Philippine Report

STATE OF THE PHILIPPINE PRINTING INDUSTRY Overview

The Philippine printing industry aims high to achieve global competitiveness that it hopes to achieve through liberalization while at the same time seeks to find solutions to various problems which stifles growth and opportunities. As it is, the industry remains a potential major export industry and unexpectedly continues to grow in number by an average of 7% annually. Lack of capital investment in more sophisticated machines, lack of skilled manpower to run the industry, proliferation of many printing firms, stiff competition, lack of government incentives, lack of government control, are just some of the major problems plaguing the industry. Even with the advent of automated printing and digital printing, majority of local printers still stick to traditional printing limiting themselves to the domestic market. The more profitable overseas printing market thus, remains the domain of a handful privileged big industry players and sophisticated printers who can afford to invest in state-of-the-art printing equipment, and to train their people to properly operate the machines. With the local economy experiencing another slump, and with recovery nowhere in sight, the local printing industry remains at a standstill, perhaps fighting to survive in a very fierce and competitive environment. Price cutting is a notorious practice for most printers often times at the expense of sacrificing quality. While majority of local printers cling to the traditional printing methods, market demands dictate venturing into high-level printing. The onset of digital printing technology resulting in print-on-demand market is fast gaining popularity. Acquisitions of digital, four-color and multi-color presses likewise is no longer news. This report seeks to present an overview of the overall state of the printing industry in the Philippines. Unless specifically noted, the printing industry constantly being referred to in this report includes the entirety of the three sub-sectors of the industry, namely the printing-publishing sector, the job and commercial printers, and the industrial/packaging/label industrial/packaging/label printers. The Philippine graphic and media industry has an estimated base of 4,000 to 5,000 establishments. According to the 2001 data of the National Statistics Office, there are 4,307 publishing and printing establishments in the Philippines of which 70% are strategically located in Metro Manila and in key cities of the 13 regions.

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Distribution of Publishing and Printing Establishments, 2001 Cancel

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Number PHILIPPINES 4307 ILOCOS REGION 169 CAGAYAN VALLEY 67 CENTRAL LUZON 306 SOUTHERN TAGALOG 514 BICOL REGION 119 WESTERN VISAYAS 173 CENTRAL VISAYAS 278 EASTERN VISAYAS 41 ZAMBOANGA PENINSULA 65 NORTHERN MINDANAO 178 DAVAO REGION 173 SOCCSKSARGEN 105 NATIONAL CAPITAL REGION 2018 CORDILLERA ADMINISTRATIVE REGION (CAR) 46 AUTO AUTONO NOMO MOUS US RE REGI GION ON OF MUSL MUSLIM IM MIND MINDAN ANAO AO (ARM (ARMM) M) 8 CARAGA 47 Distribution of Publishing Publishing and Printing Establishments in NCR, NCR, 2001 NATIONAL CAPITAL REGION

NCR-I MANILA TONDO BINONDO QUIAPO SAN NICOLOAS SANTA CRUZ SAMPALOC ERMITA INTRAMUROS MALATE PACO PANDACAN PORT AREA SANTA ANA NCR-II QUEZON CITY NCR-III CITY OF MANDALUYONG MARIKINA CITY OF PASIG SAN JUAN NCR-IV

Number 2,018

340 33 15 44 9 65 89 12 5 15 16 6 18 13 491 491 303 106 51 101 45 345

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KALOOKAN CITY CITY OF MALABON Cancel NAVOTAS VALENZUELA NCR-V CITY OF MAKATI PATEROS TAGUIG NCR-VI LAS PIÑAS CITY OF MUNTINLUPA PARAÑAQUE PASAY CITY

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150 82 6 107 297 271 3 23 242 45 23 105 69

About 60% of the printing firms are small with an average capital of PHP 500,000.00, 35% between PHP 500,000.00 and PHP 5 million and only 5% have over PHP 5 million capital. The total size of the Philippine printing industry is over US$ 100 million. Many of the smaller presses operate one or two presses. 85 % of the printing companies are into offset, while 15% are into letterpress, gravure and flexographic printing. Of the 85% belonging to the offset printing group, 53% are small-scale (assets: PHP 5 million and with less than 30 employees), 35% are medium scale (assets: more than PHP 10 million and more than 30 employees), and 12% are large scale (assets: PHP 100 million or more than 100 employees). The commodities and services of the industry include the following: (1) publication printing: books, pamphlets, newspaper, periodicals, magazines, journals; (2) commercial printing: business and office forms, brochures, posters, envelopes, school annuals, promotions/advertising materials, calendars, calling cards, greeting cards; (3) security printing: documentary stamps, postal stamps, bank forms and passbooks, legal tender, examination booklets, forms and answer sheets of state-sponsored tests; (4) office supply printing: continuous forms for computer printers, invoices, receipts, and other business forms; (5) special printing, e.g. packaging: folding cartons, boxes, containers; (6) software-related services: pre-printing services, such as typesetting, color separations, electronic stripping, image manipulations, graphic illustrations, internet services such as web design. The industry is composed of four sectors according to specific lines of business: printers-publishers, job and commercial printers, industrial/package/label printers and firms with printing presses. These sectors, which likewise engage in pre-press and graphic design enterprises, have gradually constituted themselves as one, distinct, competitive segment. The printing-publishing sector accounts for 70% of the total industry sales. Firms in this business group engage in the publication of various products for communication such as books, newspapers, magazines, journals, periodical and

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pamphlets. Except for the segment involved in newspaper publications, this sub-sector usually sub-contracts printing requirements out to commercial Cancel Download And Print printers of foreign firms. Only 6% of the total industry players are into publications of newspapers and periodicals. Entry barriers are high because of the huge capital investment requirements and the established dominance of such publications like Manila Bulletin, Philippine Daily Inquirer and the Philippine Star. The segment servicing the book market (i.e. about 3% of the industry) has lately found more channels for increased production sales. The untapped potentials of this segment have made it a very promising engagement. The large capital outlay required may be high but the degree of rivalry will be low among the limited number of competitors. The Job and Commercial printers account for 10% of the market share. Firms in this group are primarily engaged in small to medium run commercial jobs like government forms, advertising brochures, office and school papers/forms, posters, calendars, calling cards, greeting cards. They employ the smallest printing equipment in terms of runs and number of printers. This small to medium scale sub-sector, however, comprises majority of the firms in the industry. A little less than 90% of the industry players are in this sub-sector. The wide range of commodities and services has made it the most fragmented. Job and commercial printers largely service the domestic market. But they also compete with printers based in the other neighboring countries. These entrepreneurs compete in a market size of around $50 million and are expected to expand the subsector and reach the $165 million mark by 2005 if it aggressively upgrades its technology. The Industrial/Packaging/Label printers account for 20% of the market. It is similar and at times interchanged with job and commercial printers. It is also characterized by small to medium run printing jobs. Its distinguishing character is its engagement with the manufacturing industry. The latter requires wrappers and labeling materials for carton packaging products, boxes and containers of manufactured goods. Depending on the type of packaging and labeling requirements, the firms in this sector shift focus from packaging to commercial with some degree of constraints, depending on the printing equipment used to produce various outputs. These products include labels for canned goods, label insets in packaged products, labels in carton boxes and other product labeling materials. Companies with printing technologies. This sub-sector is made up of big

conglomerate multinational and local enterprises with printing plants established primarily to service their own printing requirements.

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Industry Structure Cancel

Firms in the Industry:

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The industry experienced an average of 7% annual increase during the years 1994-1999. However, with the onset of digital technology and the reduction of prices of  computers and computer-related printing equipment, there was a surge of new printing companies specializing in pre-press. There was a 7% increase in the number of printing firms – from 2,563 in 1994 to 2,755 in 1995. The small firms (those employing less than 10 workers) account for 77% of the total number. Number of Firms and Total Employment (1995)

TYPE < 10 Employees > 10 Employees TOTAL

NO. OF FIRMS % 2,123 77.10 632 22.90 2,755 100.00

TOTAL EMPLOYMENT % 9,711 29.36 23,364 70.64 33,075 100.00

In 2000, it is estimated that only 3% of the total number of printing firms (about 5,000 including those specializing in pre-press) have a total net worth of $1.5M and employ 300 workers per company. The rest are mostly small- and medium-sized firms with less than four reconditioned printing units, and employing 30 people or less. Top Performing Printing & Publishing Firms in the Philippines (1998) in PH Peso

RANK 269 306 349 384 434 750 842 1263 1469 1551 1625 1650 1745 1781 1980 2013 2030 2218 2354

COMPANY Manila Bulletin Publishing Corp. Philippine Daily Inquirer Pablo L. Bustamante III Printing Press Directories Philippine Corp. Bookhaven, Inc. Filco Stationeries Co., Inc. Lapu-Lapu Packaging Corp. Papercon (Phils.), Inc. Rowell Lithography & Metal Closure Alliance Media Printing, Inc. FEP Printing Corp. Pilipino Star Printing Jardine Salmat Corp. Monica Publishing Corp. Business World Pubilshing Corp. Vibal Publishing House, Inc. RL Graphics Arts, Inc. Lotte Aluminum Liwayway Publishing

GROSS REVENUE 2,006,610,000 1,621,376,000 1,394,831,000 1,273,062,000 1,145.595,000 641,586,000 558,047,000 352,1999,00 278,905,000 352,199,00 241,097,000 237,490,000 221,740,000 215,476,000 186,912,000 183,880,000 182,629,000 161,371,000 149,791,000

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Competitors: Cancel

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Competitors of the printing firms include exporters from other countries which satisfy the demand for printed matter that local printing and publishing companies cannot fulfill. In fact, the Philippines is a net importer of printed matter. It recorded negative trade balance that peaked to $80.265M in 1997. In 1999, imports exceeded exports by $53.704M. Balance of Trade in Printed Matter (1995-1999) in US$

DESCRIPTION Imports Exports TOTAL

1995

1996

1997

1998

1999

77,373,737 5,210,968 -72,162,769

82,528,693 5,438,673 -77,080,020

87,913,811 7,652,787 -80,265,024

80,316,129 9,568,038 -70,218,091

63,630,525 9,925,662 -53,704,863

Top Import Suppliers:

The United States is the country’s top supplier of imported printed matter, accounting for more than a third (36%) of the market in 1999 and 2000. Other top import suppliers are Hong Kong, Singapore, Great Britain, Germany, and South Korea. Top Import Suppliers of Printing Materials

RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

COUNTRY USA Hong Kong Singapore Great Britain & Northern Ireland Germany South Korea Japan Thailand France Malaysia Australia India China Canada Others TOTAL

% Share (2000)

% Share (1999)

36.0 19.49 12.67 9.35 3.66 3.03 2.85 2.79 2.18 1.76 1.25 1.20 1.13 0.79 0.51 1.34 100

35.01 15.13 11.15 10.34 1.85 12.34 3.00 0.66 0.17 1.53 3.86 1.32 1.18 1.29 0.12 1.05 100

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Local publishers of books, brochures, musical books, and other publications do not only compete among themselves with foreign publishers for a share of the Cancel but also Download And Print local market. Foreign book publishers compete through any of the following modes: (1) selling directly to major bookstores; (2) appointing an agent in the Philippines who will, in turn, introduce their books to booksellers and take the latter’s orders; (3) working with booksellers who receive orders from clients and import their clients’ requirements; or (4) granting reprint rights. Foreign publishers may export directly to the Philippines. They may also deal with local companies. Local publishers of newspapers, journals and periodicals compete largely among themselves for a share of the domestic market, but also compete with publishers of  foreign newspapers and magazines for certain segments of the market. Commercial printers largely service the domestic market. They also compete with printers in neighboring countries like Hong Kong, Singapore, Thailand, & Malaysia. Some local publishers go to Hong Kong, Singapore, and China for certain printing jobs (especially full color printing) because of price, quality, and delivery time considerations. Rivalry Among Local Existing Competitors:

There is keen competition among the firms in the printing industry characterized by numerous and diverse competitors. Of the 4,307 (as of 2001) printing and graphic imaging companies, 70% operate in Metro Manila and the rest in major cities. There has been a dramatic increase in the number of design and graphic imaging services companies over the past years. This can be attributed to the rapid development of  the pre-press technology and reduction in the cost of computer hardware. Opening of  world market via the Internet has also resulted in more opportunities. The large number of firms in the industry has resulted in stiff competition among printers and graphic service companies, many of which engage in a price war resulting in lowering company profits or simply sustaining operations. This practice results in limited or even non-expansion of establishments. Slow Industry Growth:

The printing industry has barely grown over the past decade. Its contribution to the local economy has been declining through the years as a result. Its share in the manufacturing sector for instance, consistently declined from 1.618% in 1991 to only 1.360% in 1999. Its GDP (gross domestic product) share decreased from 0.278% to 0.218% in 1999, while its GNP (gross national product) fell from 0.276% in 1991 to only 0.214% in 1999.

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Entry in the Industry: Cancel

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The large number of firms in the industry indicates that there are no major sources of barriers to entry into the industry. Capital Requirement. This is not a significant barrier for start-up firms.

Prospective printers need not invest huge financial resources to be able to set up a small printing company. They can start their own printing press by merely purchasing reconditioned equipment that can cost as low as P 300,000.00 as compared to several millions for new equipment. Government Policy. The industry is not regulated and no major controls is

imposed such as on licensing requirements, limit to access to raw materials, or limits to price offering levels, that may discourage prospective investors. Customers (Industry Markets) Primary Markets: Market Segments Examples of Printed/Published Materials Books/Journals Reference Materials Newspapers Magazines Advertising Space in Publications: Newspapers, Magazines Brochures/Pamphlets Packaging Materials Letterheads, Memo Pads, Business Cards Political Campaign Materials Sales Receipts Accounting Forms Public Documents

Consumers Students & Teachers Researchers Professionals Households Political Candidates

Households

Institutional/Industrial Librarians Educational Institutions, Private Schools, Public Schools Business Forms Manufacturers of  Consumer Products Banks, Insurance Firms and other Financial Institutions Hotel & Restaurants Advertising Agencies Other Business Firms Business Firms Government Institutions

Primary Markets:

1) Educational Institutions. Schools are major buyers of printing products. Public schools, through the secondary level, use local textbooks. Higher educational

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institutions, especially those in traditional fields, use Asian or international editions of  locally reprinted US textbooks Cancel Download And Print 2) Libraries. There are more than 8,000 libraries nationwide. 3) Buyers of Advertising Space. Ad revenue is a major source of income for publishers. Print billings grew by 120% from P1.22B in 1992 to P 2.68B in 1997. Suppliers Major Suppliers:

1. 2. 3. 4.

Paper Ink Fuel Printing Equipment

1. 2. 3. 4.

Transportation Electricity Postal Messengerial Services

Minor Suppliers:

Suppliers of paper account for almost half of inputs of publishers, commercial and  job printers, etc. Suppliers of Printing Equipment:

Almost all printing companies use traditional printing machinery. Others combine these machinery with modern printing machines which are computerized and some fully automated. The Philippines is largely import dependent on printing equipment, although imports during the last two years declined significantly because of high dollar to peso exchange rate. The leading sources of printing equipment are: Germany, Japan, USA, United Kingdom, Denmark, South Korea, China, Hong Kong, and Singapore. Other sources are: Australia, France, Italy, Switzerland, Canada, and Malaysia. Among the new printing machinery and equipment being imported are: Phototypesetting and Composing Offset Printing Letterpress Flexographic Gravure Bookbinding Digital

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Laws and Policies Affecting the Printing Industry Cancel

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Philippine Laws:

1) R.A. 8293 or The Intellectual Property Code of the Philippines . This Code is particularly relevant to the printing and publishing sub-sectors because it contains the Law on Copyright. The law gives copyright protection on Original Works (i.e. Literary and Artistic Works and Derivative Works). 2) R.A. 8047 or the Book Publishing Industry Development Act declares as a State policy "the promotion and the continuing development of book publishing industry, with active participation of the private sector, to ensure an adequate supply of  affordable, quality produced books not only for the domestic but also for the export market. The law also created the National Book Development Board (NBDB) which is tasked to formulate and implement the National Book Policy with a corresponding National Book Development Plan. R.A. 8047 gives incentives for book development such as duty-free importation of books or raw materials and exemption of the value added tax, tax, and duty exempt importation of spare parts and supplies. 3) R.A. 8424 or the Tax Reform Act of 1997. The tax imposed on the royalties of book authors was cut from 20% to 10% as an incentive to authors and writers. 4) E.O. 226 (Article 39) on Employment of Foreign Nationals. It provides that a registered enterprise may employ foreign nationals in supervisory, technical or advisory positions for a period not exceeding five years from its registration. International Laws: Taxation – In the international market, laws concerning taxation, retail price

maintenance systems, and copyright protection affect the industry. The rate of taxes imposed on books varies from each country - from a low of 2% in Switzerland to as much as 25% in some Scandinavian nations. In a few countries, such as in Australia and in the United Kingdom, books are exempt from various forms of taxes. Retail Management System (RMS). The industry has lobbied successfully for

the retention of the Retail Management System although there are still some countries with no RMS. Copyright Protection. There is an International Federation of

Reproductive Rights Organization (IFRRO) to promote the proper acknowledgement and distribution of fees to authors and other copyright holders worldwide. Most of the major book markets are represented in the IFRRO through their own Reproductive Rights Organizations (RROs).

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Industry Associations: Cancel

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Trade Associations play a crucial role in enhancing the growth and competitiveness of the printing industry. There are some ten major industry associations that include the Philippine Printing Technical Foundation (PPTF). Government recognizes them as critical partners in formulating and implementing policies affecting the industry. Demand

The industry primarily caters to the domestic market but it is slowly discovering a potential market abroad. Those that have the supply capability have realized a much larger market exists abroad, thus a way to increase their profitability. Export of Printed Matter:

Exports of printed matter have gradually increased over the years, rising from $5.210 million in 1995 to $9.925 million in 1999 posting an average growth rate of  18.48% from 1995-1999. Some of the printed matter being exported and the percentage to total exports of  printed matter are: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Christmas & Other Greeting Cards ----- 39% Books, Brochures -------------------------- 12% Paper Labels -------------------------------- 10% Magazines, Reviews, Journals ----------- 8.5% Prayer Books ------------------------------- 5.3% Newspaper ---------------------------------- 4.6% Calendars ----------------------------------- 4% Transfers ------------------------------------ 3.4% Dictionaries & Encyclopedias ----------- 2.3%

Top Export Markets of Printing Materials Rank Country 1 Germany 2 USA 3 Japan 4 Hong Kong 5 Singapore 6 7 France 8 Italy 9 Great Britain 10 Saudi Arabia

% Share 2000 22.42 16.02 14.71 9.81 5.62 4.45 2.79 2.45 2.08 2.06

% Share 1999 20.18 17.21 9.7 12.31 2.63 3.98 5.99 2.51 7.67 1.94

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11 12 13 14 15 16

New Zealand Netherlands Malaysia Australia India Others

1.94 Cancel Download And1.92 Print 1.36 1.29 1.12 9.96 TOTAL 100

0.59 0.29 .84 2.32 .04 11.79 100

Book Exports:

Book Exports 1995-1999 1995 ------------------------ $ 847,169 1996 ------------------------ $ 813,571 1997 ------------------------ $ 989,917 1998 ------------------------ $ 2,549,977 1999 ------------------------ $ 2,728,645 In terms of value, religious books contributed a significant percentage of total book exports, followed by children’s books. The top imports of printed matter for 1995-1999 and their percentage to total imports are as follows: 1. Other Books, Brochures, Similar Printed Matter ----- 39% 2. Paper Labels ------------------------------------------------ 15% 3. Other Printed Materials ----------------------------------- 12% 4. Dictionaries and Encyclopedias -------------------------- 9% 5. Bank Notes -------------------------------------------------- 8% 6. Magazines, Reviews, Journals, Periodicals ------------- 8% 7. Trade Advertising Materials ------------------------------ 4% 8. Prayer Books, Bibles, etc. --------------------------------- 1.5% 9. Stocks, Shares/Bonds Certificates ------------------------ 1.2% 10. College & High School Textbooks ----------------------- .9% Book Imports:

Book imports peaked at $48.295 M in 1996 but steadily declined since then, reaching only $27.643 M by 1999. Book Imports1995-1999 1995 ------------------------ $ 42,597,047 1996 ------------------------ $ 48,295,634 1997 ------------------------ $ 43,639,870 1998 ------------------------ $ 28,260,531 1999 ------------------------ $ 27,642,153

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Import of Printed Matter: Cancel

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Imports of printed matter reached $ 87.9M in 1997 but dipped to $ 63.6M in 1999, then went down further to $ 63.63 M in 1999. Overall, the Philippines is a net importer of books, but negative trade balance has decreased from $ 41.7 M in 1995 to only $ 24 M in 1999 largely because of the gradual decline in the value of book imports during the past few years. Newspaper and Periodicals:

Demand for newspapers and periodical could be gleaned from the circulation figures of these publications. Those with the biggest circulation figures are: Morning Broadsheets:

Philippine Daily Inquirer ---------------------- 257,000 Philippine Star ---------------------------------- 251,000 Manila Bulletin --------------------------------- 250,000 Manila Times ----------------------------------- 209,000 Today -------------------------------------------- 152,000 Malaya ------------------------------------------- 150,000 The three leading weekly magazines enjoy circulations of from 250,000 to 300,000. The top female-oriented weekly magazines have circulations from 150,000 to 200,000. Other types of weekly magazines such as male-oriented, teen-oriented, specialty, and sports magazines have circulations of from 130,000 and below. Provincial publications have circulations of 70,000 and below. These are mostly in the cities of  Cebu, Iloilo, Davao, Baguio, Bacolod, and Zamboanga. Demand for Printed Matter Abroad Book Sales:

The largest three markets are the United States, Germany and Japan. South Korea, Brazil and China represent the largest share among the fast developing markets. Book Sales in Major Markets 1991-1996 Rank Country 1 USA 2 Germany 3 Japan 4 United Kingdom 5 France 6 Spain 7 South Korea 8 Brazil 9 Italy 10 China

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Supply Capability of the Industry Cancel

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Operations/Services Offered by Printing Sectors:

In book publishing, some companies particularly the bigger ones offer a variety of  services to expand their markets. Large publishers, for example, can handle the concerns of authors from the handling of the manuscripts to post-press operations. Publishers of newspapers, magazines, and other periodicals offer specialized contents geared towards segments of readers. For the job and commercial printing sub-sectors, the large firms have the capabilities to offer a variety of services from pre-press to post-press services, giving customers the option of having all their requirements handled by one printing press. On the other hand, smaller firms suffer from weak bargaining power in relation to suppliers of paper and distributors of printing equipment because of limited financial resources. Usually they have shorter payment periods or on cash purchase basis from paper suppliers. For many small printing press companies, the lack of access to additional capital has limited their ability to upgrade their printing capabilities. However, they compensate for this by establishing networks with other small printing companies so they could specialize on one particular activity (e.g. color separation only, printing only or only binding) of the printing stage, thus not needing to invest in multiple equipment. Expertise of Personnel:

In all sub-sectors of the printing industry, there is a lack of formal training of  technical and managerial personnel. Majority of press operators never attended a formal technical school and most of them are high school graduates. Firms are forced to train their people on-the-job or they pirate skilled individuals from other printing companies. Technological Capability:

Although majority of printing companies still use the traditional method of  printing, there are some (again the large companies) that have already integrated the use of information technology in various aspects of the printing process. For one, the Internet has opened the door for printers to deal closely with suppliers and customers. Desktop publishing has also resulted in speedier and more flexible production of printed materials. Starting in the mid 90s, the country saw the emergence of digital printing technology that was successfully introduced and accepted by the local printers. A new market emerged - Print-on-Demand or Just-in-Time printing market. A customer can

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have his printing done when he needs it and where he needs it. However, the market for digital printing is currently limited to short-run printing. Cancel Download And Print The industry has a grasp of future trends, which is for full integration and automation. Computer-to-film (CtFilm) technology is widely gaining practice, particularly in packaging, publishing, and commercial printing. Large printing companies have facilities for computer-to-plate (CtPlate) initially utilized mostly for quick printing. Users of the more modern computer-to-press (CtPress) number less than ten and are limited to companies engaged in packaging and export printing. Market Share of Printing Technologies:

According to a worldwide statistical survey, the different processes have approximately the following market share: Heatset Web Offset -------------------------------- 23% Coldset Web Offset -------------------------------- 20% Sheet-fed Offset ------------------------------------ 9% Flexo Printing -------------------------------------- 19% Gravure Printing ----------------------------------- 19% Digital Printing ------------------------------------- 8% Offset printing as a whole thus covers 52%. About half of the sheet-fed offset capacity is producing advertising print, the other half produces mainly wrapping paper and folding boxes or packaging materials. Quality and Quantity of Training:

As mentioned earlier, lack of formal courses in printing has severely affected the supply of skilled technical personnel. There are at present four institutions that offer formal and short courses in printing: Don Bosco School of Printing, Philippine Printing Technical Foundation, Technological University of the Philippines, and the University of  Santo Tomas.

Opportunities and Threats to the Printing Industry

The printing industry faces a multitude of opportunities and threats brought about by social, technological, economic, and politico-legal developments both here and abroad.

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Opportunities: Cancel

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1. Population Growth. Increases base of potential customers (such as increases in school populations), and more buyers of consumer goods that utilize printed matter in their packaging requirements. 2. Large School Population. This assures constant demand for textbooks. 3. High Literacy Rate. This is a factor that could contribute to increased demand for reading matter. 4. High Degree of Press Freedom. This could be an opportunity for the Philippines to attract international publishers to establish their presence in the country (such as establishing their regional centers in the country). 5. Large Filipino Communities Abroad. This offers a potential market for printed matter (e.g. religious books, pocket books, magazines) produced in the Philippines. 6. Evolution of Equipment and New and Improving Printing Technologies is an opportunity for those who can afford high-level printing equipment They can offer better and more innovative products and services to print buyers. 7. Attendance in Printing Conventions Abroad gives local printers the opportunity to see for themselves the most modern printing equipment in the world. In Drupa (considered the Olympics of printing) for example, Filipino printers spent over P400M in purchase of new printing equipment or supplies. 8. The Internet has become a tool for printers to communicate and link with customers and suppliers to market, sell and distribute or order supplies. 9. Economic Growth can expand the base of customers for the industry. 10. Increasing Advertising Expenditures results greater revenues for the industry. 11. Demand of Western Publishers for Low-Cost but High Quality Printing Services could be serviced by local printers. Cost of print production (including labor) is still relatively high in western countries. 12. Elections are an opportunity for the commercial printing sub-sector as it dramatically increases demand for printing, particularly for ballots and campaign paraphernalia.

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13. Law Incentives offer tax and duty-free importation of books and raw materials, reduced royalty for authors, employment of foreign nationals, Cancel tax Download And Print opening of public textbook program to private firms, etc. Threats: Lack of Formal Courses on Printing has resulted in a limited supply of skilled

labor who are knowledgeable with the operations of the printing process. Limited Supply of Skilled Labor which could limit capabilities of printing firms

to increase output or to expand. This also resulted in piracy of skilled laborers. CD-ROMs and Electronic Publications which could become as substitute for

printing materials such as in business forms. High Operational Costs result in stagnancy or losses for printers. High cost of 

raw materials (paper and ink), taxes on imported paper, high cost of postage, etc. can limit the capabilities of printers. Tight Competition mainly due to the proliferation of printing companies has

resulted to lower prices and marginal mark-ups. Unreliable Supply of Paper in Domestic Market which made the industry

dependent on imported paper specially for coated stock. High Investment Cost made printing companies unable to upgrade printing

equipment to keep pace with competition both local and abroad. Majority of local printers could not keep pace with the rapid developments in the industry. Lack of Reliable Statistics on the Industry hinders the industry to map out

strategies to compete in the global market. Inadequate Government Support such as in availing of incentives, release of 

budget for printing assistance in promoting products, tax on imported paper, etc. which put local printers in a disadvantageous position for global competition.

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Action Plan to Enhance Growth and Competitiveness Cancel

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The industry needs to increase production, cut costs, and deliver promptly to be able to adjust to a highly-competitive environment. One way f achieving this is to invest in new technology (new equipment) and to train its workers. Other suggestions include putting standards in each of the printing process, specialization services and products, and training of clients and end-users on the new technology. Suggestions for Printing Companies:

1) Invest on New Technology to enhance supply capacity and enable printers to respond to the changing needs and requirements of customers. 2) Invest on Human Resources to properly operate the new machines and equipment brought about by the new technology. 3) Focus on Certain Segments of the Market by creating a niche in the market to attract advertisers that want to reach a specific target market. 4) Offer Specialized Products and Services to allow printers to improve their technical skills in one area (such as printing of business forms), or products (such as paper bags or greeting cards) and in the long run increase efficiency in production. This will also minimize cutthroat competition. 5) Standardize Work Processes and Product Types to increase professionalism in the industry and also to break non-productive habits and practices. 6) Work Closely with Customers to teach them the basics (need-to-know) about printing process which would speed up work and eliminate reprints, and increase satisfaction on the part of the customers. 7) Consolidate Business through mergers or acquisitions to increase size of  existing business. An alternative is to collaborate with others so they could specialize in one particular printing activity. 8) Develop Competencies in IT-Related Activities such as desktop publishing, electronic imaging, or online publishing to expand capabilities or speed up production processes. Also to prepare the firm to shift to IT-based business in the future. 9) Participate in Initiatives of Industry Associations to expand firms’ network of contacts, among others.

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Suggestions for Industry Associations: Cancel Download And Print

1) Sponsorship of Training Programs to strengthen capabilities of participants. 2) Providing Members’ Exposure to New Technology such as in organizing trade fairs, exhibits, etc. 3) Maintaining Database of Information concerning revenues and profit levels, salaries, etc. as an aid for future strategies. 4) Establishing Linkage with Other Industries so that issues affecting the industry could be discussed. 5) Standardize Work Processes to be used as benchmark practices for printing companies in an effort to increase overall quality of products and services offered by the industry. This would make the industry more competitive with its foreign counterparts. 6) Support Government by disseminating information concerning incentives that can be availed of by members. Suggestions for Government:

1) Promote Concept of Global Competitiveness by supporting the industry to penetrate the world market through incentives or financial assistance in international fairs and exhibits. By being competitive in the international arena, local printers are contributing to national development. 2) Facilitate Human Resource Development Efforts by pursuing the creation of a graphic arts institute in coordination with industry associations. This serves as a long-term solution to the dearth of skilled manpower in the industry. 3) Access to Capital and Credit to provide support in terms of facilitating grants and credit schemes for local printers. 4) Establish Performance-Monitoring Scheme in cooperation with industry associations through maintenance of relevant data about competitiveness of  the industry. The printing industry in the Philippines is at the crossroads of development. It is also a paradox in the sense that the industry is both mature and very young. It is mature in the sense that prices have been driven down by the sheer number of  printers competing for a share in the local market. And yet, it is young and very

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promising for those who take the aggressive path of innovation and to those who learn to quickly adapt to the rapidly changing technology in printing and in the Cancel Download And Print business of print reproduction. In the last 20 years, the Philippine printing market has been predominantly price sensitive. The preference for lower prices over quality and good service dictated the movement of the economics in printing but such a scenario is true only for the small-scale (10 employees or less) & new entrants into the industry. A large majority of the market now demands higher quality, better service, shorter production times, longer credit terms but unreasonably low prices. It is indicative of stiff and suffocating competition brought about not only by lower demand but also companies adapting stringent cost cutting measures resulting from the economic crisis which started in late 1998. In order to ensure the viability and survival of a printing company, one has to possess a high level of technical expertise and imagination to create a niche market. Consequently, we welcome the development of more efficient, simplified, and yet less costly printing systems. It is also with much hope that we look forward to the evolution of the digital printing age. We in the Philippines will work and cooperate with our fellow FAGAT members and Asian neighbors to help ensure the continuing and progressive development of our industry for the mutual benefit of our country and of all our beautiful friends on this side of the world.  Mabuhay tayong lahat!

Thank you very much and good morning.