's focused approach to governance, despite political noise surrounding various issues, demonstrates the kind of leadership that attracts investment.
A Quixotic Dream Worth Pursuing
Like Miguel de Cervantes' Don Quixote, which evolved from entertainment to social commentary in the 19th century, Dr. Arranza's manufacturing vision may yet become a catalyst for meaningful government action and support.
The sector currently employs over 1.19 million Filipinos and generated approximately P3.78 trillion in value in 2023. With electronics, food products, and beverages as top contributors, the foundation exists for growth. Combined with other industrial sectors, manufacturing contributes around 29.5% of total Philippine GDP.
As Dr. Arranza continues his noble quest, his unwavering advocacy serves as a reminder that sustainable, inclusive economic growth requires a robust manufacturing base. Whether this quixotic dream will transform into reality depends largely on government support and the private sector's willingness to invest in long-term industrial development.
In an era where services dominate our economy through BPO, retail, and remittance-driven consumption, Dr. Arranza's call for manufacturing revival represents more than economic policy, it embodies a vision for Philippine self-reliance and industrial sovereignty.