Philippine Building Construction Industry: Profiting More, Hiring Less


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In my last post, I presented the proof of my thesis that the building construction industry in the Philippines doesn’t create a significant number of jobs relative to their expansion and growth rate.  I have the same observation in this post, but it’s about profit, profit growth, and profit growth rate this time.   “Profit” in this post is “Total Profit”.

Although I use the 2008 and the 2010 data results of the National Statistics Office’s Annual Survey of Philippine Business and Industry, I believe they are still applicable today.  Let’s not forget the GDP growth in 2010 was 7.63%, and the average exchange rate of a dollar to pesos was 45.11–no wonder OFW’s were buying condos.

Since my interest in analyzing all these data is about job creation and employment, let’s start with the job growths and the job growth rates in the two industries in 2010, and let’s go further by firm.

                            2010

                          Per Industry                                         Per Firm

                               Job Growth     Job Growth Rate             Job Growth     Job Growth Rate

Construction               9,035                  26.956%                        -28                 - 10.181%

Manufacturing             9,131                   1.058%                            1                     0.535%

Now here’s the dough:

                             2008                                                   2010

                           Revenue              Cost                     Revenue               Cost

Construction                  38.391 B            31.298 B                 66.958 B             54.471 B

Manufacturing                  3.161 T              2.532 T                    3.547 T              2.902 T

Here are the profits, the profit growths, and the profit growth rates in both industries

                                  2008                                                      2010

                            Profit                     Profit         Profit Growth        Profit Growth Rate

Construction            7.093 B               12.487 B           5.394 B                  76.047%

Manufacturing             629 B                    645 B                16 B                    2.544%

Let’s equally divide the profits and the profit growths among firms in both industries. The profits in manufacturing are high because petroleum products are included.  You know oil companies are greedy too.  They deserve a separate post.  Still the profit growth and the profit growth rate of a building construction firm in 2010 were way higher.  That means  quick, easy money for a building construction investor that year.

                                   2008                                                      2010

                                 Per Firm                                              Per Firm

                               Profit                      Pofit         Profit Growth        Profit  Growth Rate

Construction           58.139 M                72.599 M         14.460  M                   24.871%

Manufacturing       136.650 M              138.919 M           2.269  M                     1.660%

A company can profit a lot in the manufacturing industry, but why is the flow of investment in that industry is slow?  I wonder if there were greedy investors in 2010 who owned multiple building construction companies.  They only needed to own two companies to surpass what a manufacturing company profited in the same year.

Now let’s put profit growth and profit growth rate and job growth and job growth rate side by side and by industry.

                            2010

Profit Growth    Profit Growth Rate      Job Growth    Job Growth Rate

Construction Firm          5.394 B               76.047%                    9,035              26.956%

Manufacturing Firm             16  B                2.544%                    9,131                1.058%

Since it’s not the industry that hires employees, let’s see how it goes if we put profit growth per firm next to job growth per firm.

         2010

                    Profit Growth Per Firm             Job Growth Per Firm

Construction Firm                   14.460 million                                 – 27

Manufacturing Firm                   2.269 million                                     1

Scandalous!  Profiting more, hiring less–quod erat demonstrandum.  I hate greed, and I equally hate greedy people.  Where’s your corporate social responsibility, blood-sucking leeches?

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