Folding Cartons: Fighting on Several Fronts
Folding carton suppliers and converters are relying on inherent product
and market strengths to fend off competitive threats.
March 2006
by Tom Polischuk
|
The folding carton packaging market is working through some challenging times. Integrated companies and converters/printers alike are dealing with such issues as rising energy costs, overcapacity, overseas competition, and alternative packaging solutions.
Despite these challenges, or more appropriately, because of them, industry players are circling the wagons, focusing on the strengths of their product attributes and making the difficult decisions required to consolidate and reduce costs.
Commenting on his outlook for Smurfit-Stone Container Corp., Patrick J. Moore, chairman, president, and CEO, states, “The company faces critical challenges and opportunities as a result of dramatic shifts in the market that call for a profound change at Smurfit-Stone. We recently announced key strategic initiatives to address market realities and are fully engaged in executing this plan. These initiatives include changes in key operating management positions, actions to drive lower costs in our manufacturing system and achieve specific cost and performance targets, and kicking off a customer-focused approach to the marketplace that should provide the foundation for long-term improvement in our results.”
With these initiatives and changes in the market, Moore sees some bright spots. “Market conditions have finally begun to improve. Packaging demand has rebounded, our inventories are at their lowest level in years, and we are implementing previously announced price increases and cost reduction initiatives.”
His comments provide a summary view of the market/business climate faced by companies in the folding carton packaging industry. The Freedonia Group, in its study titled “Corrugated & Paperboard Boxes” released in November 2005, projects the demand for corrugated and paperboard boxes to increase 2.1 percent per year to more than $34 billion in 2009. Specifically for folding cartons, it sees more modest increases through 2009 as this packaging medium faces “intense competition from alternative packaging.” However, Freedonia believes the folding cartons segment “will benefit from advances in printing and paperboard graphics capabilities, as well as a positive environmental image.”
According to the study, food and beverage will continue to be the largest market, accounting for 40 percent of the corrugated and folding carton demand through the period. Beer and soft drink beverage carriers, as well as growth in food products will be important factors in maintaining this strong position.
2005 in review
In its end-of-year Market Flash Report, the Paperboard Packaging Council (PPC) reported that folding carton shipments reached an estimated $9 billion and 5.7 million tons in 2005. These levels reflect a 2.6 percent tonnage decrease and a 0.3 percent decrease in dollar value.
Despite these challenges, or more appropriately, because of them, industry players are circling the wagons, focusing on the strengths of their product attributes and making the difficult decisions required to consolidate and reduce costs.
Commenting on his outlook for Smurfit-Stone Container Corp., Patrick J. Moore, chairman, president, and CEO, states, “The company faces critical challenges and opportunities as a result of dramatic shifts in the market that call for a profound change at Smurfit-Stone. We recently announced key strategic initiatives to address market realities and are fully engaged in executing this plan. These initiatives include changes in key operating management positions, actions to drive lower costs in our manufacturing system and achieve specific cost and performance targets, and kicking off a customer-focused approach to the marketplace that should provide the foundation for long-term improvement in our results.”
With these initiatives and changes in the market, Moore sees some bright spots. “Market conditions have finally begun to improve. Packaging demand has rebounded, our inventories are at their lowest level in years, and we are implementing previously announced price increases and cost reduction initiatives.”
His comments provide a summary view of the market/business climate faced by companies in the folding carton packaging industry. The Freedonia Group, in its study titled “Corrugated & Paperboard Boxes” released in November 2005, projects the demand for corrugated and paperboard boxes to increase 2.1 percent per year to more than $34 billion in 2009. Specifically for folding cartons, it sees more modest increases through 2009 as this packaging medium faces “intense competition from alternative packaging.” However, Freedonia believes the folding cartons segment “will benefit from advances in printing and paperboard graphics capabilities, as well as a positive environmental image.”
According to the study, food and beverage will continue to be the largest market, accounting for 40 percent of the corrugated and folding carton demand through the period. Beer and soft drink beverage carriers, as well as growth in food products will be important factors in maintaining this strong position.
2005 in review
In its end-of-year Market Flash Report, the Paperboard Packaging Council (PPC) reported that folding carton shipments reached an estimated $9 billion and 5.7 million tons in 2005. These levels reflect a 2.6 percent tonnage decrease and a 0.3 percent decrease in dollar value.
Companies Mentioned:
 |
|
Chemistry for the Graphic Arts
What the Printer Should Know About Paper