SMALL CAN BE BEAUTIFUL

Lebanon 2012 | INDUSTRY | REVIEW: INDUSTRY

Local industry has a knack for artisan and high-quality goods, though the bigger players in heavy industry should not be forgotten.

The unbreakable spirit of Lebanese industry remains a major employment and GDP generator, and currently the sector makes up one-fifth of GDP. While most industrial production is for local consumption, exports also remained significant in 2010, with the industrial sector raising its export levels by 27% over figures from 2009. Challenges remain in terms of energy costs, yet industry has recently been able to grow at around 20% a year, according to statistics from the Association of Lebanese Industrialists (AIL). The AIL has set out its aim of advocating a policy of balanced industrial development across all regions of the country, a determination echoed by the Investment Development Authority of Lebanon (IDAL), the goal of which is to “encourage investment through commercial agents, focusing on geographically developing areas that are split into three [varying] economic zones," Nabil Itani, Chairman of IDAL, told TBY.

The main export sectors include food and beverages, which accounts for 8% of the country's exports, chemical products (7%), metal products (13%), electrical equipment and products (16%), and jewelry (27%). Further significant sub-sectors include wood products, textiles, transport machinery and equipment, non-mineral mining products, and leather.

THE WORKFORCE

According to the results of a 2007 census carried out by the Ministry of Industry (MoI) with the support of the Association of Lebanese Industrialists (ALI) and the UN Industrial Development Organization (UNIDO), there are upwards of 4,000 establishments with more than five workers that make up the sector, and all together they employ over 80,000 workers. Diversification remains illusive, and activity is centered around 10 industries that employ 87.3% of the workforce in the sector: food products and beverages, other non-metallic mineral products, fabricated metal products, electrical machinery and apparatus, chemicals and man-made fibers, furniture and other manufactured goods, pulp, papers and paper products, rubber and plastic products, printed matter and recorded media, and machinery and equipment. These sectors also generate 90.7% of total value-added and were responsible for 94.6% of yearly industrial investments.

The focus is on light industry in Lebanon, with 78.2% of total enterprises considered small establishments employing between five and 19 workers; however, this only equates to 33.6% of the workforce. A larger 45% of the workforce are employed in large industries, yet companies employing 50 people or more account for only 7.1% of the total. The Lebanese also display strong entrepreneurship, as 23% of the total workforce in industries employing between five and nine workers are owner-operators, compared to the global average of 10%.

The food and beverage industry is the primary employer, providing work for 25% of the total workforce in the industry sector, as well as 25% of total industry output. Second on the employment chart was other non-metallic mineral products, including cement and cement products, with just under 11,000 workers. Third place was occupied by the fabricated metals sector, with a heavy focus on steel. This sector employed just over 8,000 workers at the time of the census.

THE SPREAD

Industrial pockets remain fragmented around Lebanon, though the sector has traditionally had a significant presence in rural areas. The largest industrial establishments are located outside of the central province of Beirut, especially in Mount Lebanon, North Lebanon, and the Bekaa. More remote regions, however, have remained less attractive to medium-sized businesses. Mount Lebanon hosts 49.8% of the country's industrial units, Bekaa 18.4%, North Lebanon 12.8%, Beirut around 6%, and South Lebanon and Nabatiyeh 12.9%. Mount Lebanon's status as a magnet for industry results from its proximity to Beirut, where it benefits from logistics and services supply, yet doesn't claim the high costs associated with the capital. Other regions thus suffer due to their distance from Beirut.

Total industrial output at end-2007 hit $6.8 billion, equating to $1.68 million per establishment. This is a vast increase over the 1998 total of $542,326. As industrial exports were up over 16% in April 2011, it seems worries that unrest in the region might cause a slowdown may be unfounded, and the challenge going forward is to diversify the industrial base and attain a more even spread of enterprises across the country.