Plywood makers cutting output amid weak demand

MANILA, Philippines - Plywood mills will cut back on production amid weakening demand, resulting in less work for their employees, an industry leader said. But prices of plywood will stay at current levels, he added. As a result of reduced output, mills will be asking workers to report for less hours or lay them off altogether. "Prices are depressed at this point. [They’re] the same levels as in 2005," Philippine Wood Producers Association plywood council chair Alfonso C. Keh, Jr. said in a telephone interview late last week. "The retail price of 1/4-inch standard-size [8 feet by 4 feet] plywood is P300. It will probably stay there," Mr. Keh said. The low prices are largely due to the continued weakened demand for plywood, he said. Already, plywood sales have dropped by 30% in the third quarter, compared with the same period last year, Mr. Keh said. Even before then, output growth of wood and cork products had slowed to 12.9% in the second quarter versus the 22.6% growth the previous year, data from the National Statistical Coordination Board show. "Some of our products go to furniture, some to general construction. The bulk of sales is general construction. Both have already slowed down," he said. Sales in 2009 will be "much reduced" compared with this year, Mr. Keh added, citing sluggish construction activity and the apprehension surrounding the realty sector. "It makes sense to avoid production," Mr. Keh said. "Some mills have already shut down for a monthMills are operating at an average of 60% capacity. We’re just reacting to the volume the market can take." To cope, firms are cutting down on work days to four days from the usual six, for instance, Mr. Keh said, noting that more than half of the plywood industry have taken this step. Some have shut down indefinitely, Mr. Keh added. — Jessica Anne D. Hermosa, BusinessWorld