Demand for packaging machinery still increasing

21-Jul-2008 - Last updated on 23-Jul-2008 at 14:03 GMT

US Industry association PMMI says that its most recent survey confirms that personal care companies anticipate spending more on packaging equipment this year.

The survey, which was carried out in December of last year and then again in April and May of this year, shows that the sector is bucking the trend as many companies have been adjusting their budgets for packaging machinery spend downwards.

More than half of the respondents said that they would stick with budget spends conceived at the start of the year, while the remainder was evenly split between increasing budgets and scaling back, the survey found.

Personal care budgets continue to rise

In the personal care sector, survey respondents said that they anticipated average budgets to remain stable at the beginning of the year but had increased this figure by 2 percent for the second round of the survey.

In the food sector, company budgets were predicted to increase by 1 percent at the beginning of the year and by 3 percent when asked later in the year.

However, in most other consumer goods sectors, predicted budget spends had fallen by the second round of the survey, underlined by the paper and textiles sector which had predicted a budget decrease of 2 percent at the end of the year, reducing spend by 4 percent for the second round of the survey.

The findings are further proof of the fact that things are slowing down in the manufacturing sector as a whole, prompted by rising commodity prices pressurizing manufacturing margins, both in the US and worldwide.

But the fact that estimated packaging machinery spend is predicted to rise for the personal care sector is surprising, especially given the fact that the industry is being hit just as hard as any other by rising manufacturing costs.

Personal care gets even more competitive

This may be partly explained by the fact that in an increasingly competitive market, many personal care companies believe that now is the time to be spending on packaging upgrades and redesigns as a means of staying one step ahead of the competition.

Likewise, this points to the fact that sustainability issues are prompting many manufacturers to upgrade, as they strive to produce packaging using less bulk, more recyclable materials and to meet shelf-life requirements.

The survey findings appear to agree with this, stating that amongst the companies anticipating increasing the spend for packaging machinery budgets, several market forces are likely to lead to budget increases.

"Packagers are bringing in new machinery for two leading reasons: to accommodate new products and to increase capacity for existing products," said Charles Yusaka, CEO of PMMI.

But equally, the association points to the fact that weaker demand for certain consumer goods has been the main reason why budgets in other segments have been cut back.

Whether this will also be the case for the personal care segment in the future will depend on consumer spending, currently being chiselled away by inflation.