A Wapping surprise for Ireland?

Rupert Murdoch is poised to fire a first shot across the bow of the Irish newspaper industry as he pushes on with plans to build a printing plant that will supply readers on both sides of the Irish border.

The proposed £20m investment is aimed at permitting the media mogul's five British titles to be printed locally, perhaps with some Irish content, and sold at prices much lower than those of domestic papers such as the Irish Times and the Irish Independent.

Irish print unions fear a repeat of Wapping that would reduce their considerable power. Irish newspaper publishers, for their part, do not relish fresh competition from a man who has already taken business away from them by transporting his national titles into Ireland from Britain and selling them at lower prices.

News International currently spends about £5m a year transporting his titles across the Irish Sea. Local printing would allow greater flexibility, not only on price but also on pagination and size.

By international standards, Ireland has a plethora of titles: Dublin is the only city in Ireland or Britain with two evening papers, while no fewer than five Irish Sundays slug it out with air-freighted British imports. Rupert Murdoch appears convinced there is room for further growth, probably at the expense of Irish newspapers.

He can certainly compete on costs, which are higher, in proportion to sales, in the Irish market than in Britain. Distribution to rural areas is one reason. And advertising revenues are lower in line with the country's 17 per cent unemployment rate. Most significantly, strong union traditions have meant that labour costs remain higher than in Britain.

Mr Murdoch is not the first to see the advantages of supplying the Irish market directly. A joint venture between United Newspapers and IN on the Irish Star has married home-produced Irish news and sport with UK features to generate daily sales of more than 70,000 for the title. Like the garish tabloid the Sunday World, it operates on slimline overheads away from the company's Middle Abbey Street city base.

The Mirror is already printed in Northern Ireland, and sold on both sides of the border. News International's new plant, backed perhaps by Spanish or Australian interests, would also be built in Northern Ireland, possibly with state grants.

Mr Murdoch's designs come at a time of turmoil in the densely populated newspaper industry, where no fewer than 12 home-produced national titles vie for a share of a tiny market.

The Irish Press group, until now one of the major players, is on the verge of financial melt-down. Its rescue by the largest Irish publisher and hitherto its main rival, Independent Newspapers, against a rival bid by the Sunday Business Post with backing from Conrad Black's Telegraph, has become a battle royal, with the state Competition Authority alleging abuse of a dominant market position, a charge IN's owner, Tony O'Reilly, disputes. IN controls fully 52 per cent of the Irish newspaper market. The government will make a final determination following further consultation with industry.

Underlying the crisis is thecompetition from lower-cost imported UK titles. British newspapers sell about 140,000 copies every morning in Ireland, compared with 400,000 for Irish titles. The competition on Sunday is closer: about 790,000 for Irish papers and 415,000 for UK titles.

The Competition Authority has asserted that there are several markets in Ireland, and views the UK import and Irish domestic sectors as being distinct. All the same, that view may change with the growth of "split run" newspapers with mixed Irish and British content.

Building the plant is a fallback position for Mr Murdoch. News International had originally planned to buy Drogheda Web Offset, south of the border. The deal collapsed last year after the Irish Print Union rejected the Wapping-style wage proposals.

The union believed the deal would have threatened conditions at IN, where the union has more members, and where Mr O'Reilly has brought in the cost- cutting David Palmer, formerly of the Financial Times. After Mr Murdoch retreated, IN took 24.9 per cent of the Drogheda firm, and is negotiating further redundancies. Cost-cutting measures are likely to accelerate.

Mr O'Reilly is trying to convince his domestic competitors to back his plan for a state-of-the-art printing plant which they would all use. One selling point: the need to band together to see off the threat from interlopers.