Increasing Production and Cutting Costs
Keys to Surviving the Competitive World of Filipino Printers

Industry Profile
Status of Technology and Skill : Constrainst to Production
Streamlining the Operations : Ways and Means

Introduction

lndustry Profile

The printing industry in the Philippines is composed of around 5,000 printing an d graphic imaging companies. Of this total figure, roughly 70% operate in Metro Manila and the rest are located in major cities and economic centers around the ar chipelago.in terms of equipment investment,it is estimated that only about 3% of the total number of printing firms have a total net worth of over $ 1.5 Millio n and employ about 300 workers. The rest are mostly small and medium-sized estab lishments, with less than four reconditioned printing units,employing around 30.
Local products can be classified into publications (Books and newspapers), period icals (magazines, forms.posters and fliers), security (postal stamps and bank forms), office supplies (continuous forms), special printing (adhesives and cartons), packaging (labels and boxes)and software-related services(color separation and electronic stripping).
The past several years have witnessed a dramatic increase in the number of desig n and graphic imaging service companies. The growth can be attributed to the rapi d development of prepress technology, dramatic reduction in the cost of computer hardware, opening of the world market via the World Wide Web, the relatively high percentage of college graduates in the Philippines and the country having Englis h as its second language.
The Philippines produces a limited range of paper products due to high productio n costs and outmoded equipment. The 31 mills in the pulp and paper industry have a combined capacity of about 530,000 tons of paper and paperboard products. The l ocal paper industry produces newsprint, printing/writing materials, corrugated materials (linerboard and fluting), tissue paper, cartonboard, sack paper and kraft/wrapping products. The most dominant source of fiber in the country is secondary fiber which is produced by repulping waste paper. This limits the quality of the paper produced and as a consequence, high-end paper requirements of the country are mostly imported. Consequently, full color publications are generally more expensive to produce locally than to import already finished.

Status of Technology and Skill : Constrainst to Production

The quality of printed products and the reliability of a company to deliver them on lime relies largely of the kind of equipment used.
Currently, a growing number of printing companies use computer-to -film technolog y, particularly those engaged in packaging, newspaper and commercial printing. However, the planned shift to compute-to-press machines cannot take off due to its steep acquisition price and expensive consumables. The market is also perceived as not ready to pay the price of resulting products.

The average age of printing machines in the country ranges from 15 to 25 years o ld. These are either refurbished or used and imported because of its low price.
10% of the total number of machines were manufactured between 1980-1995. 75% are models of late sixties and seventies and the remaining 15% were made during the early sixties. Majority(70%)of the equipment are single color, 20% are two-color and around 10% are four to eight color presses.
The age profile of the equipment results in frequent mechanical breakdown,poor p rint quality and extended delivery schedules and has driven quality-conscious cl ients to seek better job outputs in neighboring countries.
Official figures reveal a decline in the importation of equpment in the country in the last two years. The shipment to the Philippines of printing and book bindi ng equipment, machinery and spare parts in the first semester of 1998 fell by 27.63% frow US$30 million in the same period of the previous year to only US$22 mil llon. On the other hand, imports increased by 0.29% for the period 1996-1997.Growth rate alos declined by 0.90% compared with figures from 1995-1996. The country imported equipment for typesetting and composing, reel-fed, sheet-fed and officetype offset,letterpress, flexogaphic and gravure printing machines.
There is a growing awareness.particularly in some large local firms, of the advan tages of investing in new four-colour presses. These, added to the pressing need of multinatlionals and other major firms for high-quality printed products. are perceived to force printers to invest in better equipment in the near future, Considering the disparity in prices of new four-color presses between European and Asian manufacturers, Filipino printers are becoming more open to the idea of investing in graphic arts equipment produced in Asis.
lnterest rates and the US dollar-peso exchange rate plays a major role in decisi ons to purchase new and imported equipment. The bell-weather 91 T-blll rates in the county, which determines interest rates local banks lend, currently stands a t 8-9%per annum. Local banks lend to printers at an interest rate of 13-14%, At the start of the crisis, rates ranged from 20-30%.

Though there is currently little demand for new printing equipment, the reverse is true for pre-press equipment, particularly those that manage Postscript Level 3 data, This increase in demand is due to the growing numbar of graphic imaging service companies in the country and the shift to in-house color separation of m edium-sized firms. The lackluster demand for press equipment is expected to impr ove once the economic situation in the country picks up.
The lack of a skilled technical workforce to operate sophisticated printing pres ses and prepress equipment is an equally-critical problem of the industry. Mainl y due to the lack of a technically-equipped printing institute, the problem has led some companies to pirate workers from other firms. Other companies have unde rtaken in-house training for their personnel. However. such company-sponsored sessions amounts to only familiarization of existing technology. Deeper knowledge, such as that offered in technical institutes abroad, is not acquired by tho pri nting operators.

Currently, printing education in the Philippines comes from technical seminars, exposure and educational trips adroad, supplier-sponsored product launches and t echnical presentations. With the exception of the Don Bosco School of Printing, knowledge offered by other schools are mainly theoretical in nature with outdate d demonstration equipment. As a result of this lack of basic technical knowledge and after-work educational opportunities, students and working technicians cann ot standardize the quality and color of locally printed material.

Streamlining the Operations; Ways and Means

To adjust to a highly - competitve environment, Filipino printing firms need to increase production and cut costs. This can be done by investing in new technology and by training its workers while providing for attractive compensatlon packages. Other innovative solutions are: standardization of each stage of the printing process, specialization in services and products. training of clients and end-us ers on the technology and values reorientation of workers and management.

1. Training the workers. The lack of potential skilled technical operators in the industry is due to the absence of good job opportunities. Short training courses, such as those offered by the Philippine Printing Technlcal Foundation, are aug menting the immediate need for skilled manpower.
2. The long-term solution being considered by the government, through the Printing lndustries Board Foundation, is to create a graphic arts institute. Various industry groups have already agreed to support the project.
   Tapping new technology. To spur investment in brand new equipment, there is a ne ed to for greater and active govemment support in facilitating grants and credit schemes for printers.
3. Standardize work processes and product types. To increase professionalism in the industry, there is a need to establish uniform work procedures and methodologies and define quality standards for both products and raw materials used. This can start in government and later affect the private sector.
4. Specialized products and services. Firms could choose to specialize in the type of products and services that they give. This will allow them to improve their technical skills in one area (such as in security or continous forms printing) or product (such as paper bags and greeting cards) and in the long run increase efficiency in production.
5. Familiarize the client/end-users in technology. Empowering the client with need-to-know basics regarding the printing process speeds up work and eliminates re-prints. This translates to the efficient use of resources and reduction in production costs.
6. Values reorientation of workers and management. Workers and management need to break non-productive habits and practices. Resources should be streamlined and non-performing assets should be removed. More than this, all employees of the company must agree on standards and objectives of the firm towards its clients.
7. Cutting costs. To effectively reduce production costs, several facts have to be considered; majority of press operators never attended a technical school, most are high school graduates only, available equipment manuals are too technical to be understood and production managers are not all technically proficient.