Lebanon's once prosperous printing industry has long been overshadowed by its regional competitors. But it's not out of the game just yet
The first web offset printing press to operate in the Middle East was brought to Beirut in 1964 by the Mrowa family, publishers of The Daily Star newspaper and formerly also of the Arab daily, Al-Hayat.
This machine is still running today, largely because the operating company sees no point in replacing it with a new model. Although the press, by modern print technology standards an outright antique, is used nightly in the production of four daily newspapers, these print runs are insufficient to occupy the machine to more than 50%, according to Malek Mrowa, head of the operating company Print Technology. Replacing it with a new machine or even running regular three-month cycles of preventive maintenance by the book would represent financial layouts irrecoverable in the ailing domestic market for newsprint. The Lebanese enterprises that print books, magazines and newspapers constitute a highly qualified industry that is capable of turning out world-class quality products.
But the country is no longer the epicenter of Arab printing. Book printing began in Lebanon far back in the 18th century through a monastic print shop for religious tractates and for a long time, the country was the printing hub for the region. Until deep into the 20th century books printed in Lebanon were ruling regional markets from North Africa to the Arabian Gulf. Still in the 1970s and 1980s, Lebanon's printing industry was in full bloom, delivering copies of the Holy Koran in large quantities to Saudi Arabia, and also churning out publications ordered by Palestinian organizations.
The downfall
By the 1990s, however, a mega-printing company in Saudi Arabia had stepped into the printing of Islamic scriptures and Gulf financiers began investing in building high-capacity print houses in other GCC countries. National print industries got powered up in Jordan and in North Africa and more recently Syria's private sector has invested millions of dollar into modern presses at a level that makes representatives of leading international equipment manufacturers say that printers there are now better equipped with the latest technology than their colleagues here.
Thus, while other print locations in the Middle East are gaining a profile and some are booming with international aspirations, local suppliers and operators largely dismiss the idea that Lebanon could ever return to its former position as a leader in Middle Eastern printing. Yet how much of a function the Lebanese print industry could assume or which areas it could develop, is a tough question to address. It is actually extremely difficult to gauge the size and role of the Lebanese printing industry in both its regional and domestic dimensions, because even the most basic data on performance and markets are lacking. The print industry association, the Lebanese Graphic Arts Syndicate, has been in existence for six decades and numbers 180 members but cannot provide information on their performance because none is available, said the syndicate's manager Rania El Haji.
While the syndicate is in the process of having a market research firm survey sector activities, El Haji said data gathering was difficult: "because some printers do not report what they do and who they work for." She attributed this to the fact that many print shops are not licensed or insufficiently so, and thus operate in the shadow economy. Industry insiders however estimate the turnover of the sector to be somewhere upward of $100 million annually, while not exceeding $200 million. In the absence of surveyed results from companies, a comparatively concise indicator of print industry exports can be found in Lebanese customs statistics. According to these data, exports of printed matter (mainly books, newspapers and pictures) in the years 2001 to 2004 were worth on average $34.2 million per year. As sample export ratios provided to Executive by a few major printing companies were in the 20% to 30% range and reached 50% for the most export-wise productive firms, a very rough 'guesstimate' would support annual turnover in the mid-$100 millions as not an unreasonable assumption for annual sector performance, which makes printing almost certainly contribute less than 1% to GDP.
Looking to imports
The customs statistics on printed matter entering Lebanon between 2001 and 2004, on the other hand, was valued on average at $39 million per year, making the country a net importer of published material by worth. Only in 2002, exports at $50.7 million were significantly above average and also exceeded imports. Industry managers pointed out that around that period, large orders came in for printing schoolbooks for Libya. Another significant export opportunity arose from a large volume of orders from UNICEF for printing schoolbooks for Iraq. The various obstacles preventing the better economic performance of printing companies include the difficult economic environment along with other market-related problems, namely high electricity costs, the difficulty of customers to obtain bank finance for publishing projects, and a grueling collection process under the prevalent payment morale where exasperated operators have to spend undue time and efforts in collecting receivables.
As Lebanon compared to other Arab countries enjoys greater legal assurances for the freedom of expression, this makes printing in Lebanon a good proposition for publishers in surrounding countries. In the opinion of some print industry experts, this publishing freedom is today the country's strongest comparative advantage. On the other hand, the prevalent politico-clientilistic culture of seeking to control divergent viewpoints counteracts the legal framework of the freedom of speech and hampers publications. In the realm of newspaper and periodicals production, existing legislation is even detrimental to the development of both publishing and print enterprises. Arcane restrictions on the publication of foreign media has deprived the country of opportunities to produce for instance, small (lucrative) partial print runs of Arab newspapers based in Saudi Arabia and the Gulf for their readers vacationing in Lebanon. Other barriers include fragmentation in the industry, which is characterized by low cooperation.
In the newspaper industry, the major dailies in the country handle their print runs on their own presses, although consolidation and outsourcing would make much more sense in economic terms. But due to political reasons, vanity of ownership issues and fears of having their real circulation numbers leaked, the major publishers have reportedly long refused to consider solutions where a high-capacity web offset printing company with advanced equipment could come into play. Also among printers specialized in books and magazines, all too many companies seem glued to an operating mentality that emphasizes single ownership and the primitive segmentation of the market - however, without tapping into the positive potentials of family management and developing niches.
However, this isn't the entire picture. The organically grown expertise and entrenched quality of the Lebanese print industry are acknowledged by international experts. On the cost side, too, Lebanon is not without edge over competing locations. According to Georges Chemaly, general manager of the printers Chemaly & Chemaly, the labor cost for a qualified operator in Lebanon carries about a 40% advantage over an Eastern European location such as Bulgaria. Operating a $12 million facility whose break even point is a monthly turnover of $350,000 to $400,000, Chemaly's firm achieves half of its orders from European, Gulf and African markets, demonstrating that Lebanese printers today can profitably act on the international scene. The service and flexibility of printers here is better than in Dubai, Chemaly claimed, and the strong customer relationship angle of a family-run print house can be used as an asset that super-sized ventures cannot offer.
Nonetheless, Dubai must be acknowledged as the Middle Eastern print industry location that Lebanon cannot measure up against. Alongside the opulence in investments and planning that is now customary in this boom emirate, Dubai has ambitions to enhance its printing activities for regional and global customers, including establishing print factories that are geared entirely towards exporting to Europe and international markets.
A new, enormous free zone for media enterprises, the international Media Production Zone, has gained location commitments from several multi-million dollar print industry start-ups and the zone aims to attract 70 printing companies with a size of $13 million to $18 million each. Dubai also wants to establish the world's largest printing company with a $2.1 billion investment, reports have claimed. In determining the future growth chances of Lebanon's diminutive printing industry, even the best imaginable evolution of domestic demand will hold printers within clear borders, due to the inescapable scale limitations of the domestic market. Modern printing is a very capital-intensive proposition, and huge printing plants such as the $40 million web offset presses installed over the past few years at the UAE newspaper, Gulf News, would seem wholly inappropriate in Lebanon. The potentials of GCC markets are beyond comparison to that of Lebanon's. In the past two years alone, publishing activities in the UAE increased at an estimated annual growth rate of 20%.
Advertising spending in the GCC countries has topped $2 billion in the first half of 2005, and 55% of that flowed into print media. International suppliers of high quality printing machines to Lebanon nonetheless see continued potential in this market, and can support this with reports of sales that are - albeit much smaller than in the Gulf - by local standards very respectable. The firms dominating the field are the German manufacturers Heidelberg Druckmaschinen and MAN Roland. Heidelberg sold equipment valued at 6 million euro in Lebanon in its business year that ended in March 2004. MAN Roland is represented in the entire Levant and most Gulf countries by Dynagraph, a Beirut-headquartered firm that claims a regional turnover in the 50 million euro range and which just completed moving into a new head office building here.
In the opinion of these suppliers, Lebanon has quite a future in the printing industry, if increasing specializations such as packaging print are taken into consideration. "In the long term, there is a relocation of printing from Europe to the Middle East. What the Far East once was [in attracting print jobs from Europe], the Middle East will become more and more," said Christoph Fischer, the MAN Roland delegate for the Middle East and North Africa stationed at Dynagraph. He quoted shorter transport distances and greater cultural proximity as reasons why Middle Eastern locations, including Lebanon, could gain increasing ground in Europe. One field where the entire Middle East is significantly underpowered in regards to printing is however training. Not a single vocational college or technical university in the region is specialized in this field. The Lebanese company Dynagraph and MAN Roland have attempted to address this, by recently spending 2.5 million euro on the creation of a Beirut training facility for the Levant, replicating a similar investment they had undertaken in Dubai. While acknowledging that such a facility cannot substitute a technical university, they are sending out a positive sign of their confidence in the development and future of the industry here.
By Thomas Schellen
Executive 2005
