THE FOOD PRODUCTS SEGMENT
The Segment Defined
The food segment consists of producers and processors of food, food ingredients, and mixes
packaged for human or animal consumption. Food categories designated by the Department of
Commerce include: meat products, dairy products, fruits and vegetables, grain mill products,
such as cereals, dog and cat food, prepared feed (incl. feed and seed), flour and other grain
products, rice milling, and wet corn milling, bakery products, sugar and confectionery products,
fats and oils, salad dressings and salsas, a variety of miscellaneous products including canned,
cured, and frozen fish, roasted coffee, potato chips and similar snack food, macaroni and
spaghetti, and food preparations, n.e.c.
Food Segment Projections Portend Moderate Increase for 2006
U.S. food packagers as a group are expected to spend approximately $2.334 billion for
packaging machinery in 2006, roughly +2.5 percent more (the mid-point projection of a +2%
to +3% increase) than in 2005. As shown in Figure F-1, the moderate outlook follows four
consecutive years of incrementally positive growth forecasts. It is worth noting that the 2006
outlook is founded on a very favorable industry backdrop that currently includes:
•
Strong pressure to innovate and stand-out among competitors on store shelves
•
Average plant capacity utilization rates hovering at levels that typically suggest the
need for expansion.
The pie-chart of Figure F-2 shows that while 34 percent of the sample’s companies plan to
spend more for packaging machinery this year than in 2005, just as many (34%) plan to
spend less. And Figure F-3, which further details the increase-decrease ratios by company
size, shows noticeably positive spreads for both the smallest and largest plant size classes, but
with negative spreads dominating the two mid-size groupings.
But Higher Spending Possible
In acknowledgement of the likely potential for capital spending budgets to change,
respondents were asked to assess the possibility for revisions in their spending plans as the
year progresses. The first question asked them to rate on a scale of 1 to 10 their packaging
machinery budget’s susceptibility to adjustment – either up or down – in response to
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changing economic and/or market factors. A rating of 1 means that they feel their budget is
‘set in stone’ and a rating of 10 means that it is ‘very susceptible to change’. As shown in
Figure F-4, 36 percent of the respondents rated their budgets at ‘1’, or ‘set in stone’ while the
remaining 64 percent left at least some room for change with ratings between ‘2’ and ‘10’.
Roughly one out of three respondents (34%) assessed their budget between moderately
changeable to very changeable, as indicated by a rating between ‘6’ and ‘10’. Next,
respondents were asked: “If the budget were to be adjusted, which direction would you
FIGURE F-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE FOOD PRODUCTS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
12%
10%
8%
6%
4%
High Point of
Range
2%
% Change
0%
Low Point of
Range
-2%
-4%
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: PMMI
83
FIGURE F-2
PERCENT OF THE FOOD PRODUCTS SEGMENT SAMPLE PROJECTING
AN INCREASE, DECREASE, AND NO CHANGE
IN PACKAGING MACHINERY EXPENDITURES
COMPARISON 2006 VERSUS 2005
(Based on Conditions Existing as of January & February 2006)
Will Increase
Spending
34%
Will Reduce
Spending
34%
Will Spend About the
Same
32%
Source: PMMI
expect it to likely go – up, down, or is either direction equally possible?” The findings,
presented in the pie-chart of Figure F-5, clearly suggest that most budgetary adjustments
made during the year would likely push spending higher than currently projected. While the
majority of respondents (56%) said any revisions to their spending plans would most likely
be upward, just 16 percent reported a downward bias, and 28 percent indicated it is equally
possible for an adjustment in either direction.
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FIGURE F-3
PERCENT OF THE FOOD SEGMENT SAMPLE PROJECTING AN
INCREASE, DECREASE, AND NO CHANGE IN PACKAGING MACHINERY
EXPENDITURES 2006 VS 2005
COMPARISON BY COMPANIES' EMPLOYEE PLANT SIZE
(Based on Conditions Existing as of January & February 2006)
100%
90%
19%
30%
37%
80%
Plan Decrease for
2006
47%
70%
60%
Plan No Change for
2006
38%
28%
50%
Plan Increase for
2006
29%
40%
30%
20%
47%
43%
42%
34%
10%
6%
0%
Less than 100
Employees
100-499
Employees
500-999
Employees
Source: PMMI
85
1000+ Employees
FIGURE F-4
THE FOOD SEGMENT SAMPLE’S RATINGS REGARDING SUSCEPTIBILITY OF THEIR
2006 PACKAGING MACHINERY BUDGETS TO CHANGE FROM CURRENTLY
PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
50%
45%
40%
36%
35%
34%
30%
30%
% of Responses
25%
20%
15%
10%
5%
0%
1
2 to 5
Ratings
Source: PMMI
86
6 to 10
FIGURE F-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGET WERE ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
56%
Equal Chance It Could
Go Either Way
28%
More Likely Would
Be Revised Lower
16%
Source: PMMI
Reasons for Ordering Machinery in 2006
As shown in Figure F-6, the most widely stated reason among U.S. food packagers for
purchasing packaging machinery in 2006 is to improve efficiency and/or productivity on
existing packaging lines. But other reasons registered significant mentions as well, including
the need to add capacity, to reduce labor and maintenance costs, and to accommodate new
packaging designs or styles.
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Reasons for Reducing Spending in 2006
As revealed earlier, just over a third of the food segment’s companies plan a decrease in
packaging machinery spending for 2006 (versus 2005). The primary reasons for the cutbacks, as cited by the respondents, are presented in Figure F-7. Three of the most commonly
indicated are, in many instances, related to one another. Thirty-five percent said their
existing equipment is adequate for their current needs, 33 percent indicated they will cut-back
this year because they spent heavily in 2005, and 30 percent simply attributed lower planned
expenditures to budget cuts.
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following underlying market trends will likely exert an impact on demand
throughout the year.
FIGURE F-6
THE UNDERLYING REASONS FOR ORDERING PACKAGING
MACHINERY IN 2006 BY THE FOOD SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
Building New Plant(s)
3%
23%
Accommodate New Product Lines/New Package Designs
57%
Improve Efficiency/Prod. of Existing Packaging Ops.
Improve Ergonomics/Worker Safety
7%
Add Flexibility/Reduce Downtime
9%
29%
Reduce Labor/Maintenance Costs
34%
Adding Capacity to Existing Packaging Operations
0%
10%
Source: PMMI
88
20%
30%
40%
50%
60%
70%
FIGURE F-7
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE FOOD SEGMENT
(Of the Respondents That Indicated They
Will Reduce Spending in 2006)
Plant Closing/Consolidation
6%
Other Priorities
11%
Budget Cuts
30%
Existing Machinery is
Adequate
35%
Made Major Purchases in
2005
33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: PMMI
Factors Supporting Spending for Packaging Machinery
A. Plant capacity utilization to remain high According to U.S. government statistics,
U.S. food processing plants as a whole have been running at above 83 percent capacity
levels since November of 2005, well above the 79-80 percent range for overall U.S.
manufacturing plants during the same period. As indicated in Figure F-6, roughly a third
of the sample’s food companies will buy packaging machinery this year to add capacity to
their packaging operations.
B. Expect further targeting of niche consumer markets through packaging Food
companies remain steadfast in their drive to create customized options via packaging
sizes, shapes, designs, convenience features, etc. that target select groups of consumers.
Food product packagers are increasingly seeking machines with greater flexibility to
handle varying packaging requirements and are establishing more packaging lines to
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accommodate distinctly different packaging styles. Notably, 23 percent of the study’s
food segment respondents mentioned new package design requirements and/or new
product lines as a significant reason for buying packaging machinery in 2006.
C. Ongoing shift to flexible packaging to remain a major demand driver The use of
flexible pouches will continue to rapidly expand throughout most areas of the food
industry forcing many food companies to either upgrade or add pouch packaging
capabilities.
D. Look for further emphasis on food product packaging innovation To fight for and
defend shelf space in ultra competitive retail environments, food companies will remain
active in their development and introductions of new, leading edge products and
packaging.
E. Continued emphasis to be placed on improving packaging efficiency As confirmed
by the data presented in Figure F-6, food packagers are remaining intent on gaining
efficiencies in plant operations via increased automation and new machinery technology
as a means to combat competitive pressure and rising manufacturing costs.
F. Shifting consumer health trends to remain in play The food industry is quickly
scrambling to introduce new and modified products geared to emerging health trends that
include organic foods and whole grain foods in particular.
Factors Limiting Packaging Machinery Spending
A. Expect high energy and raw materials costs to further impact buying decisions
B. Continued trend toward more plant closings and industry consolidation While
mergers and acquisitions have slowed among food processors compared with the past
several years, instances of plant closings and product line divestitures will continue to
negatively impact machinery demand.
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C. Impact of heavy spending in 2005
The Food Segment Sample
Interviews were conducted with 158 respondents from virtually all sectors of the food
industry. Sixteen of the 158 represented corporate or division headquarters, in which case
their answers dealt with machinery decisions for the organization’s entire packaging
operations. The data derived from the sample covered 403 of the market segment’s plants.
It is significant to note that 78.8 percent of the respondents, or a qualified replacement at that
location, took part in last year’s study as well.
91
THE BEVERAGE PRODUCTS SEGMENT
The Segment Defined
The beverage segment consists of producers, processors, bottlers, and packagers of beverages for
human consumption. Categories include: malt beverages (beer and ale); malt; wines, brandy,
and brandy spirits; distilled and blended liquors; bottled and canned soft drinks; juices; bottled
water; and flavoring extracts and syrups intended as beverage ingredients.
FIGURE B-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE BEVERAGE PRODUCTS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
18%
16%
14%
12%
10%
High Point of
Range
8%
6%
4%
Low Point of
Range
2%
% Change
0%
-2%
-4%
-6%
-8%
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: PMMI
92
Fourth Consecutive Year of Spending Growth Expected for 2006
U.S. beverage plants are preparing to ramp up spending for packaging machinery in 2006 by
+6-8 percent to roughly $1.094 billion (the +7 percent mid-point projection of the +6%-8%
rise over their 2005 expenditures). The increase, while more moderate than the double-digit
jump of 2005, represents the fourth in as many years (Figure B-1). Moreover, the pie-chart
of Figure B-2, which presents a graphic breakdown comparing the number of respondents
forecasting higher spending in 2006 versus those predicting a decline, reinforces the positive
outlook. Ironically, the 40% increase, 24% decrease, 36% no-change ratio actually
represents an improvement over the 35% - 26% -37% breakdown recorded in 2005.
FIGURE B-2
PERCENT OF THE BEVERAGE SEGMENT SAMPLE PROJECTING AN
INCREASE, DECREASE, AND NO CHANGE IN PACKAGING
MACHINERY EXPENDITURES COMPARISON 2006 VERSUS 2005
(Based on Conditions as of January/February 2006)
Will Spend About
the Same
36%
Will Increase
Spending
40%
Will Reduce
Spending
24%
Source: PMMI
93
An examination of the increase-decrease data by plant size – determined by number of
employees – is presented in Figure B-3. The more detailed analysis reveals that all the
respondents reporting intentions to reduce spending for 2006 are from the two smaller size
categories, while the largest size plant category (greater than 1000 employees) contains the
highest rate of planned increases – 50 percent.
FIGURE B-3
PERCENT OF THE BEVERAGE SEGMENT SAMPLE PROJECTING
AN INCREASE, DECREASE, AND NO CHANGE IN PACKAGING
MACHINERY EXPENDITURES 2006 VS 2005
COMPARISON BY COMPANIES' EMPLOYEE PLANT SIZE
(Percent Range of Projected Annual Growth)
100%
0%
0%
90%
30%
Plan Decrease for
2006
35%
80%
50%
Plan No Change for
2006
70%
67%
60%
Plan Increase for
2006
25%
50%
35%
40%
30%
50%
45%
20%
33%
30%
10%
0%
Less than 100
Employees
100-499
Employees
500-999
Employees
Source: PMMI
94
1000+
Employees
Likelihood of Adjustments to Budget Plans
After providing an estimate of their 2006 packaging machinery spending plans, each
respondent was asked a pair of questions dealing with the potential for changes in their
projections as the year progresses. The first asked them to rate on a scale of 1 to 10 their
packaging machinery budget’s susceptibility to adjustment – either up or down – in response
to changing economic and/or market factors. A rating of 1 meant that they feel their budget
is ‘set in stone’ and a rating of 10 meant that it is ‘very susceptible to change’. As Figure B-4
illustrates, over two-thirds of respondents indicated their budgets are at least somewhat
vulnerable to adjustment as a result of market developments (rating between 2 and10), while
FIGURE B-4
THE BEVERAGE SEGMENT SAMPLE’S RATINGS REGARDING SUSCEPTIBILITY OF
THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE FROM CURRENTLY
PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
70%
60%
50%
43%
40%
32%
% of Responses 30%
25%
20%
10%
0%
1
2 to 5
Ratings
Source: PMMI
95
6 to 10
FIGURE B-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGETS WERE ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
43%
Equal Chance It
Could Go Either Way
37%
More Likely Would
Be Revised Lower
20%
Source: PMMI
32 percent could not foresee any changes being made to their current spending plans (rating
of 1). Most notably, however; 43 percent rated their budgets between ‘6’ and ‘10’, or
‘moderately’ to ‘very’ susceptible to modification. Next, respondents were asked: “If the
budget were to be adjusted, which direction you would expect it to likely go – up, down, or is
either direction equally possible?” The findings, shown in Figure B-5, favor upward
revisions over cut-backs; 43 percent of respondents said spending would more likely be
revised higher, 37 percent said no bias exists in either direction, and 20 percent felt a
downward adjustment is more probable.
96
FIGURE B-6
THE UNDERLYING REASONS FOR ORDERING PACKAGING MACHINERY
IN 2006 BY THE BEVERAGE SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
Accommodate New Product
Lines/New Package Designs
16%
Improve Efficiency/Prod. of
Existing Packaging Ops.
87%
Improve Ergonomics/Worker Safety
11%
20%
Add Flexibility/Reduce Downtime
49%
Reduce Labor/Maintenance Costs
Adding Capacity to Existing
Packaging Operations
Source: PMMI
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Reasons for Ordering Machinery in 2006
Figure B-6 provides a breakdown of the reasons beverage product companies will order
packaging machinery this year according to the sample. Indicative of the push by many of
the segment’s companies to improve the bottom line in the face of a highly competitive
market environment, most respondents (87%) mentioned the improvement of packaging line
efficiency and/or productivity as a major goal of their planned purchases, and nearly half
(49%) pointed to the reduction of labor and/or maintenance costs. On the other hand, a
significant number (38%) said they need new machinery to expand the capacity of their
packaging operations, while 16 percent more specifically connected the planned expenditures
to their need to accommodate new products or new packaging applications.
Reasons for Lower Spending in 2006
Nearly one-quarter (24%) of the beverage sample’s respondents indicated their plant(s) will
spend less on packaging machinery this year than in 2005. As shown in Figure B-7, more
than three-quarters linked their expected cut-backs to either heavy spending last year (39%)
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100%
FIGURE B-7
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE BEVERAGE SEGMENT
(Of the RespondentsWho Indicated They
Will Reduce Spending in 2006)
Spending More on Other
Areas of Plant
7%
Limited Capital
Available/Budget Cuts
15%
Existing Machinery is
Adequate
39%
Made Major Purchases in
2005
39%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: PMMI
or more simply to the fact that adequate machinery is already in place to handle their current
packaging requirements (39%). Another 15 percent associated the reduction with budget
cuts, and seven percent said projects unrelated to packaging are taking precedence this year.
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following underlying market trends merit monitoring throughout the year.
Factors Supporting Spending for Packaging Machinery
A. Customers will continue to seek productivity/efficiency improvements As supported
by the study’s findings presented in Figure B-6, the vast majority of the respondents
reporting an increase in spending for packaging machinery in 2006 are seeking to
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improve the efficiency and/or productivity of their packaging operations. In order to
satisfy their bottom lines in an increasingly competitive marketplace, many beverage
plants are adding machinery with faster speeds, greater flexibility, more advanced
capabilities, or simply more reliability to gain packaging line productivity.
B. Look for a steady stream of new product introductions According to statistics from
Productscan Online, beverage product SKUs increased by +25.9 percent in 2005 versus
2004. That trend likely will continue into 2006 as beverage producers continue to
introduce a wide array of different products and container styles in an effort to capture
the business of more finely segmented consumer groups.
C. Further increase in energy drink popularity
Demand for energy drinks surged in 2005, and many beverage producers – including
giants such as Coca-Cola and Pepsi – have joined the fray to capitalize on a consumer
trend that analysts expect will remain vibrant for quite a while.
D. Demand for bottled water to remain strong While the bottled water market is deluged
with competing brands and its producers continue to search for more pricing power,
demand continues to be solid. Consumers continue to flock to bottled water as a healthier
alternative to carbonated soft drinks and manufacturers seeking to benefit from the trend
will continue to offer a growing variety of flavored and vitamin/mineral fortified options.
E. Expect further increase in packaging flexibility requirements Beverage product
producers continue to seek greater packaging line flexibility to handle shorter runs of an
increasing variety of package sizes and styles. Specific requirements from major
customers to provide unique bottle sizes or case and carton configurations, combined
with increasing consumer demand for more convenience, is forcing beverage companies
to develop more nimble packaging operations.
F. Demand for wines to remain robust Partly at the expense of beer sales, North
American consumers are turning more to wines for their alcoholic beverage consumption.
A growing perception among younger adults that wine does not have to be expensive or
intimidating, combined with a concerted effort by winemakers to market their product at
99
affordable price points, with vibrant labels, and fun packaging, has led to its greater
popularity.
Factors Limiting Spending for Packaging Machinery
A. Recent Heavy Spending
As indicated in Figure B-7, many of the respondents (39%)
reported a cut-back in spending this year because their respective firms invested heavily
in packaging machinery in 2005. Moreover, an additional 39 percent simply stated that
their existing machinery is adequate for their current packaging needs, which is also
emblematic of heavy prior spending.
B. Weak beer market Prospects for brewers in North America have dimmed in response to
shifting consumer trends away from beer to other alcoholic beverages such as wines and
liquors. Sales and profits at many beer companies have declined or remained flat as a
result.
C. Slower sales of carbonated soft drinks Partly reflecting health trends and partly a
result of greater excitement generated by energy drinks, sports drinks, and various fruit
drinks, carbonated soft drink sales are suffering. According to Beverage Digest/Maxwell,
U.S. carbonated soft drink sales declined for the first time in at least two decades in 2005.
Even diet sodas, which have been somewhat of a bright spot for the category in recent
years, showed weakness in 2005.
The Beverages Segment Sample
Fifty-four (54) respondents representing various sectors of the beverage industry were
interviewed in connection with this study. Of the total sample, one respondent was located at
corporate or division headquarters and answered for all of their organizations’ domestic plant
operations. The data provided by the sample covered the packaging decisions and buying
patterns of 161 U.S. establishments. Of last year’s respondents, 68.5 percent participated in
this year’s study as well.
100
THE PHARMACEUTICALS AND MEDICAL DEVICES MARKET SEGMENT
The Segment Defined
Manufacturers of commercial- and consumer-packaged prescription and over-the-counter
pharmaceutical products, as well as medical devices. The pharmaceuticals producers fall within
SIC 283 – Drugs, which includes: medicinals and botanicals, pharmaceutical preparations,
diagnostic substances, and biological products except diagnostic. The medical devices group is
classified in SIC 384 – Medical Instruments and Supplies, which largely contains: surgical and
medical instruments, surgical appliances and supplies, and dental equipment and supplies.
Modest Up-tick in Spending Planned for 2006
U.S. manufacturers of packaged pharmaceutical and medical products – as a group – are
expected to increase their level of spending for packaging machinery by approximately
+1-3 percent in 2006 to an estimated $736 million (the +2% mid-point of +1%-3%
projection) (Figure P/M-1). While the industry’s current expenditure plans represent a clear
down shift in momentum from the double-digit (+11-13%) increase of the prior year, the
outlook nevertheless remains positive. The favorable assessment derives both from
secondary information attesting to the continued strength of the pharmaceutical/medical
products market as a growth entity and from data generated by the sample’s respondents.
With respect to the latter, 43 percent of this year’s sample are expected to ratchet up their
spending for machinery in 2006 (Figure P/M-2), which ironically is a higher proportion than
the 41 percent recorded at the same time in 2005. But detracting from the increase-decrease
ratio is the fact that 35 percent in 2006 have indicated plans for lower expenditures compared
with only 24 percent that did so in 2005. In effect, more companies appear adequately
equipped to handle their current packaging requirements as a result of having spent heavily
last year or are merely unable to stage a repeat of the growth recorded in the prior year. That
said, however, one might bear in mind that despite the growth slowdown in 2006, the
projected value of machinery expenditures – pegged at $736 million – remains quite high in
nominal terms.
101
FIGURE P/M-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE PHARMACEUTICAL/MEDICAL PRODUCTS
SEGMENT ACCORDING TO THE PMMI PURCHASING PLANS
STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
18
16
14
12
10
8
High Point of
Range
6
4
Low Point of
Range
2
% Change 0
-2
-4
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: PMMI
102
FIGURE P/M-2
PERCENT OF THE PHARMACEUTICAL/MEDICAL PRODUCTS
SEGMENT SAMPLE PROJECTING AN INCREASE, DECREASE, AND NO
CHANGE IN PACKAGING MACHINERY EXPENDITURES
COMPARISON 2006 VERSUS 2005
(Based on Conditions Existing as of January/February 2006)
Will Reduce
Spending
35%
Will Increase
Spending
43%
Will Spend About
the Same
22%
Source: PMMI
Figure P/M-3 further dissects the data by plant size (as determined by number of employees).
The most visible pattern that emerges from that breakdown is the high concentration of ‘no
changes’ projected for the largest plants (and/or headquarters operations) in contrast to the
very low percentage of smaller plants that expect to remain on par with last year’s spending
level. It is also worth noting that the increase-decrease ratio for the smallest plants is the only
one lacking a positive spread – at 50% up versus 50% down. However, heavy spending in
2005 is the likely reason, since that group’s ratio last year was easily the most favorable of
the four.
103
FIGURE P/M-3
PERCENT OF PHARMACEUTICAL/MEDICAL DEVICE SEGMENT
SAMPLE PROJECTING AN INCREASE, DECREASE, AND NO
CHANGE IN PACKAGING MACHINERY EXPENDITURES
2006 VS 2005
COMPARISON BY EMPLOYEE PLANT SIZE
(Based on Conditions As of Jan/Feb 2006)
100%
90%
25%
80%
25%
43%
50%
70%
Project Decrease
for 2006
25%
60%
44%
9%
50%
40%
Project No Change
for 2006
Project Increase for
2006
30%
50%
50%
48%
20%
31%
10%
0%
Less than 100
Employees
100 to 499
Employees
500 to 999
Employees
1000+ Employees
Source: PMMI
Potential for More Spending
In recognition of the limitations inherent in early-year budget projections each respondent
was asked a pair of follow-up questions dealing with the potential for any changes in their
projections as the year progresses. The first asked them to rate on a scale of 1 to 10 their
packaging machinery budget’s susceptibility to adjustment – either up or down – in response
to changing economic and/or market developments. A rating of 1 means they feel their
budget is ‘set in stone’ and a rating of 10 means ‘very susceptible to change’.
104
FIGURE P/M-4
THE PHARMACEUTICAL/MEDICAL SEGMENT SAMPLE’S RATINGS REGARDING
SUSCEPTIBILITY OF THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE
FROM CURRENTLY PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
50%
45%
45%
40%
35%
31%
30%
% of Responses
25%
24%
20%
15%
10%
5%
0%
1
2 to 5
6 to 10
Ratings
The results, shown in Figure P/M-4, reveal that approximately one quarter of the respondents
characterized their spending budget as ‘set in stone’, while the remaining three quarters
reported at least some chance for adjustment. Moreover, nearly a third (31%) pegged it
closer to ‘very changeable’ than to ‘set in stone’. As a follow-up, they were asked: “If the
budget were to be adjusted, which direction would you expect it to go – up, down or equally
likely in either direction?”
105
The pie-chart of Figure P/M-5 shows that the majority (53%) said spending plans would
more likely be revised higher while just 22 percent said lower. The remaining 25 percent
reported the same possibility for an increase as for a decrease. The most widely cited reasons
for budgets to be revised higher include: to replace machinery that breaks down
unexpectedly, and to increase production for new products that do well in the marketplace.
Conversely, the most commonly cited reasons for budgets to be cut-back include: if the
economy and/or market demand declines, and because of internal changes at our company.
FIGURE P/M-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGETS WERE ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
53%
Equal Chance It Could
Go Either Way
25%
More Likely Would
Be Revised Lower
22%
Source: PMMI
106
Reasons for Ordering Packaging Machinery in 2006
Of the respondents who indicated plans to purchase packaging machinery in 2006, nearly all
(98%) cited the need to increase production on their existing packaging lines as a key reason
for the planned capital investment, while 43 percent linked their spending plans to
requirements associated with new products and/or new packaging designs (Figure P/M-6).
Please note that most respondents offered more than one reason for ordering machinery this
year; hence, the total of percentages exceeds 100 percent. Among other commonly cited
answers, 40 percent indicated a need to reduce labor and/or maintenance costs, 12 percent are
seeking added flexibility and/or less downtime associated with changeovers, 12 percent
reported a goal of keeping up with technology, and 10 percent are looking to improve
ergonomics and/or worker safety.
Reasons for Reducing Spending in 2006
As revealed earlier, 35 percent of the sample’s respondents indicated they will spend less on
packaging machinery this year than in 2005. As shown in Figure P/M-7, 39 percent of those
respondents said they will do so because their existing machinery is adequate, while 33
percent specifically pointed out that they spent heavily last year and are therefore either
adequately equipped or simply unable to spend as much this year. Among other important
mentions: 12 percent said general budget cuts are a key factor and 12 percent indicated that
plant closings and/or consolidations are playing a role.
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following specific market trends merit monitoring throughout the year.
Factors to Watch in 2006
A. Pharmaceutical and medical device manufacturers will remain active in the
adoption of new packaging designs/styles. Issues surrounding packaging costs, product
protection, tamper evidence, ease-of-use, shelf-visibility, labeling content, and product
tracking are causing drug and medical device makers to be active in their pursuit of new
packaging designs and styles for their products. In particular, flexible options such as
pouches and tubes continue to proliferate in conjunction with advancing material and design
107
technologies. According to this study’s findings, 37 percent of the respondents indicated that
in 2006 their plant(s) will change or modify some aspect of the packaging used for their
existing product(s), and 36 percent reported that in 2006 their plant(s) will add new products
requiring different packaging than is used for their existing products.
FIGURE P/M-6
THE UNDERLYING REASONS FOR ORDERING PACKAGING MACHINERY IN 2006 BY THE
PHARMACEUTICAL/MEDICAL PRODUCTS SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
Accommodate New Product
Lines/New Package Designs
43%
12%
Add New Technology
Improve Ergonomics/Worker
Safety
10%
Add Flexibility/Reduce
Downtime
12%
Reduce Labor/Maintenance
Costs
40%
Increase Production – Existing
Packaging Lines
98%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Source: PMMI
B. Generic drug makers are expected to continue to generate solid growth as several
name brand drug patents are set to expire in coming years.
C. Drug Sales are predicted to grow by +7.7 percent in 2006 according to The Centers
for Medicare and Medicaid Services.
D. The outlook for biotech companies will remain strong as their drug pipelines
continue to grow; moreover, they remain safe from generics for now.
108
FIGURE P/M-8
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE PHARMACEUTICAL/MEDICAL PRODUCTS SEGMENT
(Of the Respondents Who Indicated They
Will Reduce Spending in 2006)
Other Priorities Taking
Precedence
12%
Plant
Closing/Consolidation
12%
Budget Cuts
12%
Existing Machinery is
Adequate
39%
Made Major Purchases in
2005
33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Source: PMMI
E. Higher demand expected for OTC self-care options such as home diagnostic kits
and therapeutic products The aging population and technological advances continue to
support the proliferation of these products at the OTC retail level.
F. Continued pressure on health care product manufacturers to accommodate shorter
packaging line runs should stimulate demand for packaging machinery with added
flexibility to efficiently handle frequent changeovers.
G. Big pharma company profits will remain vulnerable to generic manufacturers as
patents expire on brand name blockbuster drugs
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H. Heavy spending on packaging machinery in 2005 will lead some customers to
ratchet back in 2006
The Pharmaceutical/Medical Devices Segment Sample
The pharmaceutical and medical devices segment sample consisted of 52 respondents and
covered packaging decisions relative to 148 establishments. Ninety-eight percent of the
respondents participated in the 2005 study as well.
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THE DURABLE HARD GOODS MARKET SEGMENT
CONSUMER, COMMERCIAL, AND INDUSTRIAL
(Formerly Two Defined Segments: The Hardware, Plumbing, Automotive, Industrial, and
Related Components and Parts Segment; and The Durable Products, Consumer/
Commercial, Electronics, Appliances and Other Hard Goods Products Segment)
The Segment Defined
By the broad definition of durable products, products arbitrarily intended to last three or more
years, this segment comprises manufacturers of a wide variety of consumer, commercial, and
industrial hard goods. They include consumer appliances, electronic video and audio home
entertainment items, personal computers and related products, CDs, computer software,
photographic products, toys, games, sporting goods, among many other items. A large proportion
of this segment’s products also falls within SIC 34 – Fabricated Metal Products, which contains:
cutlery, hand tools, and hardware; plumbing fixtures and trim; structural and architectural trim;
fasteners (nuts, bolts, etc.); industrial fittings and components; and a variety of related items. In
addition, the segment further consists of products from SIC 37 – Transportation Equipment for
automotive, aircraft, and marine parts; SIC 35 – Industrial Machinery and Equipment for
replacement parts; SIC 36 – Electric and Electronic Equipment for certain parts; and SIC 30 –
Rubber and Miscellaneous Plastic Products for a variety of consumer and commercial
components and parts.
Lower Spending Expected in 2006
U.S. manufacturers of durable goods as defined above, are expected to spend roughly -3% to
-5% less for packaging machinery in 2006 than they did last year (Figure D-1). Based on a
decline of -4 percent, the mid-point of the projected range, the segment’s total expenditures
will fall to approximately $405 million. As the bar chart of Figure D-1 illustrates, this year’s
predicted downturn comes on the heels of two consecutive annual increases, including a
double-digit surge in 2004. A graphic summary showing how many of the sample’s
respondents expect to increase spending this year versus the number projecting a decline is a
reflection of the moderately bearish outlook prevailing in terms of the amount of dollars to be
spent. As shown in Figure D-2, 37 percent of the respondents expect to invest less for
packaging machinery this year, while a lesser 23 percent plan to add to last years total, and
40 percent are budgeting roughly the same amount as in 2005.
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FIGURE D-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDINGFOR PACKAGING
MACHINERY BY THE DURABLE HARD GOODS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
14%
12%
10%
8%
6%
4%
High Point of
Range
2%
% Change
0%
Low Point of
Range
-2%
-4%
-6%
-8%
-10%
-12%
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: PMMI
A more detailed view of the segment’s increase-decrease ratio – by plant size (determined by
number of employees) is presented in Figure D-3. As the bar-chart reveals, the downward
trend is evident across all but one size category – the exception being the 100 – 499
employee size group where the ratio was even.
Likelihood of Adjustments to Budget Plans
In response to a line of inquiry assessing the potential for revisions in their spending plans as
the year progresses respondents were first asked to rate on a scale of 1 to 10 their packaging
machinery budget’s susceptibility to adjustment – either up or down – in response to
changing economic and/or market factors. A rating of 1 means that they feel their budget is
‘set in stone’ and a rating of 10 means that it is ‘very susceptible to change’. As shown in
112
Figure D-4, 43 percent of the respondents rated their budgets on the higher end of the scale
(between ‘6’ and ‘10’), while just 19 percent gave a rating of ‘1’. The remaining 38 percent
positioned their spending plans on the lower end of the scale between ‘2’ and ‘5’.
FIGURE D-2
PERCENT OF THE DURABLE HARD GOODS PRODUCTS SEGMENT
SAMPLE PROJECTING AN INCREASE, DECREASE, AND NO CHANGE IN
PACKAGING MACHINERY EXPENDITURES,
COMPARISON 2006 VERSUS 2005
(Based on Conditions Existing as of January/February 2006)
Will Spend About the
Same
40%
Will Increase Spending
23%
Will Reduce Spending
37%
Source: PMMI
They were then asked as a follow-up: “If the budget were to be adjusted, which direction
would you expect it to likely go – up, down, or is either direction equally possible?” As
shown in Figure D-5, half the respondents said an increase is more probable, while just 18
percent favored the chances of a cut-back, and 32 percent said an adjustment in either
direction is equally possible.
113
FIGURE D-3
PERCENT OF DURABLE HARD GOODS PRODUCTS SEGMENT
SAMPLE PROJECTING AN INCREASE, DECREASE, AND NO
CHANGE IN PACKAGING MACHINERY EXPENDITURES
2006 VS 2005
COMPARISON BY COMPANIES' EMPLOYEE PLANT SIZE
(Based on Conditions As of Jan/Feb 2006)
100%
90%
80%
38%
31%
39%
60%
70%
Project Decrease
for 2006
60%
40%
Project No Change
for 2006
38%
50%
39%
50%
30%
40%
20%
31%
22%
10%
12%
0%
0%
Less than 100
employees
100-499
employees
500-999
employees
Source: PMMI
114
1000+ employees
Project Increase for
2006
FIGURE D-4
THE DURABLE/HARD GOODS SEGMENT SAMPLE’S RATINGS REGARDING
SUSCEPTIBILITY OF THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE
FROM CURRENTLY PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
70%
60%
50%
43%
38%
40%
% of Responses 30%
20%
19%
10%
0%
1
2 to 5
6 to 10
Ratings
Source: PMMI
Reasons for Reducing Spending in 2006
As indicated earlier, 37 percent of the durables/hard goods segment’s respondents said they
will spend less for packaging machinery this year than they did in 2005. Figure D-6 presents
the reasons – cited by those respondents – for the expected cut-backs. Twenty-eight percent
said their existing machinery is adequate for their current packaging needs, while another 22
percent pointed to limited available capital as the cause, and 17 percent simply stated that
capital spending is being directed to other areas of the company this year.
115
FIGURE D-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGETS WERE ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
50%
Equal Chance It
Could Go Either Way
32%
Source: PMMI
More Likely Would
Be Revised Lower
18%
Reasons for Spending in 2006
In looking at why durables/hard goods companies are investing in packaging machinery this
year, two reasons stand out among the rest in terms of being most commonly mentioned. As
shown in Figure D-7, 50 percent of the respondents said their primary focus is to increase the
efficiency and/or productivity of their existing packaging operations, while 38 percent said
they are aiming to reduce labor and/or maintenance costs. Not surprisingly in light of intense
global competition and rising energy and raw materials costs, both of those reasons squarely
address the idea of squeezing more profit out of the manufacturing process.
116
FIGURE D-6
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE DURABLES/HARD GOODS SEGMENT
(Of the RespondentsWho Indicated They
Will Reduce Spending in 2006)
More Retrofitting in Place of
Buying New
6%
Other Priorities this Year
17%
11%
Plant Closings/Consolidation
Using Contract Packagers
More
6%
Limited Capital
Available/Budget Cuts
22%
Existing Machinery is
Adequate
28%
Made Major Purchases in
2005
11%
0%
5%
10%
15%
20%
25%
30%
Source: PMMI
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following underlying market trends merit monitoring throughout the year.
Factors Limiting Packaging Machinery Spending
A. Further Struggle by automotive parts industry The well-documented difficulty
facing many U.S. auto parts manufacturers is expected to continue into 2006. The
economic troubles of U.S. auto manufacturers are being funneled through the supply
chain by cuts in production, while at the same time, raw material costs are rising, leaving
auto parts makers with less demand and little leverage to pass along higher
manufacturing costs.
117
FIGURE D-7
THE UNDERLYING REASONS FOR ORDERING PACKAGING
MACHINERY IN 2006 BY THE DURABLES/HARD GOODS
SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
7%
Accommodate New Product Lines/New Package Designs
50%
Improve Efficiency/Prod. of Existing Packaging Ops.
Improve Ergonomics/Worker Safety
7%
11%
Add Flexibility/Reduce Downtime
38%
Reduce Labor/Maintenance Costs
Adding Capacity to Existing Packaging Operations
Source: PMMI
20%
0%
10%
20%
30%
40%
50%
60%
70%
B. A continuation of manufacturing cost escalations Most durable product
manufacturers will continue to be hampered by high energy and raw materials costs,
which in turn will lead to lower profits, and less capital available for investment. While
some manufacturers have been able to pass along the higher costs to their customers,
others are being forced to keep prices lower to remain competitive with foreign
suppliers.
C. More plant closings/consolidations The manufacturing facilities of many U.S.
companies in the durables/hard goods segment have been, and continue to be
consolidated into more efficient operations that can more effectively compete with
foreign manufacturers. Of the study’s respondents who said they will reduce spending
for packaging machinery this year, 11 percent directly attributed the cut-backs to plant
closings and/or consolidation.
118
D. Improved plant capacity rates, but still below traditional expansion trigger At the
end of February 2006, capacity utilization rates at U.S. durables manufacturing plants
averaged just above 79 percent, much improved from the roughly 76 percent average
recorded in February 2005, but still below the low 80 percent range that often triggers
expansion.
Factors Supporting Spending for Packaging Machinery
A. Look for continued strength of home improvement market Despite signs of a
declining housing market, sales of hardware/home improvement products remain robust
going into the year.
B. Expect U.S. manufacturers to maintain focus on improving efficiency In the face of
strong foreign and domestic competition, durables/hard goods manufacturers are
expected to continue placing a high value on the improvement of manufacturing facilities
as a means of driving down costs. Fifty percent of the study’s respondents who indicated
they will buy packaging machinery this year, said they are doing so primarily to improve
packaging line efficiency and/or productivity.
C. Count on further need for packaging line automation While many durables product
manufacturers have traditionally relied more on manual labor for packaging than other
market segments, competitive pressures are forcing more companies to adapt partially or
fully to automated packaging operations. Evidence of the trend is presented in Figure D7, as 38 percent of the study’s respondents (who are planning to buy packaging
machinery this year) said they are buying machinery in 2006 primarily to reduce labor
and/or maintenance costs.
The Study’s Durable Hard Goods Segment Sample
Respondents from 49 companies classified within the hardware, industrial, commercial,
and automotive components and parts segment were interviewed in connection with this
study. The components and parts manufactured by the group include: architectural and
commercial hardware; OEM and aftermarket automotive parts; plumbing fixtures and
119
attachments; computer and printing equipment; major appliance parts; industrial gaskets,
belts, and seals; heavy industrial equipment parts; abrasives; electronic components;
electrical components, tools; and other related items. Two of the respondents answered for
all of their respective organization’s domestic plant packaging operations. The data provided
by the sample covered the packaging decisions of 119 U.S. plants and establishments. Of
the total, 100 percent of the respondents participated in the 2005 study as well.
120
THE PERSONAL CARE PRODUCTS SEGMENT
(Cosmetics, Toiletries, and All Other Related Items)
The Segment Defined
This market segment includes: manufacturers of health and beauty aids; fragrances and colognes;
toilet preparations such as soaps, toothpaste, facial powders and creams, hair conditioners, etc. It
also consists of producers of miscellaneous personal care products, e.g., bandages, cotton swabs,
safety razors, shaving cream, combs and hair brushes, nail polish, shampoo, condoms, among
others. Many of the products are classified under SIC 2844 – Toilet Preparations.
Solid Increase in Spending Planned for 2006
Manufacturers of personal care products plan to ramp up spending on packaging machinery
for their U.S. plants by +10% to +12% in 2006 to an estimated $414 million (Figure PC-1).
The projected increase, which marks the fifth in as many years for the market segment,
reflects in large part, an intensity of competition among the industry’s manufacturers, which
is forcing packaging innovation and an influx of new product developments in order to win
consumer dollars. As shown in Figure PC-2, 41 percent of the respondents plan to increase
spending on packaging machinery during the year, 26 percent foresee a reduction, and
another 33 percent plan to spend roughly the same amount as in 2005. Figure PC-3, which
breaks down the increase-decrease ratios by plant size, reveals that a majority of the smaller
plants (less than 100 employees) (57%) are planning a cut-back this year, but in each of the
three larger size classifications the breadth is clearly favorable.
Even Further Growth Possible
With the understanding that budgets for capital expenditures are often subject to change, each
respondent was asked a pair of questions dealing with the potential for revisions in their
spending plans as the year progresses. The first asked them to rate on a scale of 1 to 10 how
susceptible their packaging machinery budget is to adjustment – either up or down – in
response to changing economic and/or market developments. A rating of 1 is to mean they
feel their budget is ‘set in stone’ and a rating of 10 means that it is ‘very susceptible to
change’. As revealed in Figure PC-4, 19 percent of the respondents characterized their
121
budget as being absolutely ‘set in stone’ whereas the other 81 percent said their spending
plans have at least some potential to be adjusted – as indicated by a rating between 2 and 10.
Moreover, 41 percent gave a rating between 6 and 10, or ‘fairly’ to ‘very’ susceptible to
change as the year progresses.
FIGURE PC-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE PERSONAL CARE PRODUCTS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
14%
12%
10%
8%
6%
4%
High Point of
Range
2%
0%
-2%
Low Point of
Range
-4%
-6%
-8%
-10%
1998
1999
2000
2001
2002
2003
Source: PMMI
122
2004
2005
2006
FIGURE PC-2
PERCENT OF THE PERSONAL CARE PRODUCTS SEGMENT SAMPLE
PROJECTING AN INCREASE, DECREASE, AND NO CHANGE IN
PACKAGING MACHINERY EXPENDITURES
COMPARISON 2006 VERSUS 2005
(Based on Conditions Existing As Of January/February 2006)
Will Reduce
Spending
26%
Will Increase
Spending
41%
Will Spend About
the Same
33%
Source: PMMI
123
FIGURE PC-3
PERCENT OF THE PERSONAL CARE PRODUCTS SEGMENT SAMPLE
PROJECTING AN INCREASE, DECREASE, AND NO CHANGE IN PACKAGING
MACHINERY EXPENDITURES
2006 VS 2005 COMPARISON BY COMPANIES' PLANT SIZE
(Based on Conditions as of January/February 2006)
0%
100%
11%
90%
25%
80%
70%
22%
Project Decrease
for 2006
57%
67%
Project No Change
for 2006
60%
37%
50%
Project Increase for
2006
40%
67%
30%
29%
20%
38%
33%
10%
14%
0%
Less than 100
Employees
100 to 499 Employees 500 to 999 Employees
1000+ Employees
Source: PMMI
Next, respondents were asked: “If the budget were to be adjusted, which direction would you
expect it to likely go – up, down, or equally likely to be revised in either direction?” The piechart of Figure PC-5 reveals that half of the respondents (50%) said it would most likely go
higher, while just 10 percent said lower, and the remaining 40 percent characterized it as
being equally likely to go up or down.
124
FIGURE PC-4
THE PERSONAL CARE SEGMENT SAMPLE’S RATINGS REGARDING
SUSCEPTIBILITY OF THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE
FROM CURRENTLY PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
70%
60%
50%
40%
41%
2 to 5
6 to 10
40%
% of Responses 30%
19%
20%
10%
0%
1
Ratings
Source: PMMI
125
Reasons for Ordering Machinery in 2006
Of the respondents who indicated intentions to purchase packaging machinery in 2006, 76
percent attributed their decision to the need for higher productivity and/or efficiency on their
existing packaging lines (Figure PC-6). Other reasons cited frequently include: to add
capacity to their packaging operations (56%); to accommodate new product lines and/or new
packaging designs (52%); to add flexibility and/or reduce downtime associated with
changeovers (24%); and to reduce labor and/or maintenance costs (24%).
FIGURE PC-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGETS DO GET ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
50%
Equal Chance It Could
Go Either Way
40%
More Likely Would
Be Revised Lower
10%
Reasons for Reducing Spending in 2006
In 2005 the personal care segment increased spending for packaging machinery by a solid
+7% to +9%, so it is not surprising that 38 percent of those intending to spend less in 2006
126
cited heavy spending last year as the primary reason (Figure PC-7). And similarly reflecting
the segment’s heavy packaging line investment in recent years, another 25 percent said they
will spend less because their existing machinery is adequate for their current needs. General
budget cuts (25%) and management decisions to concentrate on other areas (12%) were also
said to account for some of the planned reductions.
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following specific market trends merit monitoring throughout the year.
Factors Supporting the Favorable Outlook
A. Further influx of new packaging designs/styles The concept of using packaging
innovation as a vehicle for differentiation from a crowd of competitors and/or for creating
convenience for consumers, will continue to resonate among personal care product
manufacturers as much or more than in any market segment. According to the findings,
nearly half (48%) of the respondents plan to change or modify at least some aspect of the
packaging on their existing products in 2006, and almost as many (44%) said they have
plans to introduce a new product in 2006 with different packaging.
B. A steady stream of new product introductions associated with increase in
segmentation of health and beauty care products Manufacturers of hair care, skin
care, oral care, and hygiene products are increasingly gearing products to specific
demographics by gender, ethnicity, and age.
C. Continuation of solid demand for skin care and oral care products Teeth whitening
products and mouth washes/dental rinses are showing growth in the oral care segment
while the skin care segment is leveraging consumer demand for the health and
therapeutic benefits of products with hydrating and exfoliating ingredients.
D. Moderate growth in cosmetics for new packaging and products
127
Growth Limiting Factors
A. Pockets of Weakness
Certain markets within the segment, including nail care, bar soaps, and fragrances are
seeing pockets of weakness – in some cases due to market saturation and in others due
to consumer demand trends. Still, major players within these sub-segments continue to
remain active in their pursuit of packaging innovation.
B. Negative cyclical effect from five consecutive years of increased spending
FIGURE PC-6
THE UNDERLYING REASONS FOR ORDERING PACKAGING
MACHINERY IN 2006 BY THE PERSONAL CARE
PRODUCTS SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
Accommodate New Product
Lines/New Package Designs
52%
Improve Efficiency/Prod. of
Existing Packaging Ops.
76%
Improve Ergonomics/Worker
Safety
8%
Add Flexibility/Reduce
Downtime
24%
Reduce Labor/Maintenance
Costs
24%
Adding Capacity to Existing
Packaging Operations
56%
0%
10%
20%
30%
40%
Source: PMMI
128
50%
60%
70%
80%
90%
100%
FIGURE PC-7
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE PERSONAL CARE PRODUCTS SEGMENT
(Of the RespondentsWho Indicated They
Will Reduce Spending in 2006)
Other Priorities
12%
Budget Cuts
25%
Existing Machinery is
Adequate
25%
Made Major Purchases in
2005
38%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: PMMI
The Personal Care Products Sample
The personal care products sample consisted of 29 respondents, of which two answered for
their companies’ entire U.S. domestic packaging operations or an entire division. In all, the
sample’s response represented the 2006 purchasing plans of 43 plants. Ninety-seven percent
of the 2006 sample participated in last year’s study as well.
129
THE CHEMICALS AND CLEANING/FINISHING PRODUCTS SEGMENT
HOUSEHOLD, COMMERCIAL, AGRICULTURAL AND INDUSTRIAL
The Segment Defined
This segment is comprised of two distinct product groups: chemicals intended for industrial,
commercial, agricultural, and garden use; and cleaning and finishing products designed largely
for domestic use. Essentially all of the segment’s manufacturers are classified within SIC 28 –
Chemicals and Allied Products. Included among the more common domestic products are:
laundry detergent, bleach, furniture polish, liquid and powdered sink and tub cleansers,
dishwasher detergent, paint, stain, insect repellent, pesticides, water conditioning and neutralizing
chemicals, and others. The industrial, commercial, agricultural, and garden group includes:
inorganic and organic chemicals, fertilizers and other agricultural chemicals, insecticides, and
resins.
Spending Decline Expected for 2006
According to their estimates, respondents from the industries that make up the chemicals
segment will reduce spending for packaging machinery by -2% to -4% in 2006 to an
estimated volume of $342 million (Figure C-1). As shown in Figure C-2, 51 percent are
budgeting less, while just 34 percent plan to spend more this year and 15 percent expect to
invest roughly the same amount as in 2005. A more detailed breakdown of the increasedecrease data is presented by company size in Figure C-3. While no fewer than half the
companies within each size category are planning to cut-back on packaging machinery
expenditures, the smaller plants (fewer than 100 employees) exhibit the least favorable ratio.
While, certain external market factors (to be discussed) have significantly influenced the
2006 outlook for the smallest plants as well as for the market as a whole, it is worth noting
that in 2005 the segment’s smallest plants exhibited the best increase-decrease ratio favoring
positive breadth. Therefore, the cyclical effect of recent heavy spending for that group
undoubtedly played a role in their 2006 projections.
But Respondents Allow Possibility for Improvement
With the understanding that budgets for capital expenditures are often subject to change, each
respondent was asked a pair of questions dealing with the potential for revisions in their
130
spending plans as the year progresses. The first asked them to rate on a scale of 1 to 10 their
packaging machinery budget’s susceptibility to adjustment – either up or down – in response
FIGURE C-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE CHEMICAL PRODUCTS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
14%
12%
10%
8%
6%
4%
High Point of
Range
2%
% Change
0%
-2%
Low Point of
Range
-4%
-6%
-8%
-10%
-12%
-14%
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: PMMI
to changing economic and/or market factors. A rating of 1 means that they feel their budget
is ‘set in stone’ and a rating of 10 means that it is ‘very susceptible to change’. As shown in
Figure C-4, one-third rated their budget plans at ‘1’ or ‘set in stone’, leaving two-thirds that
characterized their estimates as at least somewhat changeable based on ratings between ‘2’
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and ‘10’. Moreover, 44 percent placed their rating between ‘6’ and ‘10’ insinuating their
plans are fairly to very changeable. As a follow-up, they were asked: “If the budget were to
be adjusted, which direction would you expect it to likely go – up, down, or is either
FIGURE C-2
PERCENT OF THE CHEMICAL PRODUCTS SEGMENT SAMPLE
PROJECTING AN INCREASE, DECREASE, AND NO CHANGE IN
PACKAGING MACHINERY EXPENDITURES
COMPARISON 2006 VERSUS 2005
(Based on Conditions Existing as of January & February 2006)
Will Increase Spending
34%
Will Reduce Spending
51%
Will Spend About the
Same
15%
Source: PMMI
direction equally possible?” Based on the response, it appears that the segment’s spending
budgets are much more likely to be adjusted higher than lower as the year unfolds (Figure C5). Many who favored an upward revision commented that the possibility of additional
business from new product introductions and/or stronger than anticipated market demand was
the basis for their reasoning. Others simply stated “it can only go up” because their current
estimates only include purchases that are absolutely necessary and do not account for
unanticipated needs that may arise during the year. On the other hand, the vast majority of
those leaning toward a downward revision attributed their reasoning to the potential for
further slowing of market demand.
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FIGURE C-3
PERCENT OF THE CHEMICAL PRODUCTS SEGMENT SAMPLE
PROJECTING AN INCREASE, DECREASE, AND NO CHANGE IN
PACKAGING MACHINERY EXPENDITURES 2006 VS 2005
BY COMPANIES' EMPLOYEE PLANT SIZE
(Based on Conditions As Of January/February 2006)
100%
90%
80%
50%
53%
70%
50%
60%
Project Decrease
for 2006
Project No Change
for 2006
50%
6%
40%
Project Increase for
2006
23%
30%
50%
41%
20%
10%
27%
0%
Less than 100
Employees
100 to 499 Employees Over 500 Employees
Source: PMMI
Reasons for Less Spending This Year
As revealed earlier, slightly over half the chemical segment’s respondents (51%) expect their
plant(s) to spend less for packaging machinery this year than in 2005, and as shown in Figure
C-6, 48 percent of those attributed the cut-back to the adequacy of their existing machinery to
handle their current packaging needs. An additional 33 percent specifically noted that they
spent heavily for packaging machinery in 2005 and therefore are either adequately equipped
or unable to match the volume of spending again this year.
133
FIGURE C-4
THE CHEMICAL SEGMENT SAMPLE’S RATINGS REGARDING SUSCEPTIBILITY OF
THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE FROM CURRENTLY
PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
70%
60%
50%
40%
44%
33%
% of Responses 30%
23%
20%
10%
0%
1
2 to 5
6 to 10
Ratings
Source: PMMI
Reasons for Higher Spending in 2006
Of the 34 percent of chemical segment respondents planning to increase spending for
packaging machinery in 2006, the vast majority (91%) indicated that at least in part, they are
doing so to improve packaging line efficiency and/or productivity (Figure C-7). Fifty-three
percent said they need to increase the capacity of their existing packaging operation, and 34
percent are aiming to reduce labor and/or maintenance costs.
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following underlying market trends merit monitoring throughout the year.
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Factors Limiting Packaging Machinery Spending in 2006
A. Look for continuation of effects from high raw material costs Leading up to 2006,
high oil and natural gas prices have forced chemical companies to either pass the added
manufacturing costs on to customers or to endure lower profits.
B. Expect lingering effects of 2005 Gulf Coast hurricanes Many chemical product
manufacturers with plants on the gulf coast continue to suffer the damaging effects from
the recent hurricane season.
FIGURE C-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGETS WERE ALTERED, WOULD THE REVISION
MOST LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
Equal Chance It
Could Go Either Way
25%
More Likely Would
Be Revised Higher
57%
More Likely Would
Be Revised Lower
18%
Source: PMMI
135
C. More production to be moved overseas Reflecting rising costs of doing business in
the U.S., particularly in light of higher natural gas prices, many chemical producers
are moving their manufacturing operations to lower-cost regions such as Asia and the
Middle East.
D. Slower demand expected from the auto industry Chemical companies supplying
coatings for automobiles will continue to endure slowing sales to the struggling North
American auto industry.
FIGURE C-6
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE CHEMICALS SEGMENT
(Of the Respondents Who Indicated They
Will Reduce Spending in 2006)
Outsource Packaging More
5%
Closing Plant/Consolidation
5%
Lower Sales, Rising Costs
10%
Existing Machinery is
Adequate
48%
Made Major Purchases in
2005
33%
0%
10%
20%
Source: PMMI
136
30%
40%
50%
60%
Factors Supporting Spending in 2006
A. Possible easing of natural gas prices this year Many chemical industry analysts
are optimistic that chemical companies’ profits will improve in 2006, based heavily
on the expectation of lower natural gas prices. Notably, a significant number of the
segment’s respondents made it clear that their spending projections for this year are
not ‘set in stone’ and could go higher if the market improves (Figures C-4 and C-5).
B. High rate of new product introductions U.S. chemical product manufacturers
will continue to introduce many new products as a way of differentiating themselves
from competitors.
FIGURE C-7
THE UNDERLYING REASONS FOR ORDERING PACKAGING
MACHINERY IN 2006 BY THE CHEMICALS SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
3%
Building New Plants
22%
Accommodate New Product Lines/New Package Designs
91%
Improve Efficiency/Prod. of Existing Packaging Ops.
Improve Ergonomics/Worker Safety
9%
12%
Add Flexibility/Reduce Downtime
34%
Reduce Labor/Maintenance Costs
53%
Adding Capacity to Existing Packaging Operations
Source: PMMI
0%
10%
137
20%
30%
40%
50%
60%
70%
80%
90% 100%
C. Continued focus on improving plant efficiency In light of increased
manufacturing costs, many chemical product firms are focusing efforts on expanding
automation and improving efficiency of their U.S. plants. Figure C-7, reveals that 91
percent of the respondents who plan to increase packaging machinery spending this
year are doing so, at least in part, to improve packaging line efficiency/productivity.
D. Lawn and garden products sector to remain a bright spot Linked with robust
home improvement product sales that appear to be continuing into 2006 despite a
slowdown in the housing market, lawn and garden chemical demand will remain
solid.
E. Robust paint and coatings sales for home improvements
The Chemical Segment Sample
Respondents from 44 companies classified within the chemical products segment were
interviewed in connection with the study. Of the total, three answered for all of their
respective organization’s domestic plant operations. The data provided by the sample
covered the packaging decisions of 68 plants and establishments. Significantly, 95.4
percent of the sample’s respondents took part in the study last year as well.
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PAPER PRODUCTS, TEXTILES, AND ALL OTHER SOFT GOODS
AND NON-DURABLES, N.E.C.
The Segment Defined
This is an extremely diverse market segment, which consists of a wide range of products,
generally falling into the non-durables category, i.e., consumer and commercial soft goods, such
as paper products and textiles, as well as some hard good disposables. More specific examples
include: stationery and writing tablets; computer and copying paper; napkins; paper towels;
facial and toilet tissue; sanitary napkins; disposable diapers; packaged clothing products, such as
socks, stockings, underwear, etc.; notions and novelties; pens and pencils; and a variety of other
miscellaneous products.
FIGURE ND-1
HISTORICAL PROJECTED GROWTH OF U.S. DOMESTIC SPENDING
FOR PACKAGING MACHINERY BY THE NON-DURABLE PRODUCTS SEGMENT
ACCORDING TO THE PMMI PURCHASING PLANS STUDIES 1998 – 2006
(Percent Range of Projected Annual Growth)
10%
8%
6%
4%
2%
Maximum Forecast
Range
0%
Percent Change %
-2%
Minimum Forecast
Range
-4%
-6%
-8%
-10%
-12%
-14%
1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: PMMI
139
Spending Expected to be Flat in Paper/Non-Durables Segment
The diverse group of industries, which together make up the U.S. paper/non-durables
segment, plan to spend approximately $346 million for packaging machinery in 2006 –
roughly the same as in 2005. The zero growth expectation (the mid-point of the -1% to +1%
forecast) is the fifth in as many years that does not show a meaningful increase (Figure ND1). The data presented in Figure ND-2, however, offer a potentially redeeming spin
FIGURE ND-2
PERCENT OF THE PAPER PRODUCTS, TEXTILES AND SOFT
GOODS/NON-DURABLES SEGMENT SAMPLE PROJECTING AN
INCREASE, DECREASE, AND NO CHANGE IN PACKAGING
MACHINERY EXPENDITURES
COMPARISON 2006 VERSUS 2005
(Based on Conditions as of Jan/Feb 2006)
Will Reduce
Spending
34%
Will Increase
Spending
50%
Will Spend About
the Same
16%
Source: PMMI
140
FIGURE ND-3
PERCENT OF THE PAPER, TEXTILES, SOFT-GOODS NON-DURABLE
PRODUCTS SAMPLE PROJECTING AN INCREASE, DECREASE, AND NO
CHANGE IN PACKAGING MACHINERY EXPENDITURES 2006 VS 2005
COMPARISON BY COMPANIES' PLANT SIZE
(As of Jan/Feb 2006)
100%
90%
23%
39%
80%
40%
40%
70%
Project Decrease
for 2006
23%
60%
15%
20%
50%
Project No Change
for 2006
40%
30%
46%
20%
Project Increase for
2006
60%
54%
40%
10%
0%
Less than 100
Employees
100 to 499
Employees
500 to 999
Employees
1000+
Employees
Source: PMMI
on the otherwise lackluster forecast. By a margin of 50 percent to 34 percent, the number of
respondents who indicated their plant(s) will spend more for packaging machinery this year
noticeably exceeds the group estimating a decline. The favorable ratio, though encouraging
in terms of its potential to produce a positive momentum swing, does not necessarily translate
into higher overall dollar expenditures for two reasons. First, a closer look at the findings
shows that many of the projected increases are just slightly above last year’s totals, barely
offsetting the fewer, but often more dramatic projected cut-backs. Second, as revealed in
Figure ND-3, a significant portion of the projected declines are from the bigger plants, which
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due to their size, account for a disproportionately larger amount of the segment’s annual
capital spending total.
Potential for Adjustment as Year Progresses
With the understanding that budgets for capital expenditures are often subject to change, each
respondent was asked a pair of questions dealing with the potential for revisions in their
spending plans as the year progresses. The first asked them to rate on a scale of 1 to 10 their
packaging machinery budget’s susceptibility to adjustment – either up or down – in response
to changing economic and/or market factors. A rating of 1 means that they feel their budget
is ‘set in stone’ and a rating of 10 means that it is ‘very susceptible to change’.
FIGURE ND-4
THE NON-DURABLE SEGMENT SAMPLE’S RATINGS REGARDING SUSCEPTIBILITY
OF THEIR 2006 PACKAGING MACHINERY BUDGETS TO CHANGE FROM
CURRENTLY PROJECTED LEVELS
(Respondents rated their budget’s ‘susceptibility to change’ on a scale from 1 to 10 with 1
meaning the budget is ‘set in stone’ and 10 meaning it is ‘very changeable’)
50%
45%
40%
40%
34%
35%
30%
% of Responses
26%
25%
20%
15%
10%
5%
0%
1
2 to 5
Ratings
Source: PMMI
142
6 to 10
FIGURE ND-5
THE SAMPLE'S ASSESSMENT: IF THEIR CURRENT 2006 PACKAGING
MACHINERY BUDGET WERE ALTERED, WOULD THE REVISION MOST
LIKELY BE HIGHER OR LOWER?
(Based on Conditions Existing as of January/February 2006)
More Likely Would
Be Revised Higher
43%
Equal Chance It
Could Go Either Way
35%
More Likely Would
Be Revised Lower
22%
Source: PMMI
The results, presented in Figure ND-4, indicate that just over one-quarter of the respondents
labeled their budgets as being ‘set in stone’. On the other hand, 40 percent categorized their
spending plans as somewhat changeable (rating between ‘2’ and ‘5’), and 34 percent placed
their ratings in the range of moderately to very changeable (between ‘6’ and ‘10’. Next,
respondents were asked: “If the budget were to be adjusted, which direction you would
expect it to likely go – up, down, or is either direction equally possible?” The findings
undoubtedly favor upward corrections over cut-backs by a margin of 43 percent to 22
percent, with 35 percent reporting no bias in either direction (Figure ND-5). Many of the
respondents who indicated their spending would more likely be adjusted higher rationalized
that their current budgets will satisfy just a bare minimum of their packaging needs for the
year, so any change that occurs would have to be an increase. Others more specifically
143
pointed to the potential for either packaging related changes passed down by management or
simply greater market demand as reasons their spending would go higher. Conversely, many
of the respondents who believe a downward revision is more likely said worsening market
conditions would cause management to make cuts; while still others said money could be
redirected to other areas with more pressing needs.
FIGURE ND-6
THE UNDERLYING REASONS FOR ORDERING PACKAGING
MACHINERY IN 2006 BY THE NON-DURABLES SEGMENT
(For Respondents Who Indicated They Will Order
Packaging Machinery in 2006)
Accommodate New Product
Lines/New Package Designs
30%
Improve Efficiency/Prod. of
Existing Packaging Ops.
90%
Improve Ergonomics/Worker
Safety
3%
Add Flexibility/Reduce
Downtime
3%
Reduce Labor/Maintenance
Costs
23%
Adding Capacity to Existing
Packaging Operations
23%
Source: PMMI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Reasons for Ordering Machinery in 2006
Figure ND-6 provides a breakdown of the reasons respondents cited for buying packaging
machinery this year. As indicated by the bar chart, the vast majority – 90 percent – reported
that at least one of the major reasons is to improve the efficiency and/or productivity of their
packaging operations, while 30 percent mentioned the need to accommodate new packaging
requirements as a significant factor. Also, 23 percent said they are buying machinery to
reduce labor and maintenance costs, and 23 percent gave as their primary reason, plans to
expand the packaging capacity of their existing operations.
144
Reasons for Reducing Spending in 2006
As indicated earlier, 34 percent of the segment’s companies will spend less for packaging
machinery this year than in 2005. Of those, 27 percent are doing so at least partially as a
result of heavy spending in 2005, while respondents from an additional 27 percent indicated
that their existing machinery can adequately handle their current packaging needs. And
another 27 percent broadly attributed the decline to general budget cuts. Notably, 20 percent
specifically mentioned that plant closings and consolidation contributed to the cut-backs.
FIGURE ND-7
THE UNDERLYING REASONS FOR REDUCING SPENDING ON
PACKAGING MACHINERY IN 2006
BY THE NON-DURABLES SEGMENT
(Of the Respondents That Indicated They
Will Reduce Spending in 2006)
20%
Plant Closing/Consolidation
Other Priorities
7%
Budget Cuts
27%
Existing Machinery is
Adequate
27%
Made Major Purchases in
2005
27%
0%
5%
10%
15%
20%
25%
30%
Source: PMMI
Trends to Watch in 2006
While the respondents’ comments provide fairly general insight into their current budgetary
considerations, the following underlying market trends merit monitoring throughout the year.
145
Factors Supporting Spending for Packaging Machinery
A. Paper Industry will continue its focus on improving packaging efficiency Faced
with increasing domestic and global competition, higher raw materials costs, and
higher energy costs, many in paper-based industries such as diapers, tissues, wipes,
and office paper, among others, are actively searching for greater efficiencies in their
manufacturing processes, particularly packaging operations. As Figure ND-6,
reveals, 90 percent of the segment’s respondents indicated that increasing packaging
line efficiency and/or productivity is a primary motive for their planned expenditures
in 2006.
B. Look for continued high demand for pre-moistened and dry wipes Companies
will continue to introduce a number of new products related to the growing popularity
of disposable wipes for a variety of household cleaning applications and personal care
uses.
C. Expect ongoing development of new packaging styles and configurations
associated with convenience trend in consumer tissue, baby wipe, diaper
markets Consumer packaged goods companies will continue to introduce their
products in a host of new, more portable, convenient, and single-use packages to
stimulate demand in otherwise saturated markets.
D. High capacity utilization rates in paper industry to be sustained According to
U.S. government data, average plant capacity rates among companies in the U.S.
paper industry have been hovering above 87 percent during the first two months of
2006. While the high rate is partially due to the effects of industry consolidation, it
nonetheless represents a positive sign for the market.
Factors Limiting Further Spending for Packaging Machinery
A. Rising Manufacturing Costs While higher raw materials and energy costs are in
some cases causing manufacturers to upgrade to newer, more efficient packaging
146
equipment as a means of reducing costs, they are also forcing some companies to
delay or cancel new capital spending projects.
B. Further consolidation and plant closings Fierce global competition and high
manufacturing costs continue to force U.S. manufacturers in the paper and apparel
industries to move operations to lower-cost producers overseas and/or to create
greater efficiencies domestically through consolidation.
C. Increasing availability of lower-cost reconditioned and/or used packaging
machinery associated with industry consolidation
The Segment’s Sample
Thirty-nine (39) respondents representing 90 plants within the paper products, textiles, and
all other soft goods and non-durables products segment provided information and data for
this study. The companies include manufacturers of tissues, napkins, paper towels, office
supplies, pre-moisture wipes, greeting cards, paper, hosiery and underwear, pens, carpets,
tack cloth, paper plates/cups/bowls, pads/notebooks, men’s and women’s undergarments,
sanitary paper products, and other related items. Of the respondents interviewed, three (3)
answered for the packaging operations of all their respective companies’ plants. In addition,
76.9 percent of the sample participated in last year’s study as well.
147