Thirst for Innovation Drives Continued Growth

For the fifth consecutive year following the economic downturn experienced in 2001, domestic demand for packaging machinery will increase. A U.S. purchasing plans study conducted by the Packaging Machinery Manufacturers Institute (PMMI) predicts that packaging machinery sales will grow to $5.854 billion in 2006.

PMMI attributes the continued growth trend to the sustained growth of the U.S. economy and actions taken by industry. According to PMMI, manufacturing organizations have made efforts to reduce costs and improve productivity by expanding packaging line automation and installing equipment with the latest technology.

“Machinery purchasers,” says Charles Yuska, PMMI president, “recognize the inherent benefit of incorporating the latest packaging technology into their lines in order to strengthen their existing operations. Whether the reason is reducing maintenance costs, increasing line speeds, or raising productivity, packaging machinery end-users are looking for innovation.”

Much of the continued growth can also be attributed to strong cash positions held by corporations and improved rates of capacity utilization in conjunction with the sustained growth of the U.S. economy, the study finds. The PMMI study represents the collective voice of 446 decision makers who are responsible for 8339 packaging lines in 1123 plants throughout the U.S. market. The market is divided into eight key segments. Five of those segments defined in the study are expected to increase expenditures for packaging machinery this year. The largest increase in spending—10 to 12%—is predicted to come from the personal care products segment. The pharmaceutical and medical segment is expected to only increase by 1 to 3%. The study indicates that 62% of the respondents plan to either increase their spending or keep expenditures at their 2005 levels.

The purchasing plans forecasts reflect macroeconomic instructions that indicate an increase in aggregate capital spending for 2006. Corporate profits are also expected to continue to increase, but at a slower pace than in 2005. In addition to the macroeconomic assumptions that are driving an increase in capital equipment spending this year, the end-users who were surveyed for the study also indicated several market-specific factors, trends, and expected developments that they thought contributed to growth in packaging machinery sales this year. They pointed out a growing trend amongst end-users to recognize the benefits inherent in new machinery technology and to encourage further replacement of older machinery. And further stimulating demand for new units is end-users’ collective sense of urgency to reduce labor costs and improve productivity through expanded packaging automation.

The study suggests that a need for additional packaging capacity is likely to emerge on the heels of the predicted strength of consumer spending during the first half of 2006. And the continuing focus by consumer-product packagers on developing innovation in package design, configuration, and material is likely to yield further dividends in new machine demand.

Another market driver end-users cited is the strong influence of super stores and retail chains on packaging requirements, such as radio-frequency identification tagging and package size requirements like bundling or unit-dose packaging. Further attention to worker ergonomics, product security, and safety issues related to packaging machinery is expected to remain an ongoing trend, the study says.

 

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