CEBU CITY — Export businesses in Cebu should aggressively pursue industry clustering as a way to penetrate more foreign markets and boost production of export products, an industry player urged.

“By clustering, export companies can harness their strength as a group,” said Fred Escalona, Executive Director of the Confederation of Philippine Exporters in Cebu (Philexport-Cebu). Escalona underlined that this will help cushion local exporters in surviving declining revenues from cuts in total imports by the United States.

Escalona also said lack of capital hinders exporters to meet their orders abroad and this financing problem, according to him, can be addressed by adopting clustering of exporters and even subcontractors in the same product line.

“This strategy could reduce operational costs and widen our markets. When they are clustered, an order of one exporter will also be an order of the supplier.”

He pointed out that “if companies are clustered, they could save on the orders of materials since they would do bulk buying and could avail of wholesale prices from their producers.”

He said that when there are huge orders from foreign clients, say, a total of 100,000 items, most export companies here tend to back-out since they could not handle the large order. “In other countries, orders even come in millions and they are able to produce such number since they have partners that could help out.”

However, Escalona noted that before going into a clustering approach, exporters will need to address issues concerning inbound logistics.

Another challenge, he added, is the idea on competition given that some export companies are engaged in the same business.

Likewise, he said, being an archipelago may also pose a challenge in resorting to clustering.

Industry clustering is a strategy under the country’s export development plan, and is meant to benefit businesses in the regions and provinces in terms of raising productivity and reducing shared manufacturing costs, among others.

Among those documented as model clusters are the bottled sardines cluster in Dipolog, Zamboanga del Norte; the furniture industry in Cebu; the banana, coconut, wood, information technology services, seaweeds and mango clusters in Davao; high value vegetables in Bukidnon; processed food in Northern Mindanao; and the processed food cluster in the CARAGA region.