A unique 'export' is turned out by construction firms
Manila — Back in 1900 a group of American engineers arrived here to dredge the harbor, filling in the moat of the old walled city with the muck hauled up from the bottom. They founded Atlantic, Gulf & Pacific Company (AG&P).
That company was taken over by Filipino investors in 1969. Today AG&P is a sizable engineering and construction operation serving not only the Philippines, but also much of the Middle East and Far East.
AG&P participates in what is a growing so-called "nontraditional export" for the Philippines -- oversease construction.
Philippine firms, principally four of them, did an estimated $370 million of business abroad last year, bringing home as much as $150 million in foreign exchange. AG&P [TEXT ILLEGIBLE] brought in $31 million of foreign exchange.
The three other companies are Construction & Development Corporation of the Philippines, Erectors Inc., a subsidiary of Benguet Consolidated Inc., a mining giant listed on the New York Stock Exchange.
"All these contractors," noted Quirico S. Camus, president of AG&P, "are active in the overseas scene, with very minimal government assistance. They are principally on their own."
The Harvard Business School graduate emphasizes this point because the Filipinos believe their toughest competitors, the South Koreans, are receiving considerable government aid.
"We have won contracts against the South Koreans," he said. "But competition is rough."
After losing one bid to a South Korean bidder, Mr. Camus compared notes with an American company, Bechtel Corporation, bidding on the same project. "We could not figure out how they [the South Koreans] were bidding," he said. "It seemed to us they were giving it away, earning just enough to cover foreign exchange requrements."
There is a suspicion that the South Korean companies are able to use Army engineers at little or no cost.
The sterner competition from other nations has somewhat slowed the rapid growth of Philippine overseas contracting. Thai companies have also become active, and, says Mr. Camus, the Thais are "a hardworking people." Indian and Pakistani companies have a problem with low productivity. "Our productivity is as good and sometimes better than the South Koreans," the AG&P executive added.
There is some clamor for the Philippine government to provide its national enterprises with more assistance in the way of credit lines and tax incentives. "That is fine with me as long as it doesn't result in government interference," Mr. Camus commented.
The Philippine companies have grown big enough financially and technically to take on major subcontracts from the world's largest American and European engineering firms. AG&P, for instance, could bid on a $20 million portion of a $ 200 million project. It might provide some of the engineering detailing as well as skilled workers and their supervisors.
This year, Mr. Camus expects his firm to do, domestically and abroad, 750 million pesos' (about $100 million) of business. Of this, almost 20 percent will be overseas revenue. Last year gross revenues amounted to 615 million pesos.
Some recent contracts involved work on an ethylene plants in Qatar and Algeria, a gas recovery plant in Kuwait, and a special airport terminal building in Jiddah, Saudi Arabia. The terminal, designed to receive Muslim pilgrims before they leave for Mecca, involves two 25-hectare (60 acres) "tents" made of steel pylons and a fiber-glass covering.
AG&P has also developed a capability for making production and wellhead "modules" for offshore oil platforms. Last [TEXT OMITTED FROM SOURCE] cost overruns meant losses on such a module built for [TEXT OMITTED FROM SOURCE] in Malaysia. But Mr. Camus expects to make a profit on a similar module for a platform over the Bombay High field offshore of India.
Altogether, Philippine construction and engineering firms employ some 50,000 Filipinos aborad. Last month Construction & Development Corporation won a $285 million contract to build an 88-mile segment of an expressway in Iraq between Baghdad and Basra. It will involve 1,700 Filipino workers.
Thousands of other Filipinos are working abroad for foreign construction companies or as seamen, domestic help, or professionals, such as doctors and nurses. This summer, for instance, Libya was negotiating to recruit some 5,000 workers through the Philippine Overseas Employment Development Board. They would consist of communications technicians, engineering professionals, farm workers, agricultural technicians, and fishery workers.
The Philippines has the highest education level in Asia outside of Japan, officials claim. So the country has a large pool of skilled and educated workers it can send abroad.