Critical Trends: 2008 PFFC survey

In April 2008, Penton Media conducted its third research study across all segments of the converting industry to examine critical trends, including revenue, business activities, and costs of doing business. Results of this survey were compared to those of previous years. The number of completed, qualified responses to PFFC’s Critical Trends surveys continues to increase year over year. The 2008 survey resulted in 293 responses.

Executives most often spent about one-fourth of their time with current or potential clients.

More than one-third of respondents indicated that their executives spend 25% of their time with clients, a big jump over the 2006 and 2007 levels. Another one in five spend half of their time with clients.

Expanding the product line into new markets remains the best investment of company resources, according to respondents.

However, respondents are increasingly less likely to see expansion into new markets as having the greatest impact. Investment in capital equipment (25%) also is considered a wise investment.

Overall plant capacity utilization was an estimated mean 79% in 2007.

Respondents were evenly divided in terms of how their backlog changed for the last half of the year.

While selling prices increased for a majority of respondents, only four in ten saw pre-tax profitability increase.

Each primary business type is well represented in the sample. Three in ten respondents each work for an unprinted rolls and sheets or flexible packaging company. Nearly one-fourth work for a tapes, labels & tags company, and 11% work for a paperboard packaging company. The largest segment of respondents work for companies employing 200 or more people.

Sustainability efforts both helped attract new business and retain old business for most respondents.

One-third of the respondents were able to pass the increased costs along to customers, though nearly half (47%) were unable to do so.

Respondents most often reported that their customers’ revenue increased in 2007.

Less than one-third reported that profitability increased, however, with the largest segment of respondents indicating flat or no growth in profitability.

Three-fourths of respondents plan to add or expand products/services.

Printing, coating, laminating, and slitting capabilities are the most often cited additional or expanded products/services. The percentage of respondents adding printing capabilities increased over 2007, while those expanding coating capabilities declined.

Respondents were evenly split regarding the impact from imports.

Nearly half (49%) report a negative impact from imported converted products—higher than last year, but still below 2006 levels. The impact on revenue appears to have been larger in 2007, however, for those who reported a negative impact.

Imported products negatively impacting revenue primarily came from China.

Three-fourths of respondents reported imports coming from China, slightly less than 2007 respondents. In fact, the 2008 respondents were more likely to report products from India and Eastern Europe impacting revenue compared to last year.

Raw materials costs continued to increase for nearly all respondents.

The percentage of increase in costs appears to have increased over that reported last year. This year’s respondents were more likely to report increases in the range of 5%–10%, compared to 3%–7% last year.

Revenue increased from 2006 to 2007 for most respondents.

Fewer respondents reported an increase, however, and the magnitude of reported increases was lower than last year.

Volume of orders, inquiry activity, and order size all increased for a majority of respondents in 2007.

Slightly fewer respondents reported increases in volume of orders and order size this year, with slightly more indicating no change. Past-due receivables remained the same for the majority of respondents, and another 31% experienced an increase.

The majority of respondents expect volume of orders and inquiry activity to increase again this year.

The largest segment of respondents expects order size (40%) and past-due receivables (54%) to stay the same. Nearly twice as many respondents (31% versus 17%) compared to last year expect past-due receivables to increase in 2008.

Respondents also were split regarding the impact on profit margin.

Nearly one-third of these respondents (30%) reported that profit margin was down 10% or less as a result of imported converted products.

What Do You Need to Know?

Penton Media can customize a market-specific research study for you. Penton’s research team of highly accredited custom research experts is experienced and knowledgeable in specific industry sector research. Our expertise is backed by a proprietary database of more than 3 million business-to-business names, providing access to an engaged and reliable audience of willing participants for market studies. To learn more about custom research studies, contact Lynn Adelmund, director, Penton Research, 913-967-1891; lynn.adelmund@penton.com


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