Thursday, February 12, 2009

FedEx Winds Down Asian Hub

MANILA, PHILIPPINES: FedEx began winding down its Asian hub in the Philippines and shedding 800 staff Friday (6 Feb) as the U.S. courier giant started full operation of a new regional facility in China, an official said.

Arman Areza, administrator of the Subic Bay economic and tourism zone where FedEx has been based for nearly 14 years, said the company will for now keep a skeleton operation in Subic as a back up to $150 million hub in Guangzhou in southern China.

FedEx has said the Subic facility may finally close in April after which it has the option to renew its lease on a monthly basis, he said.

The closure of FedEx's operation comes in the wake of an announcement by Intel Corp. last month that it will let go 1,800 workers later this year when the company shuts down its 35-year-old operation in the Philippines amid waning global demand for computers.

Areza said the decision to shift the hub to China was made in 2005 and was based on "market reality" _ the large cargo volume in China _ not on Subic being unable to meet the requirements of FedEx or the current global slump.

"The move has nothing to do with the financial crisis," Areza said.

"The volume and market conditions favored China because the volume in China dwarfed those in Southeast Asia, and China has opened the domestic market to FedEx," he said.

Subic, 50 miles (80 kilometers) west of Manila, was converted from a sprawling U.S. naval base into an economic zone after U.S. forces left in 1992.

The Philippine government will lose 150-160 million pesos ($3.15-$3.37 million) annually in landing, parking and warehousing fees it has been collecting from FedEx since it started operating the Subic hub in September 1995, said Areza.

He said about 800 workers of FedEx and its subcontractors will be affected. He said he expects the highly skilled workers can easily find jobs elsewhere in the economic zone.

Dozens of workers showed up before dawn Friday at the former hub to wave goodbye to one of the last FedEx planes to fly out of Subic.

"Even if the economy is doing well ... it's never a good time if a company as big as FedEx (leaves). We are sorry to see them go," Areza said.

FedEx officials were not immediately available for comment. (By OLIVER TEVES/ AP)

Source: MySinChew

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