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Main Lebanese Companies :
Industry

Industry

The Lebanese industry will face some major challenges in the coming years. This sector is one of the most important in the country as it represents a main source of employment. The challenge will be to keep its level of employment and improve the competitiveness in a non-favourable environment.

The Lebanese industrial sector is not very diversified, with less than ten sub-sectors, among which :

- The plastic industry : Leading companies are producing containers, tubes, domestic items, and advertising materials. Some of these are very competitive and have established production units outside Lebanon.

- Textile : Spinning mills, and readymade, knitting and weaving factories are the main components of the Lebanese textile industry. It is very export oriented with more than 50% of production sold abroad.

- Furniture industry : thanks to a sustained internal demand, the leading companies in this industry have implemented modern production processes and are now competing on foreign markets

- Paper industry : This sector also invested heavily in modernising production tools.

- Marble industry : Using up-to-date equipment, this industry grew with the domestic demand generated by the reconstruction. It is now exporting to the Gulf and to Europe.

- Cement industry : Right after the war, this was among the main industrial products and is now dropping as major infrastructure projects have been completed.

- Wood industry : This is a very fragmented industry, ranging from door manufacturing, to mousharabieh and traditional furniture…

The Lebanese industry is usually fragmented and often family owned. The major manufacturers hiring more than 50 employees represent less than 1% of the total number of industries in the country.

But one major step for the Lebanese industry would be to improve the quality of production, since regional competition is getting tougher and Lebanese goods are suffering from cheap imported products.

Simultaneously, the cost of production of Lebanese goods does not allow export towards the regional markets. This high production cost is due to an educated work force, social security contribution costs and the cost of energy sources (electricity and fuel). Hence, replacing industrial production with a comprehensive marketing plan is widely needed.

Lebanese companies able to produce quality and value added products are already doing well on foreign markets, however they are the exception. The whole sector would have to capitalise on the image of quality that Lebanon boasts, to concentrate on smaller scale, higher value added production. Furthermore, Lebanon is in the process of entering the WTO and is about to sign into the Euro-Med program. In this framework, substantial reduction on custom duty taxes have already been implemented. Signing these agreements (especially Euromed) will create a free trade zone between all the countries bordering the Mediterranean Sea.

If this is an opportunity for companies prepared for such changes, it is also a danger to the unprepared. Government programs have been established in order to enable the small and medium sized industries to benefit from the opening of these markets. Two of these are the Industrial Modernisation Program that will create a hands-on business advisory service and providing technical assistance to companies in the sector and in other areas of manufacturing industries, the other is elcim (see : www.elcim.info)


Yann Rotil
February 2004
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