Chemphil, soap manufacturers settle dispute

BY PAUL C.H. HOW, Reporter/BusinessWorld Soap manufacturers have settled a dispute with the country’s lone manufacturer of a local soap detergent ingredient in order for the latter to continue its business even without the reimposition of safeguard provisions. In a memorandum of agreement signed Thursday, the Soap and Detergent Association of the Philippines (SDAP), through President James M. Lafferty, who is also president of Procter & Gamble Philippines, Inc., committed to provide financial assistance to Chemphil Albright & Wilson Corp., represented by its Chief Operating Officer Alexandra Garcia-Versoza. Chemphil, for its part, will work on getting back on its feet after having contemplated closing down at the end of May due to the removal of tariffs on sodium tripolyphosphate (STPP), the production of which has been more expensive by $150 per metric ton than the same component imported from China without safeguards. "The industry will begin to resupply [from Chemphil] at competitive prices and help them become competitive. They [Chemphil] need to invest in certain fuel systems in their factory, and also develop alternative uses for their equipment. They can diversify their portfolio. We will help them either get financing or outright [provide] grants of money," Mr. Lafferty told reporters. The investment of the money, he added, will allow the STPP supplier to bring prices down and become globally competitive. Ms. Garcia-Versoza said the assistance from the association will allow Chemphil to "be quite competitive" once more in six months’ time. "It doesn’t take overnight," she admitted, adding that the detergent makers will begin purchasing once more "as soon as we are ready to supply." She had previously noted that since 2004, the company had lost about P300 million and downsized its work force to 30 from 200. Soon enough, however, she said "we will be at a point where we can at least survive." She added that with the signing, Chemphil will be withdrawing its petition with the Trade department asking for the restoration of tariff charges of P14,150 per metric ton on STPP, which were lifted last February. The Trade department had dismissed last March Chemphil’s petition to remove the tariffs, and ordered the refund of cash bonds that had been imposed on importations from July 2006 till then. The state had previously imposed the P14.15-per-kilogram cash bond on the STPP importations for 200 days beginning last July. The company then filed for reconsideration, saying the removal of the safeguards was allegedly in favor of China-imported STPP. Ms. Garcia-Versoza had asked Trade Secretary Peter B. Favila to restore the safeguards for a provisional period of three years in order for the company to "reengineer" its operations to cut costs and improve competitiveness. The plea has remained pending. Both parties refrained from stating the amount of financial assistance to be provided. Mr. Lafferty said however that the individual member companies of SDAP willingly contributed their investments in Chemphil. "Nobody wants one source of supply. You never put all your eggs in one basket. All of us have multiple supply sources and all of us maintain a portfolio of suppliers," he said. Other SDAP members include Unilever Philippines, ACS Manufacturing Corp., Magiclean Corp., Manufacturing Services & Trade Corp., Peerless Products Manufacturing Corp., Royal Industrial Development Corp. and Wellmade Manufacturing Corp.