Good News Hunting

As the show and conference circuit winds down for the year with only the Packaging Machinery Mfrs. Institute's Pack Expo (Nov. 7-11 at Chicago's McCormick Pl.) to go before the holidays hit, I've heard increasingly positive statements while good news hunting about the health of the converting industry. The caveat here is that it appears the description of good health applies to specific markets.

At Plastics USA (Sept. 28-30, also at McCormick Pl.), though a marginal show for the converting industry, the exhibitors with whom I spoke indicated improving market conditions for their products. While this show isn't nearly as comprehensive as NPE (next slated for June 19-23, 2006), the Society of Plastic Industries, producers of the show, surpassed attendance objectives and were on the whole pleased.

Presently, cost for plastic resins is off the charts as crude oil (and let's not forget natural gas, too) prices continue to spiral out of control with no new capacity anticipated. With global demand up, especially in Asia, it's no secret someone's meeting shareholder expectations.

Converters, meanwhile, are in their traditional middleman position, having to shell out the cash for higher-priced materials, trying to keep a lid on manufacturing costs, and waiting for the ax to fall as they approach consumer product companies for even modest price increases they simply must pass along to stay in business.

During the Assn. of Industrial Metallizers, Coaters and Laminators fall technical conference in Charleston, SC (Oct. 24-27), Alain-Roger Jendly, VP, flexible packaging products, of Bobst Group, Roseland, NJ, told me converters' profit margins, particularly in flexible packaging, are tighter than ever before.

By the same token and at the same AIMCAL meeting, I learned converters involved in flexible circuit laminates and pressure-sensitive adhesive coating for label applications couldn't have been more upbeat. Business for these companies is flourishing. Interestingly enough, if you can throw in a subsidiary or two in China or other Asian locations where growth is booming, you might have the perfect formula for success.

Speaking of China, recently I came across some package printing figures released at Graph Expo (held Oct. 10-13, McCormick Pl.) during an NPES-sponsored press conference for China Print 2005 (coming May 11-15 in Beijing). According to a handout tracing Chinese market growth for package printing between 2001 and 2002, it had grown by 6.7% to 80 billion Yuan. And from 2002 to 2003, turnover increased by 12% to 89.6 billion Yuan. That kind of growth is nothing to snicker at. It's substantial.

Continuing along the lines of good news hunting, the Paperboard Packaging Council released its figures on year-to-date carton shipments as of October 19. With growth at 4.4% by value and 4.3% by volume as of September, the folding carton industry is experiencing a robust recovery during the first half of '04.

Throw into this mix of good news a report from the Intl. Fresh-Cut Produce Assn., Alexandria, VA, claiming “fresh-cut produce remains the fastest growing segment in produce.” According to IFPA's report, “Fresh-cut Produce Fuels an America On-the-go,” packaged salads “are the second-fastest selling item in US grocery stores, with $2.6 billion in annual retail sales, followed by fresh-cut vegetables at $1.4 billion. The still-young fresh-cut fruit category, which reports $300 million in annual retail sales, is likely to surpass the $1 billion mark over the next three to four years.”

Many of these products come in sophisticated reclosable bags and pouches, while single-serve portions are marketed in thermoformed containers.

With all this good news, the converting industry continues to attract more competition for CPC dollars from commercial printers. John Zarwan's conference session at Graph Expo, titled “Packaging Trends You Can Use,” reported flex-packs are growing at 4%-5% annually, with labels growing in the low single digits, slightly greater than GDP. Among the 30 attendees in the audience (of which three were converters and myself), it felt a bit like commercial printers were closing in for the kill.

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