Despite their exporting successes, many U.S. packaging-machinery manufacturers have lost ground to foreign competition in recent years. Here is a brief overview of the packaging machinery industry.

The total United States market for packaging machinery in 2008 was worth $6.3 billion, with domestic manufacturers posting $4.8 billion in sales, according to the U.S. Census Bureau. The Bureau’s 2007 Economic Census indicates that 551 companies manufactured packaging machinery in the U.S. in 2007, and most producers today are small, with nearly 64 percent employing fewer than 20 employees.

Manufacturers of processed food and beverages represent approximately 55 percent of the packaging machinery consumption. Pharmaceutical manufacturers account for another 10 percent. Other significant packaging machinery end-user segments, including chemicals, personal care products, hardware and paper products, account for another 20 percent.

Many of the country’s packaging machinery manufacturers are successful exporters that do business with customers worldwide.

Nonetheless, the U.S. industry has lost ground in recent years to foreign competition.

Imported packaging machinery worth $2.2 billion accounted for 39 percent of the domestic U.S. market in 2007, up from 26.2 percent in 2002. Exports worth $787.4 million represented 14 percent of total shipments in the same year, down slightly from 15.1 percent in 2002.

“Not surprisingly, the recession has affected both U.S. exports and imports of packaging machinery,” a recent study from the International Trade Administration says. “Exports and imports of packaging machinery both peaked in 2008, at $863.2 million and $2.3 billion, respectively. In 2009, exports fell 16.4 percent to $721.8 million, and imports fell 28.8 percent to $1.6 billion.”

For the most part, U.S. packaging machinery manufacturers’ leading competitors are from Europe: Germany, Italy and several smaller northern European countries. Japanese manufacturers are major, well-established competitors. Imports from China have also grown strongly in recent years.

Spending on packaging machinery in the U.S. showed growth in the third quarter of 2010. Comparing the third quarter of 2010 with the same quarter in 2009, the Packaging Machinery Manufacturers Institute‘s (PMMI) index for the market as a whole was 62.7, which is 12.7 points above the midpoint of 50, according to the latest reported data.

Investments in the food (66.5), beverage (65.9) and pharmaceutical/medical devices (65.9) segments are expected to outpace the market as a whole. Looking to the fourth quarter of 2010 and into 2011, only 12.9 percent of respondents expect to cancel, delay or decrease projects, while the rest expect to increase or maintain their purchasing rates.

When it comes to initially scheduled projects, all market segments indicated expansion, some more than others. Slower signs of expansion were seen in the chemical (55.6), cosmetics/personal care (52.2), and paper and other non-durables (50) segments. At the other end of the spectrum, the food segment (60.1) indicated the fastest expansion.

Through September, total year-to-date packaging machinery exports were up 4.66 percent, helped along by double-digit export increases to Canada and the United Kingdom.

As 2010 winds down, packaging machinery purchases should continue to increase through the close of the year, according to the PMMI’s fourth-quarter purchasing index. Most segments show an increase in spending over the third quarter, with the largest in durables/industrial/hardware and the smallest growth in cosmetics/personal care.

In practice, packaging machinery includes certain types of materials-handling equipment, such as conveyors and accumulators, as well as specialized printing and graphics machinery. Demand for these and other conventional materials-handling products — including industrial trucks and lifts, hoists and cranes — should benefit from the recovery in developed nations, particularly the U.S.

Global demand for materials-handling products is projected to rise 7 percent per year through 2014, approaching $119 billion, according to a recent study from the Freedonia Group. Demand will benefit from the key U.S. market, which is among the fastest-growing markets and comprised more than one-quarter of world growth through 2009. (Demand growth in the Asia/Pacific region will also outpace the global average, with India and China forecast to show the strongest growth among national markets.)

Despite a modest outlook in the short term, U.S. demand for materials-handling products is expected to rise more than 7 percent per year through 2014, according to Freedonia. Gains will result from a boost in manufacturing output, which plummeted in 2009 due to the recession.

Related

The State of Machine Equipment Manufacturing

Packaging Machine Market to Grow Through Recession?

The Road to Recovery for Packaging Machinery

Resources

Packaging Machinery: Sustainability and Competitiveness
by Padraic J. Sweeney
The International Trade Administration, September 2010

Third Quarter Demand for Packaging Machinery Shows Growth
The Packaging Machinery Manufacturers Institute, Sept. 23, 2010

Monthly Trade Stats: Exports Up 4% Through September
The Packaging Machinery Manufacturers Institute, Nov. 18, 2010

PMMI Purchasing Index: Growth Continues
The Packaging Machinery Manufacturers Institute, Dec. 2, 2010

World Material Handling Products – Study #2687
The Freedonia Group, October 2010