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Arlington, Va.; July 21, 2008 — Consumer and industrial
goods companies have adjusted their predictions for 2008
packaging machinery spending only slightly, according to PMMI’s
Spring Update to the Purchasing Plans Study. Interviews and
surveys for use in the update were conducted in April and May
2008, and initial research took place in December 2007 and
January 2008.
More than
half of the respondents said they would stay on track with their
packaging machinery purchase plans for 2008. The remainder were
split evenly between increasing budgets and scaling back.
As in the
initial study, Foods (+1 percent to +3 percent) and Personal
Care Products (0 percent to +2 percent) expect to see growth
over 2007. The remaining six categories anticipate moderate
declines: Beverages (0 percent to -2 percent); Pharmaceuticals
and Medical Products (-1 percent to +1 percent); Chemicals (-1
percent to +1 percent); Consumer, Commercial, and Industrial
Durables/Hard Goods (-1 percent to +1 percent); Paper Products,
Textiles, and Other Non-Durables (-2 percent to -4 percent);
Converters, Printers, All Other (-3 percent to -5 percent).
“The
packaging machinery market’s performance seems to be in line
with today’s broader economic picture and the slowness all
industries are facing right now,” said Charles D. Yuska,
president & CEO, PMMI.
Looking at
the overall packaging picture, PMMI’s updated research predicts
an increase of 0.4 percent over 2007 in packaging machinery
spending vs. a 0.6 percent prediction in the initial survey,
bringing the year’s anticipated spending to $6.292 billion, just
slightly less than the $6.304 billion predicted earlier in the
year.
This
report marks the first time PMMI has issued an update to the
Purchasing Plans Study, and asked respondents to re-examine
their earlier responses in light of the rapid economic changes
taking place so far this year.
Forecasts
and associated findings in both editions of the report were
based on telephone interviews and online surveys conducted in
December 2007 and January 2008 (initial report), and in April
2008 (update). The 511 decision makers represented,
collectively, 1,564 US plants and 9,000 packaging lines.
Cuts and Boosts Balance Out
More than
half of the companies surveyed (55.6 percent) said they would
not change their purchasing plans for the year. Of the
remainder, 22.5 percent say they revised their budgets higher;
21.9 percent have cut back. Mid-sized companies (six to 25
packaging lines) had the highest rate of budget increases (25
percent), and larger firms (more than 25 lines) had the highest
rate of budget cuts (29 percent).
Interestingly, the magnitude of the changes — i.e., the percent
change in dollars from the original projection — is roughly
equal between the groups. Effectively, increases and decreases
cancel each other out.
“Packagers
are bringing in new machinery for two leading reasons: to
accommodate new products and to increase capacity for existing
products,” said Yuska, noting a variety of reasons packaging
machinery buyers are maintaining or increasing their 2008
budgets:
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Upgrades to increase speed, productivity and/or efficiency
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Reduce maintenance needs and increase uptime
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Increase output
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Accommodate new product lines
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Higher-than-expected demand for products
- Heavy
emphasis on product safety, security, tracking and labeling.
On the
other side of the spectrum, weaker-than-expected demand and
economic uncertainty have led to project cutbacks, delays and
cancellations. Increasing costs for raw materials and energy
spurred budget cuts for 15.9 percent of the companies adjusting
their plans downward. For 10.4 percent of the packagers
increasing their budgets, however, those same increased costs —
which bump up the price of the machinery — are the reason.
Sustaining Sustainability
It’s clear
from PMMI’s Purchasing Plans Study that sustainability is
playing a specific role in many firms’ (48.3 percent of the
sample) decision to order packaging machinery this year, most
frequently (30.5 percent) to improve efficiency and address
issues such as energy use and greenhouse gas emissions as well
as general production costs and material waste.
About a
quarter of the respondents (24.2 percent) said “sustainability”
is a factor because of customer demands and requirements. But
that’s just the beginning, Yuska said.
“The most
influential customers look at all facets of packaging
sustainability when making buying decisions, so
sustainability-related decisions in packaging are at least
indirectly influenced by major customers,” he noted.
Sustainability-related issues that affect packaging machinery
purchase decisions include: accommodating new packaging styles
and sizes (19 percent); accommodating new packaging materials
(16.8 percent); reducing the amount of packaging materials used
(11.6 percent); to increase product shelf-life and quality (6.3
percent) and to meet management expectations (2.1 percent).
“North
America is the largest packaging machinery market in the world —
and with trends in marketing and sustainability, we’re confident
it will remain significant,” Yuska said.
He added,
“PMMI’s industry research shows that packaging machinery
customers are looking for solutions to challenges such as
accommodating new products and increasing efficiency — our
members are working with their customers to find solutions, and
because PMMI now includes the entire packaging supply chain,
they’re in a better position to achieve that goal.”
For your
copy of the Spring 2008 Packaging Machinery Plans update, visit
PMMI.org. The study examines each of the eight listed markets in
detail and is free to PMMI members. Contact Paula Feldman, PMMI
director of research and surveys:
pfeldman@pmmi.org; 703.243.8755.
About PMMI
PMMI is a trade association with more than 550 member
companies that manufacture packaging and packaging-related
converting machinery, commercially-available packaging machinery
components, containers and materials in the United States and
Canada. PMMI’s vision is to be the leading global resource for
packaging, and its mission is to improve and promote members’
abilities to succeed in a global marketplace. PMMI organizes the
PACK EXPO trade shows: PACK EXPO International, PACK EXPO Las
Vegas and EXPO PACK México. Learn more about PMMI at
pmmi.org.
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