Gordon remembers how FedEx was won | SubicNewsLink

07 February 2009

Gordon remembers how FedEx was won

Dozens of workers showed up here before dawn Friday to bid goodbye to one of the last Federal Express (FedEx) planes to fly out of Subic.

Senator Richard Gordon, who signed up the US courier giant to set up its Asia-Pacific hub in Subic, was also here Friday to wave goodbye to FedEx for the last time.

“I came here when I heard they were leaving. I said I had to be here. I was here at the very beginning,” he told reporters.

Gordon, the first Subic Bay Metropolitan Authority (SBMA) chair, said that after he signed up FedEx to set up its hub here, DHL and UPS followed suit.

Surrounded by FedEx employees as the planes were taking off, Gordon said: “I remember
meeting one of their executives, Larry Hillbloom, who was quite a character. I was in a meeting with a senator at the time. When I went to the VIP room to meet them, there was a guy in a suit and another guy in jeans, T-shirt and dark glasses. I shook hands with the man in the suit who said, ‘I am not Larry Hillbloom. He’s my boss.’”

With a fond farewell, the government stands to lose P150 million a year after FedEx completes the transfer of its Asia-Pacific hub from the state-owned Subic Bay International Airport (SBIA) to the Baiyun International Airport in Guangzhou, China, this April.

FedEx pays P150 million annually in landing fees and warehousing to the SBMA, according to Armand Arreza, SBMA administrator.

Winding down

The US courier giant on Friday began winding down its Asian hub in the Philippines, shedding 800 staff as it starts full operation of a new regional facility in China, Arreza 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.

Arreza said the decision to shift the hub to China was made in 2004 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,” he 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.”

Business decision

Arreza said FedEx preterminated its 2010 contract to April this year, with options
to extend the use of the SBIA on a monthly basis as a back-up plan for its China project.The company will, for now, keep a skeleton operation in Subic.

“We understand that FedEx had to make this business decision,” he said. “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.”

FedEx officials were not immediately available for comment.

Largest tenant since 1995

In 1994, the SBMA obtained a $60-million loan from the World Bank to develop Cubi Point into the SBIA to entice the world’s largest freight-handling firm and attract more cargo and passenger airlines to operate from Subic.

FedEx has been the main locator at the SBIA since April 1995, serving 21 Asian cities.Arreza said the government tried to convince its largest tenant at the SBIA to stay.

SBMA Chair Feliciano Salonga and Arreza went to FedEx’s headquarters in Hong Kong to ask the company’s top executives to reconsider their plan.Trade Secretary Peter Favila also tried to convince FedEx to remain in Subic.

Generous separation pay

Arreza said FedEx would make intermittent flights at the SBIA until April or up to the extension period.

As it is, Subic is on standby, he said. He added that FedEx has not given an official closing date for its Subic operations. “We’re open to their return. We’re giving them the flexibility to extend.”

Arreza said about 800 workers of FedEx and its subcontractors will be affected. He added that the highly skilled workers could easily find jobs elsewhere in the economic zone.

He said the courier company facilitated job placements for former employees and gave “generous” separation pay and bonuses. (Robert Gonzaga & Tonette Orejas, Philippine Daily Inquirer)