Greener Business Asia Project Construction Essay

Published:

The final form of this Report, as expressed in the Terms of Reference, is the material that will be used to set the context for the two-day High Level Expert Validation Meeting for the Greener Business Asia Project to be held in February 2010. Essentially, the report is expected to provide guidance as to:

The selection of the sector of focus for the practical intervention

The direction and design of the subsequent enterprise level intervention

As a preliminary overview, this Report presents three case briefs that explore the green potential and readiness of three sectors namely: automotive, electronics and construction.

Selection of Sector of Focus for Research

The Terms of Reference describes the sector of focus for research as a sector that conforms closely to a defined criteria set. It is on the basis of observed conformity to this criteria set as detailed in Table 1.0 that the three sectors covered by this report were selected.

Lady using a tablet
Lady using a tablet

Professional

Essay Writers

Lady Using Tablet

Get your grade
or your money back

using our Essay Writing Service!

Essay Writing Service

Table 1.0 Selection Criteria

ITEM

PARTICULARS

1

Appropriate size of

supply chain base

Supply chain base continuum to consist of SMEs with 50-250 employees

In-factory systems in place or must exhibit potential thereof

2

Economic viability

Job creation potential as well as greening of existing jobs demonstrated

3

Supply chain linkages with MNEs

Japanese MNEs preferred

4

Potential for introduction of environmentally sound

practices and technologies

Pre-disposition toward green adoption indicated

5

Availability of data at

enterprise level

Employment, financial, production and environmental data available

6

Unionization rates

Potential for bipartite cooperation at enterprise level indicated

7

Industry associations with appropriate linkage to ILOEmployers' organizations

Active and present

8

Interest and ability of ILO employers

and workers organizations to provide support in the sector

Collaborative efforts evident

9

Geographic concentration of production activities

Cluster concentrated and proximate ideal

10

Voluntary environmental and energy conservation standards

Available

11

Trade -environment related measures in country of import

Indicated

The preliminary choice of sectors, guided by the criteria set, was enhanced thru interviews with senior company officials, company documentation and secondary data analysis. Also, the requisite consultation process with the GBA Project Steering Committee and the GBA Project Advisory Committee (created as per DOLE Administrative Order No.446-2009 dated 22 December 2009- Annex A) was utilized to secure the necessary approval of the research framework and support on the plan of action for the project.

2. RESEARCH FRAMEWORK

Determinants of Greener Business Adoption

While green initiatives are said to create new competitive opportunities, reduce carbon emissions and improve overall business efficiency, sectors exhibit different levels of awareness, interest and adoption.

Essentially, understanding these sector differences will be the key to designing the appropriate interventions toward meeting GBA's multiple objectives of building knowledge, developing stakeholder capacity and developing tools of good practices and training materials.

This paper investigates the extent of green adoption in the sectors and posits that background conditions, contextual factors and perceptual dimensions contribute to the differences in the breadth and depth of adoption.

Figure 1.0 Greener Business Adoption Determinants: A Framework

Background Conditions describes sector endowments and dynamic components that provide the impetus for green adoption.

Global exposure, evidenced by links with MNEs, indicates adherence to global standards that will most likely reinforce adoption.

Formality in systems indicates existence of performance metrics and standards that may lend the system hospitable to further quality improvements.

Active value networks within and outside sector are necessary as many of the resources in carrying out processes of greening are likely to lie outside the boundary of the sector. Inter-relationships between sectors and numerous actors are important to understanding how greening will unfold and expand opportunities for learning.

Geographical clustering marked by proximity indicates ease in knowledge transfer activities and may hasten adoption.

Good Practices publicly cited indicate adherence to excellence and leadership in the field of endeavor and may add force to the pursuit of green initiatives.

Contextual Factors describes the operative context, climate change impacts and dominant drivers in the sector that greatly influence the content and direction of green initiatives.

Lady using a tablet
Lady using a tablet

Comprehensive

Writing Services

Lady Using Tablet

Plagiarism-free
Always on Time

Marked to Standard

Order Now

Context represents the primary characteristic that is inherent in the adoption situation. A sector whose rising electricity costs is creating pressure for it to shift to a more energy efficient system has an adoption context that is technological. A sector that is integrating its green strategy with its overall business strategy because it believes that is the right, good and smart thing to do is responding from an organizational context. A sector that is going green because of a conducive and permissive regulatory setting is acting from an environmental context.

Impact refers to the effect climate change may have on core operations, the value chain and the broader supply and demand network of the sector.

The context and the impact create the motivation to go green and determine the sector's dominant driver. Drivers could be economic, regulatory, physical or ethical.

Perceptual Dimensions refers to a dynamic assessment of the sectors' own preparation to accept green and go green.

Readiness of the sector, its network of suppliers, competitors, investors, partners and customers and its institutional support system will contribute greatly to green adoption.

Openness to external forms of support show a bias toward collaborative pursuits that will help accelerate green adoption.

Intentions to act, publicly declared and explicitly articulated, indicate a strong predisposition toward green action.

2.2 Evaluation Criteria for Selection of Sector for Practical Intervention

Based on the framework, the following guidelines may be applied in the selection of the sector for practical intervention:

1. A sector who has adopted or most likely to adopt will be characterized by:

Dynamic background conditions

Strong order contextual factors

Remarkable perceptual dimensions

2. A sector most likely open to external forms of support and/or most likely to require training intervention will be characterized by:

Dynamic background conditions

Strong order contextual factors

Imperceptible perceptual dimensions

3. SYNTHESIS OF THE FINDINGS FROM THE RAPID ASSESSMENT OF THE SECTORS

Structure of the Synthesis

Each Sector Report has a common structure that examines:

The general sectoral profile

The coordination and reporting mechanisms in the sector

The sectoral best practices

The green context in the sector

The impacts so far on the sector

The drivers influencing the sector response

The readiness of the sector to respond

The sector intentions to act and openness to external support

The action taken by the sector in response to the drivers.

Overview of the Findings

An overview of the findings is presented. In brief:

The general sectoral profile

Automotive. Japanese multinational companies dominate the Philippine automotive sector. Clustered in the economic zones of NCR and CALABARZON, some companies comprising this sector, assemblers and (first tier) suppliers alike, have active labor unions.

Electronics. The industry is a mixture of foreign and Filipino manufacturing companies, majority of which is Japanese multinational companies (30%). Geographically clustered in economic zones, some industry players have existing workers' organization and labor-management council (LMC).

Construction. Construction is both capital and labor-intensive and comparatively open, with upstream exposure to Japanese and other foreign investments, but is highly fragmented because of the extreme variability of economic activities involved.

The coordination and reporting mechanisms in the sector

Automotive. The existence of a number of automotive organizations infers having an avenue for sectoral consultations. Within the sector itself, assemblers play a key role in setting guidelines and standards which are then followed by suppliers. The well developed management system of industry leaders (assemblers), who greatly influence supply chain activities, ensures that quality principles are adhered.

Electronics. The existence of industry association provides venue for sectoral consultations. Though the supply chain recognizes their differences, the major roles of the players were converged to revolutionize industrial development in the Philippines. The well-institutionalized management system of the sector ensures that various industry plans, policies and programs are properly implemented.

Construction. Organizational coherence is evident in the presence of industry and other forms of associations, but management systems for control, standards and metrics of performance are lacking.

The sectoral best practices

Automotive. Since multinational companies dominate the automotive sector, global standards are stringently enforced. Best practices are a way of having a competitive edge within the sector.

Lady using a tablet
Lady using a tablet

This Essay is

a Student's Work

Lady Using Tablet

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Examples of our work

Electronics. Guided by the objective to strengthen the competitive environment for electronic business growth, meeting global standards is sternly required.

Construction. Awards are not typically conferred within the industry, given the variability of economic activities and geographic fragmentation, but industry practices in corporate social responsibility are customary, particularly among large firms.

The green context in the sector

Automotive. Amongst industries, the level of environmental consciousness of the automotive sector may be one of the highest. Being one of the main contributors to climate change, because of its technological make-up, the sector is geared toward green adoption. Organizational (through CSRs) and environmental (regulatory) contexts also pre-dispose the sector toward green adoption.

Electronics. Driven by the intensification and increased global awareness surrounding several environment-related issues and concerns, interest in greening the sector is rapidly increasing. Product innovation is one of the key focus areas of the industry and is considered as one of the potential directions for sustainable growth.

Construction. Because climate change is a physical event and construction relates to physical spaces and environs, the two are invariably linked. In the case of the Philippines, regulations, although indirect, have been set up and institutions, the market and input materials are gearing, if not already geared, toward, the green shift.

The impacts so far in the sector

Automotive. Primary value chain activities, especially operations, are impacted by climate change. Conscious actions to reduce energy consumption is a result of climate awareness. Through the adoption of greener processes and technology, climate change also prompted the sector to provide additional trainings to employees. A few environmental jobs were also created.

Electronics. As there is now a growing demand to adopt a "green" strategy, the industry recognized the need to react flexible and cost effective in doing the business.

Construction. The supply chain will transform by becoming more resource efficient, therefore cutting into some processes, such as logistics or transportation. Inputs might be expected to shift toward local, low-environment impact sources and design. Cement may be less favored and shift to glasses and other more energy-saving fixtures may be expected.

The drivers influencing the green response

Automotive. In order to compete globally in today's automotive market, one of the prerequisites is to go green. Not only does greening improve the productivity and efficiency of the sector, customer preference is also influenced by the environmental advocacy of the manufacturers. It can be implied that the main driver that influences green response is economic, although ethical drivers (CSR) are also influential in the green adoption of the sector.

Electronics. The sector recognizes that in order to achieve global competitiveness, the business has to embrace the green agenda and reduce their impact to the environment. It can be inferred that the economic and ethical drivers encourages the sector to adopt a green strategy.

Construction. The green shift is driven by ethical consideration of the huge environmental impact of construction activities, but more strongly because of economic motivations for addressing resource constraints and optimizing market share amidst resource competition and the growing demand for green products and services.

The readiness of the sector to respond

Automotive. In comparison to other sectors, the automotive sector has been in the forefront of the green initiative. Organizationally, the commitment of industry leaders to go green is very evident. Green and sustainable policies have been imposed by the main players, and this translated to greener practices in the supply chain. Greening of technology is treated not only as an environmental advocacy but also a business necessity. Conclusively, the sector is prepared to respond to greening.

Electronics. Like the other business sectors, the electronics industry is now taking a significant role in "greening" the business sector. The sector is embracing an environmentally-safe and energy-saving practices not only because it is good for the environment but is also saving up money for their businesses.

Construction. The Philippine construction industry is green-ready in terms of institutions, and slightly because foundations have been laid down by private-led or market-based initiatives.

The sector intentions to act and openness to external support

Automotive. Greening intentions and actions are very apparent in the automotive sector. Trainings may be conducted in both the first and second-tier suppliers. Assemblers on the other hand, already have well developed environmental strategies that have been embedded in the overall business strategy.

Electronics. Intention to adopt green strategies is very prominent in the electronics sector. The industry key players conduct training programs to keep abreast with the best facilities as part of achieving total quality productivity.

Construction. Training will be a welcome and needed support especially in the light of green shift in low to semi skilled skills as well as the emergence of related green practice of professions particularly in the areas of engineering and architecture.

The actions taken by the sector in response to the drivers

Automotive. Both external and internal measures to adapt/mitigate climate change impacts have been espoused by enterprises in the automotive sector.

Electronics. The industry employs both internal and external measures to adapt/mitigate climate change impacts.

Construction. Development of green building certification and eco/sustainable communities, as well as private and public partnerships for energy efficiency are some of the initiatives taken so far. Legislations, on the other hand, are in progress, but may be expected to face serious setbacks because of the ongoing leadership transition.

Assessment of Green Potential and Readiness

Table 2.0 summarizes the results of the rapid assessment. Essentially, the summary indicates conformance to the framework requites. Specificities as to extent of conformance and quality however can be found in the case narratives.

Table 2.0 Evaluation Matrix

 

Point of

Analysis

Data

Needs 

Data

Particulars

Auto motive

Electro nics

Cons truction

1

GENERAL PROFILE Restricted to Selection Criteria

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplier partnerships with Japanese MNE

with partnerships

+

+

+

no partnerships

Typical supply chain base(capitalization)

 

Small

 

 

 

meduim

 

 

 

Large

 +

 +

 +

Typical supply chain base (number of employees)

Small

 

 

 

meduim

 

 

 

Large

 +

 +

+ 

Primary supply chain activity of a typical supply chain base

 

 

inbound logistics

 

 

 +

Operations

 +

 +

 +

outbound logistics

 

 

 

marketing &sales

 

 

 

Service

 

 

 +

Unionization/ Workers organization

active

 +

 +

 +

not active

 

 

 

Geographical concentration

Clustered

+ 

 +

 

Dispersed

 

 

 +

Location

 

Regions NCR,III &IV

 Eco-zones

 Eco-zones

 +

Other regions

 

 

 +

Planning horizon

 

 

mostly 1 year

 

 

 

up to 5 years

 +

 +

 

up to 20 years

 

 

 

2

ANALYSIS OF SECTOR &REPORTING MECHANISMS

Industry Associations

 

Active

+

+

+

not active

Management System in place

in place

+

+

not in place

+

Common metrics Observed

Observed

+

+

not observed

+

Partnerships Developed

Developed

+

+

not developed

+

 

Point of

Analysis

Data

Needs 

Data

Particulars

Auto motive

Electro nics

Cons truction

3

ANALYSIS OF SECTOR BEST PRACTICES

Best practice

Present

+

+

+

None

4

ANALYSIS OF SECTOR GREEN CONTEXT

Climate impact Awareness

 

Low

Moderate

High

+

+

+

Context

  

Technological

+

+

+

Organizational

+

+

+

Regulatory

+

+

+

5

ANALYSIS OF SECTOR CC IMPACTS Potential Impacts/ Impacts from Exposure

Impact on supply chain activities

Inbound logistics

+

Operations

+

+

Outbound logistics

Marketing &sales

Service

+

Impact on jobs

 

 

Direct jobs

+

+

Indirect jobs

Upskilling

+

+

+

Impact on skills

 

 

Corporate training

+

+

Technical training

+

+

+

Tailored training

+

Other Impacts

6

ANALYSIS OF SECTOR GREEN DRIVERS

Climate change policy drivers

Economic

+

+

+

Regulatory

Ethical

+

+

+

Physical

+

7

ANALYSIS OF SECTOR GREEN READINESS

Organizational

 

 

  

Attitude

+

+

+

Policy

+

+

Practice

+

+

+

technology

+

+

Governance

+

+

+

Value network

+

Institutional

+

+

Barriers to action

(+)

+

 

Point of

Analysis

Data

Needs 

Data

Particulars

Auto motive

Electro nics

Cons truction

8

ANALYSIS OF SECTOR OPENNESS/ INTENTIONS

Openness to training support

Yes

+

+

+

No

Green"Intentions

 

Yes

+

+

+

No

9

ANALYSIS OF SECTOR ACTIONS Steps taken to mitigate / adapt to Impact

Internal measures

Increase energy Efficiency

+

+

+

Substitution of inputs and materials

+

+

Produce greener Products

+

+

+

Reduce climate Vulnerability

+

+

External measures

Working with supply chain

+

+

Influencing customer Behavior

+

Trading in carbon Allowances

Engaging with the policy process

+

+

+

Working in Partnerships

+

+

4. CASE BRIEF 1: AUTOMOTIVE SECTOR

Sector profile

The Philippine automotive sector is dominated by Japanese multinational companies, namely, Toyota Motor, Honda Cars, Mitsubishi Motors, Isuzu Motors, and Nissan Motors. The assemblers and first tier suppliers (parts and components segment), which supply the OEM (original equipment manufacturers) and replacement markets, are large enterprises while the second tier enterprises are SMEs. The sector is geographically clustered and companies are mostly located in the economic zones of NCR and CALABARZON. The planning horizon of enterprises in this industry varies from 1 to 5 years.

The assemblers and first tier suppliers of the automotive sector have a large number of workers, and some of these workers are members of labor unions and workers organizations.

Coordination and reporting mechanisms in the sector

A number of associations are active in the automotive sector. These associations serve as avenue for discussion on issues concerning the sector. Within the sector, assemblers play a key role in setting common guidelines and standards which is imposed in both the upstream and downstream segments of the supply chain. The well developed management system of industry leaders (assemblers), who greatly influence supply chain activities, ensures that quality principles are adhered.

Best practices in sector

In order to be globally competitive, the main players in the automotive sector require their first tier suppliers to have ISO 14001 certification. This implies that promotion of environmental advocacy is manifested across the sector. Some companies in the sector have also been recognized for their greening initiatives and advocacy.

Green context

Being one of main contributors to climate change, the automotive sector has a high level of awareness regarding climate impacts. Greening has been one of the major strategies of assemblers to stay in business. In turn, suppliers are led (forced) by the assemblers to go green.

The technological make-up of the sector, which requires large energy consumption, is also suited toward green adoption (energy-efficient technologies). Regulatory frameworks, both local and international, also heighten its responsiveness to have a more environmental approach in manufacturing its products.

Impacts so far on the sector

Primary value chain activities, especially "operations", are affected by climate change. Even prior to the physical catastrophe (direct impact) brought by climate change which affected the productivity of the sector (Typhoon Ondoy), promotion of energy-efficient, cost-saving activities have been a common practice in the sector.

Retraining/Upskilling of employees have also been conducted to equip them for greener technologies and processes, thus, improving their productivity through efficiency.

A handful of "green jobs" have also been created as a result of heightened awareness regarding climate change (at least for large enterprises). "Environment officers" are hired/trained to ensure that environmental guidelines are followed.

Drivers influencing the sector response

Greener activities generate more savings to companies. Customers also prefer companies with environmental advocacy. Greening has been an integral part in the business strategies of companies.

The automotive sector is also one of the main contributors (causes) to climate change. Advocacy for the environment is one way of showing corporate social responsibility.

Furthermore, one of the main reasons why the automotive sector is clustered in CALABARZON is the abundance of water in the area. Saving the watershed is important for the sustainability of the business.

On the part of the suppliers, pressures to adopt green processes compelled them to follow environmental standards set by the assemblers. Adherence to such standards makes them more competitive in the market.

Readiness of the sector to respond

Compared to other sectors, the automotive sector has been in the forefront of green initiatives. The economic significance of greening the sector, plus the high level of awareness across the supply chain, prompts leaders of the sector to have an environmental advocacy. Environmental guidelines and policies from such leaders also lead suppliers in adopting greener approaches.

Collectively, the readiness of the sector to respond to climate change is very apparent. For large enterprises, funds are allocated for green strategies. However, for smaller enterprises (second and third tier suppliers), the cost of having greener technologies is a barrier.

Sector intentions to act and openness to external support

Greening intentions and actions are very apparent in the automotive sector. Trainings may be conducted in both the first and second-tier suppliers. Assemblers on the other hand, already have well developed environmental strategies that have been embedded in the overall business strategy

Action taken by the sector in response to the drivers

Several internal measures have been employed by the industry in response to climate change drivers. This includes: the utilization of lead-free, SOC-free materials; production of greener vehicles and vehicle parts and components; Reduction of climate vulnerability through environmental activities like reforestation; and increase energy efficiency in the production.

Meanwhile, external measures have also been practiced in the sector. The main players spearhead the greening effort in the supply chain.

5. CASE BRIEF 2: ELECTRONICS SECTOR

Sector profile

The Philippines electronics sector is acknowledged as the main driver of the Philippine economy as it accounts for 63% of the country's total exports (as of August 2008). With the organization's member companies responsible for over 70% of the total electronics exports, this unequivocally makes the electronics sector a major economic force in the Philippines.

The electronics industry can be segmented into the following sectors: semiconductors and other components (70%); electronic data processing (24.3%); communication and radar (2.09%); office equipment (1.35%) and telecommunication equipment (0.37%). The industry is a mixture of foreign and Filipino manufacturing companies, majority of which is Japanese multinational companies (30%) that include Hitachi, Toshiba and Fujitsu. The sector is geographically clustered with the companies mostly located in economic zones and are registered with the Board of Investments (BoI).

The supply chain is characterized by a large number of workers, with significant number of these workers as members of the worker's organization and the labor-management council.

Coordination and reporting mechanisms in the sector

The Semiconductor and Electronics Industry in the Philippines, Inc. (SEIPI) is the leading and largest organization of both foreign and local semiconductor and electronics companies in the Philippines. The SEIPI serves to be the representative body of the major players and industries supporting the development of Philippine electronics.

In terms of management system, the industry has the SEIPI Board of Directors which functions as the Strategic Direction Group (SDG) of the organization. Composed of 15 members of the Board of Directors, the SDG provides the leadership and vision for the industry through its policy creation, direction setting and decision making duties and responsibilities. The well-institutionalized management system of the sector ensures that various industry plans, policies and programs are properly implemented.

Best practices in sector

In order to achieve global competitiveness, the parent company requires its members to have ISO 14001 and OSHAS 18001 certification. The parent company as well as the individual industry players is advocating the sharing of best-known methods (BKM) on environmental health and safety, plant engineering and facilities maintenance, space utilization and operation reliability.

Green context

Driven by the intensification and increased global awareness surrounding several energy-related issues and concerns, interest in greening the sector is rapidly increasing. The sector is now in the process of considering the shift to environment-friendly products and processes as one of the potential directions for sustainable growth. Hence, product innovation is one of the key focus areas of the industry. Regulatory framework, both local and international, is geared towards the adoption of a more efficient production processes that will entail less energy unit of output.

Impacts so far on the sector

As there is now a growing demand to go "green", the electronics industry faces the challenge to meet a more sophisticated quality standards and regulations. The industry is encouraged to manufacture "green electronics", reduce the impact of electronics when using them, and manage unusable electronics in an environmentally safe manner.

The industry recognizes the growing market demand for environmentally-safe products and processes, hence the need to react flexible and cost effective in doing the business.

Drivers influencing the sector response

Businesses are key players in environmental issues. They drive technological innovation. However, given the growing concerns on environment-related issues, the need to protect the environment by converting industries and businesses into more environment-friendly workplaces becomes apparent. Hence, the sector's intention to go "green" is driven not only by the need for greater efficiency and pursuit of tangible cost savings (economic driver), but more importantly in pursuit of socially responsible business practices and good corporate citizenship (ethical driver). The industry appreciates that to be globally competitive, the business has to embrace the green agenda and reduce their impact to the environment.

Readiness of the sector to respond

Like the other business sectors, the electronics industry is now taking a significant role in "greening" the business sector. The industry elicits preparedness to commit resources to greening by investing a sizeable portion of their revenues to research and development activities and initiatives. The sector is embracing an environmentally-safe and energy-saving practices not only because it is good for the environment but is also saving up money in their businesses.

Sector intentions to act and openness to external support

Intention to adopt green strategy is very prominent in the electronics sector. The sector conducts training programs (in-house and industry-wide) for engineers and technicians to keep abreast with the best facilities as part of achieving total quality productivity. The sector likewise hosts dialogues to as effective communication link among its members, other industry players, government regulatory agencies and other entities to design programs and policies that are compliant with environmental rules and regulations.

Action taken by the sector in response to the drivers.

In order to foster high ideals of responsibility, dedication and deep concern for preserving and maintaining a clean, healthy and safe environment, the industry encourages its members to achieve and maintain a safe and environment-friendly workplaces through continuous training and education and by instituting health and safety programs such as compliance to regulations and standards, clean technology, pollution prevention, safety awareness, energy management, equipment reliability and facilities management.

6. CASE BRIEF 3: CONSTRUCTION SECTOR

6.1. Sector Profile

Activities in the Construction Industry

site preparation

building of complete constructions or their parts;

civil engineering;

residential and non-residential building construction;

general engineering construction;

plumbing and related work;

building components installation contractors;

electrical and mechanical work at site of construction;

water well drilling and water pump installation;

building installations and completion (finishing and repair);

painting and related work

floor and wall tiling or covering with other material;

interior decoration;

carpentry; and

renting of construction or demolition equipment with operator (1994 Philippine Standard Industrial Classification)

Construction is a major industry in the Philippines, embracing a range of activities from design and engineering, site work, contracting of materials and labor and rental of related machinery and equipment.

Big players are mostly Filipino-owned but a growing proportion of foreign companies have emerged, recently of Chinese origin. The presence of Korean and Japanese firms are also equally notable, the latter mostly concentrated in the fields of engineering, architecture and construction, including rental or sales of heavy equipment and machineries. Japan's presence is also felt through its Official Development Assistance which typically skews toward logistics and infrastructure development.

Construction firms that engage in engineering and construction require huge capital exposure because of the heavy technology and physical asset requirements, typically amounting to millions to billions in investments. But investments vary, depending on activity. Materials production requires millions in investments, while it might be much smaller for subcontracting or contracting of manpower. In 2006, total cost excluding compensation incurred by 648 construction establishments employing 20 and over amounted to PhP81.0 billion or PhP125 million each (2006 Census of Establishments preliminary results).

Employment. The construction industry employs about 1.8 million workers, or 5% of the total employed. Based on the census again, construction firms employed 107,334 workers, more than a majority of which (63.2% or 67,885) is engaged in general engineering construction. Given that there were 648 construction firms reported in the census period, it follows that firms employed about 160 workers on the average. Typically, however, it is the larger construction firms that employ 100-plus workers.

Supply structure. The supply continuum is heavily concentrated in engineering, constituting two-thirds of the total establishments with average total employment of 20 or over (2006 Census of Establishments). Segmented by activities, the supply chain sets off with the manufacturing of building materials; transport from production plants to building sites; then and construction and operation including maintenance and repair. By vertical integration, the supply structure consists of extraction, manufacturing or production raw materials; subcontracting and contracting of materials and labor; and construction and operation which cover engineering, design and installation. The supply structure may also be segmented as to primary activities (construction of building, structures, and other land improvements) and secondary (technical and engineering services, and manufacturing of construction materials), which are horizontally integrated to operation activities of informal labor, for construction, repair and maintenance.

Highly segmented by activity, the Philippine construction industry is similarly fragmented geographically, with construction firms located in almost all major urban centers, not only Manila.

The industry is minimally unionized, although presence of associations is strong in other forms. Administrative records show that incidence of unionism in the industry has substantially slackened, from 50 organized establishments out of a total of 734 in 2006 to just nine of 618 in 2008. Union members also contracted by almost half. There is, however, a national workers organization, the National Union of Building and Construction Workers, affiliated to the Building and Wood Workers International, as well as industry associations and support organizations, including the Construction Industry Triparitite Council, United Architects of the Philippines, Philippine Constructors Association and Council of Engineering Consultants. Not all segments of the sectors, however, are covered, particularly excluding those engaged in informal economic activities.

6.2. Sector Coordination and Reporting Mechanisms

At present, it is the Philippine government that exercises checking functions over the industry. Manpower suppliers must register as contractors or subcontractors to guarantee compliance with labor laws. The Construction Industry Authority of the Philippines regulates contracting of materials through a blacklisting system that lists violators of consumer protection standards.

6.3. Sector Best Practices

Conglomerates within the construction industry are strong in corporate social responsibility. Ayala Land and SM Development Corporations, two of the biggest construction firms, engage in education and community building advocacies.

6.4. Green Context

Construction as a facet of the built environment and physical spaces is invariably affected by climate change. Climate risks, rising energy cost, competition for resources and growing green consumer consciousness have led big construction companies to consider energy and resource efficiency strategies. Although no specific green regulation yet pertains to the construction industry, a slew of green enactments (Clean Air Act, Ecological and Solid Waste Management Act and Clean Water Act) are exerting pressure on the built environment to go green. Further, the Philippine natural endowments for, and historical foundations and cultural imprint for use of indigenous and low environment- impact materials (bamboo, adobe, bricks, wood) favor the green shift.

6.5. Impacts so far on the sector

Drastic transformation will occur or will be required in the construction industry, in all its aspects: design, engineering, construction and material production. Transport activities might contract if the shift to locally produced materials will be favored. Cement may be less favored and shift to glasses and other more energy-saving fixtures may be expected. Even skills will transform as higher or more specialized competency is required for green design and use of green materials. Installers of green fixtures might become new skill categories while job losses are not expected to be drastic as the industry will diversify with green products (buildings). Greener standards or parameters in the practice of related professions and technical skills could also be advantages and thus preferred in the future, such as the fields of architecture, engineering and design.

6.6. Drivers influencing sector responses

Reducing the operational or life cycle cost of buildings is the primary driver for construction players to become more competitive in the context of resource competition and rising cost of resource (energy, steel, wood products and stones). It is estimated that green buildings have 3% higher occupancy rate, result in 6.6% improvement in return on investment and have 7.5% higher value. But there are also other reasons cited such as the ethical consideration of the built environment as a huge polluter, resource user, source of waste and source of carbon emission. In 1994 for instance, 37% of carbon emission from the Philippine manufacturing industry was due to cement manufacturing. The prolonged Business Process Outsourcing industry boom in the Philippines is also creating a huge demand for construction, driving competition for greater market share, i.e., through diversification to green, resource-efficient products (buildings).

6.7. Readiness of the sector to respond

Laws, businesses and products seem to be prepared in notable degrees. It is the business leaders and practitioners that are themselves leading the dialogue and development of market regulation standards. Large firms have formed environment departments, hired sustainability officers and issued sustainability reports. There is uncertainty, however, as to the preparedness of the informal sector because of lack of skills and motivation as profitability does not yet appear to translate to their gains.

Full market potential and social and environmental benefits also might not be realized because of apprehensions on huge first or upfront costs of green buildings, as well as due to huge literacy gap on the benefits of green construction and buildings. Tight market for green materials is also noted, particularly for the technology-driven ones which are not typically available locally but instead have to be imported, e.g., solar panels (manufactured locally but only for export markets).

6.8. Sector intentions to act and openness to external support

With a complex set of skills required for the installation of green fixtures and new procedural requirements for use of green materials, specialized education and training investments may be required for the low to semi-skilled construction workers.

6.9. Action/s taken by the sector in response to the drivers

The green initiatives are institutional and primarily private-led. Industry leaders have rolled out sustainable land development projects and eco-communities. The private sector has also initiated the development of a national building certification system called BERDE (building for ecologically responsible design excellence) that aims to suit local geographical and cultural requirements and nuances. The Philippine Green Building Council (PhilGBC) is a non-government organization that has been set up for the BERDE formulation and for other green advocacies. PhilGBC and the Energy department are presently engaged in partnerships for promotion of use of energy saving fixtures.

The legislative system is also taking positive steps, particularly through a proposed Green Building Act that will frame the regulatory and incentive system for the greening of the built environment.