- Contract Packaging
- Leaders in Packaging
Article | December 31, 2003
What a difference a decade makes. When we launched Packaging World in January 1994, the prospects for an economic recovery were strong after a difficult couple of years following the Gulf War.
Though the threat of terrorism was as real as ever after the February 1993 World Trade Center bombing focus in the U.S. remained on the economy and streamlining manufacturing practices.
Real economic growth fluctuated between a low of 1.8% in ’95 to a high of 8% in late ’99. For the packaging business we saw capital expenditures for packaging machinery climb along with continued investment in R&D for new packaging materials and processes. As CPG companies continued to launch new products and fight for shelf space packaging became an increasingly important point of differentiation for manufacturers. In the late 90’s manufacturing began to be overshadowed by high tech and the intrigue of the Web. Whether B2C B2B or D2C the acronyms were flying. Then there was the Y2K hype—for the most part much ado about nothing. All it did was mess with company inventories and disrupt manufacturing.
With the new millennium the Internet boom went bust. Maybe it’s just as well. Maybe now the Web will evolve into a more realistic and useful tool for research communication and collaboration. Even select manufacturing sectors have begun to “do it eBay” and “googling” is now a verb.
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So in 2004 where is the business of packaging headed? From the activity at the two major shows this fall Pack Expo Las Vegas and the Worldwide Food Expo signs are the healthiest we’ve seen in a few years and packaging innovation is thriving. Packaging is not a market but a function of manufacturing and the recent economic news regarding this function is promising.
I recently had the opportunity to listen to a presentation by Marvin Zonis a political economist at The Graduate School of Business at the University of Chicago. A highly regarded authority on global affairs Zonis also heads up Marvin Zonis and Associates (www.marvinzonis.com) a consulting firm in Chicago. Though not packaging-specific for this particular meeting of packaging machinery manufacturers his presentation on manufacturing challenges and opportunities hit home with the attendees many of whom have felt the effects of reduced capital expenditures by CPG companies over the last couple of years. Zonis emphasized several interesting points including the fact that real economic growth was on the rise in 2003 reaching 7.2 percent at the end of the third quarter after hitting a low of –1.8 percent in 2001. Zonis also noted that manufacturing’s share of the GDP continues to average 17 percent the same average it’s held since 1948.
BusinessWeek has more good news. A recent issue reports that from May to October 2003 durable goods orders increased faster than in any five-month period during the 1990’s. According to the Institute of Supply Management the November 2003 ISM index—covering production orders employment inventories and delivery speeds—jumped to 62.8 percent a 20-year high. Anything higher than 50 percent indicates factory growth.
Echoing another point Zonis made the BusinessWeek report states that the first phase of the capital-spending recovery will be in high-tech and the second phase later in 2004 will involve “more traditional” machinery to upgrade factories. This is good news for the packaging business. According to a study released in April 2003 by the Packaging Machinery Manufacturers Institute (www.pmmi.org) packaging machinery spending in 2003 was projected to increase at a modest 1.5 percent to 2.5 percent. With the encouraging news from the overall manufacturing sector and the ISM index it will be interesting to see if PMMI’s 2004 study released later this year dovetails with overall manufacturing indicators.
Packaging challenges and opportunities do abound. The influence of mass merchandisers has increased as consumers grow increasingly comfortable in this new retail environment. With the advent of the “big-box” stores like Wal-Mart and Costco manufacturers and packaging suppliers will continue to be challenged to take costs out of the system and meet the packaging demands presented by these retailers. With this there is also opportunity for CPG companies and packaging suppliers to work together to create new efficiencies. Further supply chain traceability and packaging security are high on the agendas of packagers primarily in food and pharmaceutical. We touched on this in our September 2003 issue (see: packworld.com/go/w108) and you’ll see more of this in upcoming issues of Packaging World as packagers come to grips with issues like bioterrorism regulations 21CFRPart11 GAMP4 practices (FDA Validation) and intelligent/smart packaging (and RFID).
These first 10 years have been rewarding for all of us at Packaging World and Packworld.com and we appreciate the constant dialogue we maintain with our readers. As we enter our next ten years we renew our promise to adapt as your information needs evolve. Though research shows print is still preferred we have continued to expand our Web site with our digital eBook technology and later in 2004 we will enhance functionality. Soon we’ll introduce a new series of opt-in e-mail newsletters focusing on new machinery new materials machine automation and personal insights from Packaging World editors. All these are being developed to help you do your job better. To sign up for any or all of these newsletters be sure to visit packworld.com/newsletters. As always we welcome your comments and suggestions. Drop us a line at firstname.lastname@example.org anytime. Best wishes for a safe and happy New Year.
Joe Angel VP/Publisher
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