U.S. Packaging Machinery Shipments Eclipse $6 Billion

Arlington, Va.—Sixteen of the seventeen machinery categories that the Packaging Machinery Manufacturers Institute monitors experienced growth in 2006, according to PMMI’s 2007 Shipments and Outlook Study. Two categories, Wrapping (18.6%) and Capping, Overcapping, Lidding and Sealing machinery (11.2%) enjoyed double-digit growth. Converting machinery was the only machinery category with a modest decline of 0.6%.

Exports of packaging machinery surpassed the $1 billion mark for the third consecutive year with $1.012 billion in equipment sold overseas, an increase of 0.5%. U.S. domestic demand, which includes domestic shipments and import figures, increased by 8.4% to $6.637 billion in sales. Domestic shipments were up 7.2% to $5.098 billion and imports were up 12.6% with $1.539 billion in sales.
“U.S. domestic demand for packaging machinery has been particularly strong for the past three years with 9.8% growth in 2004, 7.6% growth in 2005 and last year’s 8.4% growth,” notes Charles D. Yuska, president & CEO of PMMI. “While things have slowed in 2007, capacity levels remain high, and we expect consumer goods companies to continue their past buying patterns at slightly moderate terms.”

Growth Factors in 2006
The following growth factors supported the strong industry growth in 2006
• Increased focus by U.S. companies on manufacturing/packaging cost reduction andproductivity improvement to combat rising labor, energy and raw material costs.
• Continued strong cash positions among U.S. corporations.
• Increased need for highly flexible packaging machinery to accommodate shorter packaging runs with a widening range of packaging styles, sizes and configurations.
• Greater demand for turnkey packaging system projects (total line solutions).
• Favorable reception to new machinery introductions with advanced features and benefits including robotics, servo technology, faster speeds, greater packaging precision, easy packaging line integration, touch screen user controls and smaller footprints.
• Demand for machinery upgrades due to packaging format changes to support consumer marketing efforts.
• Attention made to product tracking and labeling, as well as continued pressures to add package security features to protect product integrity, prevent counterfeiting or product contamination.

“Over the past few years, PMMI has been working closely with its members to keep up to speed on the changing marketplace, and to ensure they are delivering value beyond the machinery solutions they create,” adds Yuska. “The sales numbers PMMI members are posting are clear indicators that they are meeting the needs of the customer community and are poised for long-term growth.”

2007 Shipments Moderate
U.S. packaging machinery shipments are forecast to grow at an average annual rate of 3.1% over the next three years, increasing from $6.110 billion to $6.689 billion by 2009. Growth in 2007 is expected to be essentially flat at 0.5% growth.

Market Considerations
Growth rates for 2007 and beyond are dependent on a number of economic factors, including:
• U.S. gross domestic product is forecast to grow by 2.0-2.5% in 2007, followed by stronger increases in the range of 2.8-3.2% in 2008 and 2009.
• Overall U.S. manufacturing capacity stands at 80% as of June 2007. Capacity utilization at non-durables manufacturing plants, where the majority of shipments come from, stands at 82% as of June 2007, the generally agreed upon trigger point for meaningful expansions.
• Machinery demand from overseas markets, including China, Brazil, India, Russia and Eastern Europe will grow.
• U.S. corporate profits will remain relatively solid, but companies will take a careful look at economic conditions, especially the impact of the housing market.