The Philippine Printing Industry in the Globalization Era

An Industry Report presented by Mr. Romeo G. dela Cruz, in his capacity as Trustee of PPTF, during the 7th FAGAT Information Exchange Meeting held on March 2004 in Kuala Lumpur, Malaysia. 

In the Philippines today, a number of very progressive printing companies attribute their success to the quality of leadership and vision of their managers. They do not attribute such success to a miracle, but through a right mix of knowledge, skills, and the proper attitude of those in control of resources that are always scarce as they are changing. 

All of us here have probably heard of the 'nanosecond culture', where the 'quick' dominates the 'dead.' The 'quick' manager positions his company at a vantage point that can easily grab every opportunity, utilizing his organization's maximum strength to overcome threats. On the other hand, the 'dead' is prone to procrastination, reactive rather than pro-active in addressing issues and problems that confront his organization. He even supports the status quo, thus gaining nothing except his forced early retirement and the untimely demise of his organization. 

The 'quick' manager can immediately and easily tell that modern technology has gifted humankind with amazing facilities to improve our way of life, including capturing and duplicating monotone and full-color images faster, better, and cheaper. Thus, the 'quick' manager utilizes such new technologies to his ad advantage to stay ahead of competition. 

But what if even the 'quick' manager cannot afford the price of such new technologies? I think this is a valid question in the light of the fact that over 80 percent of printing companies in Asia are small businesses with only 20 or less number of staff. 

No Escape 

The speed by which new technologies are being introduced into the market is truly unnerving. A computer unit that you buy today is likely to be obsolete in three to six months. The imagesetter, a prepress equipment that enables its users to process data from the computer into film, is being threatened into extinction by a new machine that processes data from the computer into a plate, ready for mechanical printing. After this, what is next? 

In printing trade exhibits, we bear witness to new developments that leave us gasping in fascination and disbelief – large format printers that print on different substrates, computer-linked multi-process printing machines that do pre-press, press, and post-press jobs in one operation, and other printing possibilities that appear as limitless as man's imagination.  

Back home, there is a mad scramble for new knowledge and information, a race to set up new standards to raise our quality of printing. Suddenly, we are conscious of the use of the densitometer, in the truth of the oft-repeated adage that without measurement there are no standards, and, therefore, no quality control. 

We have to confess to this because for too long, we have ignored the clamor of our local print users for better quality print jobs, knowing very well that they had to travel to Hong Kong or Taiwan to find better quality printers. It was an expensive alternative, so most print buyers had to rely on local printers for their jobs. 

But with the advent of globalization that saw the entry of printers from neighboring countries, like Malaysia and China, Offering better quality printed products at lower prices, local printers found themselves suddenly being jolted out of their complacency. While the more progressive local printers saw the threat and embarked on a massive restructuring effort geared at improving the quality of their printed products and offering them at lower prices, the less proactive Filipino printers saw their market share being taken over by local and foreign printers with new technologies and more efficient printing systems.  

Since small printers with hardly any capital to upgrade their equipment account for over 90 percent of printers in the Philippines, this new development spelled an impending disaster for the industry. We, at the Philippine Printing Technical Foundation (PPTE), had been quick to recognize the problem and sought the assistance of our foreign friends to help us find and develop ideal learning models. 

The European community has been quick in heeding our call and in offering technical assistance. But of course, expectedly, as in all foreign assistance programs, the technical assistance agreement is not without a business agenda. European companies are always sourcing for new markets to use their technically advanced printing systems, and have found in the Philippines an ideal market for their printing products and processes. 

On the other hand, the Philippines needs new technologically advanced printing systems and technologies to improve its printing quality and productivity, and found in the EU an ideal partner in this pursuit. We have just completed the technical assistance component of the program and are now in the midst of building a partnership between our two countries through data exchange and business matching. 

Speed, Workmanship, Price 

Now, more than ever, we cannot afford to relax our guard against encroaching competition spawned by new technologies that have redefined the norms in printing. The new norms, in so far as the industry is concerned, are speed, workmanship, and price --- with each norm changing every so often with the advent of newer technologies offering better, more cost-efficient and faster services. 

In the highly competitive world of printing, companies who deliver faster print better quality jobs, and offer lower prices win the bid. Loyal customers have ceased to exist. Their only loyalty is to price, assuming workmanship and speed are givens. 

Some of us have embarked on a massive re-engineering effort to meet these new standards and have been aptly rewarded with good business. Unfortunately, others have to agonize while print jobs are taken away right under their very nosed because they are unable to compete with those who are more equipped with newer equipment and better technologies, by those with financial muscle to upgrade their facilities. 

In the frenzy of our printers' unnerving struggle to survive, some of us have lost touch, unable to explain their failure, while a few others march ahead. Some are asking themselves, ' what happened', as if a magic spell had been cast over their once profitable operation. Our association has long ago foretold of this possible scenario and has thus given a timely warning to many of our printers. Unfortunately, not everybody listened. And even if they heard the warning loud and clear, many of our printers did not have the resources to brace themselves for what is happening now in the industry. 

The cost of new printing equipment, pre-press facilities, and other cutting-edge printing technologies wrapped in compact discs are too expensive for most of our small print shop owners, who represent a sizeable percentage of our industry. 

While, indeed, a number of our printing companies have closed shop, our country's experience in addressing the problem of lack of resources in acquiring better and newer technologies to cope with the demands of the times is not all heartrending melodramas. A 'quick' Filipino manager boldly borrowed funds to upgrade his entire printing operation, from pre-press to press, and is now reaping the fruits of his success from printing jobs of multinational companies. Another 'quick' Filipino printer took a big leap from an operation that used to have only three units single color machine five years ago to three units four-color printing equipment at the moment, with two silver medal awards to boot from the Asian Print Awards. 

A large textbook publishing company is Metro Manila had decided to totally close its typesetting department and contracted some free-lance typesetters and service bureaus to undertake this chore for them. Amazingly, the publishing company did not just survive, but has regained its profitability. Another distressed printing company resuscitated its almost dying operation by selling off its pre-press and press facilities, and concentrating mainly in post-press or bindery. Another firm on the brink of collapse decided to sell its press and post-press equipment to concentrate on pre-press and publishing its own coffee table with amazing success. 

One of the Philippines' largest publishing outfits decided against acquiring additional full-color machines, but acquired the services of a foreign consultant to assist them in electronically feeding their files to other printing suppliers in printing hundreds of thousands of full-color publications.  

Obviously, the crisis situation in our country has forced many of us in the printing industry to review our situation, assess our capabilities, determine our strengths and weaknesses, and establish our choices. 

Service Bureaus 

One choice many of our industry players have made in the face of the crisis is to determine individual strengths and work on them, a welcome development after years and years of distrust, of seeing each other as a competitor out to steal a job at the slightest opportunity. Such distrust has spawned the growth of too many full-service printing companies, with a few companies daring to out-source certain services for fear of losing an account or two to a competitor-cum supplier.
A printing company's effort to do everything in his press – from pre-press to post-press – has adversely affected profitability due to its enormous overhead costs. The availability of more cost-efficient printing systems and technologies has prodded many local printers to downsize their operations and concentrate on services where they have better-established facilities and expertise. 

A number of companies are selling off their excess equipment and are using the funds derived from them to upgrade the facilities in areas they wish to specialize in. This has spawned the growth of more color separation companies, graphic design studios, binding services, and other printing-related services. Many more are undertaking the same tack, providing enormous opportunities for foreign suppliers of high-end printing hardware as well as prepress software.  

Information and Computer Technology 

By and large, the Philippine printing industry is computerized and has integrated the use information and computer technology in various aspects of the printing process. However, there are still a few traditional printers specializing in the production of receipts, letterheads, and invitations through letterpress. 

With the entry of more and more baby offset machines that could print the size of an A3 and could do numbering, letterpress machines and their operators are slowly being pushed into small city alleys and are fighting an almost helpless battle for survival. 

While the drop in the cost of computers has increased their usage among local printer, still not too many can afford high-end printers and film processors to improve print quality. A study conducted by the National Census and Statistics Office (NCSO) in the Philippines released the following reasons for the failure of some companies to computerize.  

• Lack of financing  
• Lack of equipment  
• Low priority by management  
• Lack of technical expertise  
• Obsolete machines  
• Not relevant to business  
• Lack of appreciation  
• Lack of telecommunication facilities  
• Lack of information 

In terms of financing, very few financing institutions show interest in providing supports to the industry. If at all, they only accept for financing brand new printing equipment and certain preferred brands. While leasing is gaining popularity in the Philippines, again only certain brands are acceptable, one of which is Heidelberg. 

Financing problems result not just in lack of equipment, but also in the proliferation of obsolete and uncompetitive machines that rate very low in quality and speed. Most local printers are hardly able to afford an imagesetter used for processing graphic and text files into films.  

E-Commerce 

While many printers have already ventured into digital production, not too many of them are engaged in e-commerce transactions, defined as 'the sale or purchase of goods and services, whether between businesses, households, individuals, governments, and other public and private organizations, conducted over computer-mediated networks. 

Simply stated, an e-commerce transaction is a deal done over the internet. It includes the production process and control, processing of customer's orders, electronic payment, auditing/financial information system, budget preparation, human resource information system, automated employee services, electronic selling, inventory management, purchasing, research and development, ICT education/training, software development for business and engineering applications, internet service provider, web hosting, website management, animation, project management, data management, and others. 

E-commerce in the Philippines is still in its infancy stage. Among our country's unremarkable 3,153 ICT users, only 2.2 percent are e-selling, while 2.9 percent have made e-commerce purchases in 2001. These figures are obviously not encouraging, considering that a number of printing businesses could readily be sourced through the internet.  

To encourage transparency and to deter graft and corruption, the Philippine government itself has launched a website where it posts its requirements for bidding. A printer has to simply apply for accreditation, after which he could already join in the bidding for the government's printing requirements, but apparently not too many of our printers are able to take advantage of such business opportunities. 

Conclusion 

While, indeed, Philippine printing companies are in a mad scramble for new technologies and printing systems, they are likewise exploring other sources for their printing equipment, supplies and other needs. 

For this we look forward to Japan and other Asian neighbors to actively promote their products in our country. If we have opened our doors to EU, the more reason we have to open them to you, with whom we share a closer affinity. 

While we are impressed by the quality of printing equipment and supplies from Europe made available to us through their Philippine partners, we have heard also so much of the same items coming from within our region, particularly Japan, China, and Korea. Unfortunately not too many of them are available in our country. 

One way of creating awareness for printing-related products from Japan, Korea, and China is to launch a similar technical assistance program provided by the European Union to Filipino as well as other Asian printers. With the above three countries' vast stake in graphic arts technology, we realize that this could be readily done sooner than later. 

In the FAGAT forum conducted in 2001, we already spelled out and laid open our problems and concerns. Today, the same problems continue—only this time, they are more pressing and real. Among these problems we hope we could collectively resolve as a body are:  

• Lack of formal courses in printing and publishing,  
• Limited supply of skilled labor  
• High operational costs.  
• Tight competition among industry players  
• Unreliability of paper supply in the domestic market  
• High investment costs  
• Lack of reliable statistics on the industry 
• In the same forum, we had suggested the following strategies to strengthen our firms' strategic advantages. Among these are:  
• Invest in new technology  
• Invest in human resources  
• Focus on certain segments of the market  
• Offer specialized products and services  
• Standardize work processes and product types  
• Work closely with customers  
• Consolidate business  
• Develop competencies in IT-related activities 

While, indeed, the above strategies have helped a number of printing companies survive the onslaught of globalization and digitalization, there are still a good number of them that failed to adopt these strategies and are now hopelessly struggling to survive, citing the same reasons for companies' failure to adopt ICT as earlier indicated. 

With the lessons of noncompliance too great to ignore, many companies are now willing to embrace these recommendations. Those who thought that ICTs and new technologies were irrelevant. Those who had little appreciation for emerging development in the industry. Or those who simply lacked the information that stressed the importance of technologies have long ago been forced into early retirement. 

What we have left in the industry are survivors – those who are willing to learn and adopt changes in their work environment, and to face the challenges of globalization with more vim and vigor. It is in the context of this experience that we wish to extend our hand in a call for partnership and cooperation with our Asian neighbors in the fulfillment of the following objectives: 

1. Regional Printing Trade Show:
A regional printing trade exhibit showcasing not just printing equipment, printing management software, color management technology, color density measuring instruments, consumables, and paper stock, but also regional service bureaus in prepress, press, and postpress. Each member of FAGAT is entitled to a country booth displaying country profile, printing industry profile, a listing of printing equipment manufacturers and consumable suppliers, accredited service bureaus, etc. Each member country shall designate an institutional partner to help identify possible exhibit participants and encourage them to join the regional trade fair. The Philippines is willing to host the first of such regional trade exhibit through Printech slated in May 2005. 

2. Technical Information Exchange:
In the light of the speed by which technologies are developed, launched, and replaced by newer technologies, a continuing information update should help regional users to determine what's in and what's out in the printing business. Printing experts from Europe have helped Filipino printer update their technical know-how and introduce them to their printing practices and processes. A similar effort could be undertaken by regional printing equipment and accessories suppliers, with the end of acquainting regional users in the application of their product and providing training to prospective and practicing trainers' in our respective countries. 

3. Business Matching:
In view of the region's very potent printing industry and possibilities offered by e-business, a wide-array of business opportunities are laid open for everyone to see and explore. The FAGAT could lead the way in the development of more graphics related business ventures among its member countries and associates, with everyone of us able to identify our strengths and weakness, and parlay them into trade opportunities for our country and a people. Perhaps, we can all sit down together in the furtherance of this objective 

Fostering Better Relationship 

While the barriers among countries, and even among continents, have shrunk and continue to shrink with amazing speed, the expedience by which regional neighbors can work together in many areas of concern cannot be taken for granted. Our closeness goes beyond physical borders. We have had over a millennium of commercial and cultural contacts. We have had shared experiences that precede history. We have a collective dream of seeing this region grow in peace, wealth and prosperity. We have connectivity that goes beyond mobile phones and satellite communication. We have ourselves – because we have the unmistakable Asian features that technology can only enhance, but never delete nor erase.