Bernardo M. Villegas
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A Paragon of Agro-Industrialization (Part 1)

             There are those who almost despair of our ever building a strong manufacturing base when they observe all those factories that are leaving China and skipping the Philippines to transfer their operations especially to Vietnam, Thailand and Indonesia.  Those who consider me a very optimistic person about the future of the Philippine economy are surprised that I am a pessimist as regards our ever catching up with our neighbors in labor-intensive export-oriented industries, with the exception of semiconductor components.  I don’t think we will be ever exporting motor vehicles, much less electric cars.  Neither can we hope to be exporting laptops or smart phones. It is not only these three ASEAN tigers with whom we have to compete.  Waiting in the wings are three very low-wage countries:  Myanmar, Cambodia and Laos.   We missed the boat in the last century when we misguidedly adopted an inward-looking and protectionist industrialization strategy that spawned a host of capital-intensive enterprises that all languished during the age of globalization.

            That is why I was elated to see rise from the First Industrial Township, right at the back of the ancestral home of my late parents in Sto. Tomas, Batangas, a brandnew state-of-the art factory complex producing coco chemicals from coconut oil as the raw material.  I am talking about D&L Premium Foods and Natura Aeropack, wholly-owned companies of D&L Industries, a publicly listed company that is setting the pace of the industrialization of the coconut industry.  Its top management is so forward looking that the factory complex is built to meet the needs of both the domestic and export markets for the next fifteen years.  It is the likes of D&L Industries, the parent company of D&L Premium Foods and Natura Aeropack, that will make sure that manufacturing  in the Philippines can still account for a large percentage of GDP as we move towards high-middle income to high-income  status in the next ten to twenty years during which the demand of a population reaching as much as 150 million with a per capita income of at least $15,000 annually will make profitable manufacturing enterprises like D & L Premium Foods and Natura Aeropack, together with a host of companies replicating the success of such food firms as Century Pacific, Mondessin, Mega Sardines, San Miguel Foods, Robina Foods and a host of other local food manufacturing companies that are holding their own against competing multinationals like Alaska, Nestle, Unilever and Mondelez.  We don’t have to export a great deal of manufactured goods like our East Asian neighbors to have a strong manufacturing base.  Our large domestic market will make profitable numerous factories in a wide variety of sectors.

            D&L Industries is a Filipino company engaged in product customization and specialization through a collaborative effort with various partners.  Powered by research and innovation, D&L manufactures various products ranging from food ingredients, chemicals for personal and home care use, raw materials for plastic, and aerosol products.  These are the types of manufactured products the demand for which rises exponentially as an economy increasingly modernizes and urbanizes. To get an idea of the variety of manufactured products of D&L, let me list what are contained in their website.  There are oleo-fats which serve as ingredients for food and snacks.  These can be used by food industry leaders, restaurants, small time bakeries and other food retailers in the Philippines and in 28 countries located in East and Southeast Asia and the Middle East, Europe, Australia, and North America.

            Another subsidiary of D&L is Chemrez which goes beyond food manufacturing and covers the equally bullish markets of health and nutrition, personal care and hygiene, and home care and Institutional and Industrial (I&I) . Chemrez Technologies also comes out with manufactured products for crop science, petroleum and oilfield chemicals, packaging, paint and coatings, building and construction and composites. Then there is D&L Polymers and Colours, Inc. providing the plastics industry with custom designed and formulated dry colorants, color masterbatches and additives and engineered polymers for a wide range of applications. The oldest subsidiary is First in Color (FiC) which from its humble beginning over 60 years ago has grown to become the leading provider of custom dry colorants, color masterbatches, additives and engineered polymers in the Philippines today.  FiT continually invests in research and development to provide the local plastic industry with biodegradable and environmentally friendly products.

            Also a significant manufacturing venture that is business to business in the local market is AERO-Pack, the first company in the Philippines to supply aerosol cans and components and to introduce contract filling and compounding services.  For more than 35 years, AERO-Pack has been satisfying the packaging needs of local manufacturers and marketers alike.  It offers services with a wide range of applications, among which are insecticides, industrial maintenance chemicals, air fresheners, furniture polish and personal care products.  In 2002, it ventured into toll producing non-aerosol products for its current clients such as those producing insecticides, liquid and gel disinfectants, cleaner/polishers, liquid soaps and so forth.

            And finally, for more than 35 years, another subsidiary called Corro-Coat has been providing state-of-the-art, high-quality color solutions to industrial and commercial manufacturers.  Corro-coat has been meeting the demand of exacting global standards while unflinching in its advocacy in Green Chemistry which promises to reduce or even eliminate the use and generation of hazardous substances. These diverse products of the D&L conglomerate illustrate the myriad of manufacturing possibilities that can cater to a large domestic market that fortunately the Philippines will continue to have for a long time.  We are far from being inflicted with the demographic suicide that practically all developed countries have committed.  The domestic market will be for some time the foundation for a strong manufacturing base.  Once we are able to build state-of-the art manufacturing enterprises as the basis for our industrialization, there is hope for exporting the products of these industries through what is known as marginal cost pricing.  As the domestic consumers are able to bear the full costs of the goods manufacturing locally, any extra production can be sold to foreign markets at very competitive prices on the basis of marginal cost pricing.

            That is why my visit to the newest addition to the portfolio of manufacturing ventures of the D&L group gives me great hope that as long as we are able to solve the thorny problem of significantly increasing the productivity of coconut farms, we shall have abundant raw materials from the coconut tree that can be processed by the likes of   D&L Premium Foods and Natura Aeropack at very competitive prices of exports to the rest of the world. With companies like these (there are others like Axelum, Cardinal Agriculture, and Lionheart Farms) we need not despair that our export will always be the laggard in the Indo Pacific region.  Think of all the agro-industrial exports that can come from processed food products and related manufactures that can come from equally productive plantations of coffee, cacao, mangoes, avocados, durians and a host of other plantation crops that can follow the example of a highly productive coconut farming sector that can benefit from farm consolidation, product diversification, digitalization and industrialization that are the four-pronged strategy that the present BBM Administration is determined to implement in the next five years.  To be continued.