Can SMEs survive climate change? Eva Marie Arts and Crafts versus
Typhoon Yolanda
Ser Percival K. Peña-Reyes
Economist, AIM RSN Policy Center for Competitiveness
AIM RSN Policy Center for
Competitiveness
Research on Micro, Small, and Medium Enterprises
Enterprise Performance in Asia
- In partnership with the International Development Research Centre.
- It aims to support and promote evidence-based research on micro, small,
and medium enterprises (MSMEs) in middle-income Asian countries.
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Significance of the Study
• In ASEAN, Small and Medium Enterprises (SME) account for more
than 90% of all enterprises, employ 50-99% of the domestic
workforce and contribute about 32-77% of total domestic output
in their respective countries.
• In the Philippines, the number of SMEs grew by 66% from
492,510 in 1995 to 816,759 in 2011. Similarly, the numbers of
those employed by these firms have grown by 45.7% from 2.7
million in 1995 to 3.9 million in 2011.
• With climate change, we expect calamities to happen more
frequently and with greater intensity. As such, SMEs could be
more vulnerable to climatic shocks compared with large
enterprises.
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Objectives of the Study
• To identify and illustrate factors that could influence dire outcomes
by focusing on the production chain of Eva Marie Arts and Crafts .
• To illustrate the important linkages across the resilience of this firm
with the resilience of the entire production chain to which it
belongs.
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Methodology
• Data sources
– official and media sources
– key informant interviews
– focus group discussions
• Initial interviews carried out by
a local coordinator and case
writer in May 2014
• Fieldwork by a team from APC
from June 9 to 12, 2014
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Production Chain
Sources of
Raw
Materials
Eva Marie
Arts and
Crafts, Inc.
Distributors
Retailers
Weavers and
Embroiderers
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Production Chain
PRODUCTION
INPUT:
400 weavers and 80
embroiderers
PRODUCTION OUTPUT:
Up to 200 boxes or
10,000 finished pieces
of bags, wallets, and
other items per
shipment
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Production Chain
Type of Labor
job-out weavers
Employment Arrangement
They had the responsibility to source their own tikog .
Alternatively, they could also buy tikog from Eva Marie at PHP 500 per
bundle and pay on a staggered basis.
a bundle of tikog ≈ 4 mats
2 panel mats/week; PHP 180 to PHP 200 per mat (PHP 72 to 80 per day)
in-house
embroiderers and
coordinators
full-time employees who worked 8 hours a day and were paid a daily
wage of PHP 150
one family-sized mat in three days
in-house coordinators to find job-out weavers to help finish orders;
provided quality control as well
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Breaks in the Production
Chain
Sources of
Raw
Materials
Eva Marie
Arts and
Crafts, Inc.
Weavers and
Embroiderers
Distributors
Retailers
These elements
bore the brunt of
Typhoon Yolanda.
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Breaks in the Production
Chain
Elements in the Production Chain
Immediate Effects of Typhoon Yolanda
Suppliers of Inputs
Storm surge washing away all raw materials;
difficulty in finding alternative sources
Eva Marie Arts and Crafts, Inc.
Where to get financial support?
- Cash from relatives
- Global Communities
- Government loans
Affected by no-build-zones
Hampered by strict building requirements
Weavers and Embroiderers
Damaged homes; relied on relief goods and
cash-for-work; could not produce due to
scarcity of tikog and buri
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Interventions by Different
Organizations
• Global Communities
– Partnered with Eva Marie and its
artisans
– Provided overall management and
material support for livelihood
restoration, asset recovery, and
shelter repair kits distribution
– Tapped Eva Marie’s existing
production chain network, in order to
course its support to the targeted
beneficiaries
– Eva Marie was tasked with the
distribution to the beneficiaries and
buying some of the materials to be
distributed.
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Interventions by Different
Organizations
• Cash-for-work Programs
– To immediately boost incomes
and speed up debris removal
and clean-up operations
– PHP 260 per day for 8 hours of
work; people to participate just
once; work duration lasting 7 to
10 days
– Examples
• Plan International Inc.
• UNDP
• DSWD
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Resilience of the Production
Chain
Elements in the Production Chain
Response of Production Chain Link
Suppliers of Inputs
Found alternative
constrained
sources,
but
still
Eva Marie Arts and Crafts, Inc.
Optimistic outlook; had to increase prices;
made adaptations for climate change;
considered alternative warehousing and
insurance
Weavers and Embroiderers
Became hard to source because some of
them still went for cash-for-work
Distributor/Exporter
Intervened in issues regarding competition;
provided production incentives
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Resilience of the Production
Chain
Before Yolanda
After Yolanda
Price per bundle of tikog Eva
Marie sold to weaver
PHP 500
PHP 1,200
Price per mat at which Eva
Marie bought from weaver
PHP 180 to 200
PHP 350 to 380
Cost of producing one mat
for the weaver
PHP 33 to 56
PHP 80 to 133
Take-home income per mat
for the weaver
PHP 124 to 167
PHP 217 to 300
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Learning Insights
• Need to upgrade the
market so that the
products could be sold
at a much higher price
Minimum wage
(non-agriculture) in
Samar (Region VIII),
assuming 8 working
hours per day, 5
working days per
week
PHP 260 per day
Workers’
compensation preYolanda, assuming 2
panel mats per week
sold at PHP 180 to
200 per mat
PHP 72 to 80 per day
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Learning Insights
• Need for firms to adopt disaster risk
reduction strategies in their
production
• Improve public infrastructure under
shock-prone environments
• Close coordination and proper
timing of interventions
• Need to streamline processes for
firms to get government assistance
in times of disaster
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Timeline of Events for Eva
Marie Arts and Crafts, Inc.
Time
Event
October 15,
2013
Last shipment to Japan and cash inflow before Typhoon Yolanda.
October 16,
2013
Eva Marie bought materials in Cebu worth P160,000 to prepare for a volume order from Tommy Bahama. The
shipment was set for December 15, 2013.
November 8,
2013
Typhoon Yolanda hit Samar, and a storm surge of about 10 ft. washed away the raw materials and products ready
for shipment. It has also destroyed the showroom of Eva Marie Arts and Craft. A few days later, the Adona-Yu
family left Samar for Manila to seek refuge.
November 24,
2013
Eva Marie met with Christopher Rae of Global Communities in Manila to talk about her situation and the situation in
Samar. Global Communities did not promise anything at first, but they expressed their intention of helping the
community by donating shelter kits/ GI sheets to households in the coastal areas that were affected.
December
2013
Some suppliers who were not affected or those who were able to save the tikog, buri, and mats sold their products
to Eva Marie.
January 2014
Global Communities went to Basey to assess the extent of the damage. A contract was signed by Global
Communities and Eva Marie Arts and Crafts. Eva Marie was assigned to purchase the fishing kits and sewing
machine and to head the distribution of shelter repair kits, fishing kits and weaving kits for the community in
exchange for three sewing machines and money to buy the raw materials, such as tikog and buri.
February 2014
The firm started the embroidery of bags for shipment. They also applied for a loan under the Department of Trade
and Industries.
March 2014
The firm was able to make its first shipment after the typhoon.
May 16, 2014
The firm’s application for loan to DTI was approved.
June 2014
The firm was able to confirm thousands of products ordered by Tommy Bahama to be delivered by December
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2014.
Comments are welcome at
POLICYCENTER@AIM.EDU.
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