Orders for packaging machinery may have decelerated recently, but signs point to growth opportunities for packaging machinery manufacturers in the coming two years, according to the latest industry figures.

Shipments of packaging machinery from the United States grew by 8.6 percent in the latest year for which data are available (2008), reaching $1.2 billion. Modest economic growth in emerging markets as well as favorable currency exchange rates in large part drove sales, according to the latest annual report by the Packaging Machinery Manufacturers Institute (PMMI).

Exports were 20.5 percent of total shipments, up from 18.7 percent the previous year (2007), and the second consecutive year of growth.

The trade association’s latest Shipments & Outlooks Study, released this fall, showed growth for the year in seven of 18 categories:

• Pre-made bag hanging, opening, weighing, filling and closing machinery (7.9 percent);
• Dry products filling (3.8 percent);
• Palletizing, de-palletizing and check-weighing machinery (3.3 percent);
• Case and tray forming, packaging/unpacking, closing and sealing (2.8 percent);
• Inspecting, detecting and check-weighing (2.6 percent);
• Cartoning, multi-packing and leaflet/coupon placing (1.4 percent); and
• Conveying, feeding, orienting and placing (0.2 percent).

The gains, however, were partially offset by U.S. customers reining in spending in anticipation of tougher times ahead, which caused yearly domestic shipments to fall 2.5 percent to an estimated $4.68 billion, according to the PMMI report.

Meanwhile, U.S. packagers imported approximately $1.74 billion worth of packaging machinery in 2008, representing a 2.5 percent increase from the prior year. This marked a substantial slowdown from the double-digit gains made by foreign packaging machinery manufacturers in recent years.

Diminished demand from U.S. customers feeling the effects of the economic downturn — fewer capital projects, skyrocketing commodity prices, plant consolidations/closings and banks’ tight lending practices — along with a weak U.S. dollar, led to the deceleration, PMMI says.

Total U.S. domestic demand (domestic shipments and imports) decreased 1.2 percent in 2008, hitting $6.42 billion.

The solid gain in foreign billings was not enough to push total shipments growth into positive territory because, at nearly 80 percent of the total, domestic billings exerted much more influence on the overall result.

The 0.4 percent decline in total shipments of packaging machinery (excluding parts and service), albeit slight, marked the first decrease in seven years.

“It was a very difficult year for the entire industry, with pockets of strength but an overall softness in demand in comparison to previous years,” PMMI President and CEO Charles Yuska said in an announcement of the findings. “That said, this industry continued to be stable, and companies that could demonstrate value saw sales increase, especially in targeted global markets… .”

Despite the decreases revealed within the PMMI state-of-the-industry report, signs point to certain growth opportunities in the coming two years.

As we make our way into 2010, PMMI expects to see more emphasis on the following elements of packaging machinery:

• Productivity — Higher levels of automation with increased adoption of servos, monitoring and reporting software, and robotics to speed changeover and reduce faults;
• Flexibility — Robotic equipment with ultra-hygienic designs, vision capability and advanced software to expand functionality, ease of use and setup;
• Support — Reactive, interactive and proactive support services for maintenance, especially as packagers have deferred new equipment purchases and/or reduced in-house technical staff;
• Sustainability — Innovations that fall primarily into five categories: utility conservation, source reduction, recycled content, recyclability and renewable materials;
• Digital Printing — Increased use of digital printing, especially for labels and shorter runs, as digital presses continue becoming more sophisticated; and
• Safety — Adoption of Category 3 safety circuits to provide redundancy and fast reaction time and other safety enhancements, due to new safety standards in the European Union’s CE requirements, internal risk assessment initiatives, greater levels of litigation and a higher-value labor force, not to mention the safety tie-in with lean initiatives.

“2008 was a tough year for many PMMI members, but the good news is, the economy seems to be showing signs of improvement, and market trends such as sustainability, the increase in private label packaging and a considerable focus on safety are providing new opportunities for sales growth,” according to Yuska.

Resources

Shipments & Outlooks Study
Packaging Machinery Manufacturers Institute, September 2009

2008 U.S. Packaging Machinery Shipments Down 0.4%
Packaging Machinery Manufacturers Institute, Sept. 15, 2009

Packaging Trends 2010
Packaging Machinery Manufacturers Institute, Nov. 19, 2009

PACK EXPO Exhibitors and Attendees Bet on Economic Recovery
Packaging Machinery Manufacturers Institute, Oct. 13, 2009