More than just Cedar

9 April 2008



The Lebanese film and flexible packaging sector is developing a strong export proposition, says Des King


Arguably more of a Mediterranean than a Middle East country, the Lebanon’s trading links with the rest of the world date back far longer than most of Europe. Whilst its present-day status has latterly become that of a net importer, the balance is poised to be redressed, says Raja Habre, director of the Euro-Lebanese Centre for Industrial Modernisation (ELCIM).

Lebanon not only benefits from lower labour costs, readily available feedstock supplies and on-going investment in new technology, but it also has a strong logistics network.

ELCIM’s initiatives aimed at bringing the Lebanese packaging industry into European contention have already attracted a positive response from film and flexible packaging manufacturers, several of which are on the way towards establishing a successful presence in key export markets.

Film and flexible applications represent 45 per cent of the Indevco Group’s US$800M annual turnover, two-thirds of which is now generated outside the Lebanon, says export sales manager Amal Mussalem. “Our subsidiary company Masterpak produces on average 3,000t of PE film each month, so we either export or die. Most of the major players have to look outside of the Lebanon because of our capacities.” Indevco currently sells specific flexible non-printed commodity packaging into Europe: around 1,500t/mt of stretch-film, shrink and greenhouse film.

“In Lebanon, we get better feedstock prices from our petrochemical suppliers than European converters,” he adds, “The labour cost is low here and as we are not subject to taxes and tariffs in relation to the EU, we are effectively zero-rated. Stretch film doesn’t tolerate great margins. It’s much more economical for us to ship ex-Beirut direct to the end-customer; it’s as though you have a factory in a remote area in Europe with a 10-day delivery.”

Indevco’s rate of production is matched by Rotoflexopress, which extrudes solely for its own use. As converted product, however, it goes to a range of flexo and gravure flexible packaging applications with a highly cost-competitive potential, says the company’s general consultant, Georges Ghaoui.

“We have centralized our production facility within a new purpose built US$1.5M site, and are also investing in new equipment in order to grow the business, which currently turns over around US$8M per annum.”

In addition to maintaining the largest colour capacity gravure press in the Lebanon (128cm web width and a running speed of 200m/min), the company has also recently extended its flexo operation by installing a u1.2M 8-colour Bielloni press with a 140cm web width and a potential running speed of 350m/min.

Another film producer to have recently invested in excess of US$1M in new flexo technology to help re-position itself within the export market is Thermoplast. It installed an 8-colour 120cm width press, same size laminator and slitting equipment from the Italian manufacturer Bonnardi.

Thermoplast is also planning to supplement its own capacity of 2,000t/year extruded PE grades through the import of around 500t/yr of PP as a strategy to generate new export business, says general manager, Shahe Haladjian.

‘‘We’re buying in granules from Saudi Arabia and Qatar, for which we have secured a lower rate per tonne and delivery costs specific to within the Arab community. This gives us an average 10 per cent positive cost differential over European competitors with whom we are comparable in terms of extruded film production and 8-colour flexo printed quality, but way lower on overhead.

“We are already exporting on average two containers/month to Europe, and whilst that 300t/year isn’t a huge amount, it’s a significant proposition for a film producer of our size and location.

“On the converting side, we are building up a new application niche in recycled waste disposal bags. As a commodity item that could easily be produced in bulk and warehoused locally, we’re planning to invest in a warehousing location in Romania, which would give us direct road access throughout the EU,” says Shahe Haladjian.

With over 80 per cent of its total annual output of flexo and rotogravure printed flexible packaging already going for export, Al-Moutahed is the Lebanese market leader in PE, PP, BOPP and specialist food standard grades in shrink film, multi-layered wrappers, all-around sleeving and bag applications for a number of leading European brands including Cadbury, Henkel, Dolly’s and Nestlé, for whom it has been a worldwide approved supplier for five years.

Fully equipped with flexo and rotogravure (Cerutti) printing lines, three PE film extruders, slitters, bag making and waxing machines, the company recently extended its laminating lines by investing in a u400,000 Nordmeccanica modular Super Combi 3000 system: the first of its kind in the Lebanon, and only the seventh to be installed worldwide.

Al-Moutahed sells across 26 different markets and has been active within the UK for around six or seven years. It supplies either ready-made bags or reels to a customer base including Ginnis Enterprises (West London); Byblos Roasterie; Nutcase; Arabella (roasterie & food-stuff: stocked in Harrods & Selfridges); and Nuts About Nuts.

“This is a small market; theoretically Al-Moutahed could supply the entire Lebanese market for high-end added value flexible packaging,” says the company’s general manager Mamdouh Abdallah.


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