In 2006, U.S. shipments of packaging machinery (excluding parts and service) climbed 6 percent to an estimated $6.110 billion, extending the industry's string of consecutive annual increases to five years, according to Packaging Machinery Manufacturers Institute (PMMI, www.pmmi.org). Nearly all of the growth materialized in the domestic market, which, at an estimated value of $5.098 billion, accounted for roughly 83 percent of the total.

Unyielding pressure to reduce manufacturing labor costs and improve packaging line productivity, combined with increasing packaging line flexibility demands, compelled U.S. customers to add and/or upgrade machinery during the year.

Dollar-value estimates and growth forecasts presented in the 2007 Packaging Machinery Manufacturers Institute Shipments & Outlook Study are based on the projection of trends and growth prospects by individual machinery category together with analyses of economic data and relating developments.

Five years strong

U.S. packaging machinery shipments have increased in each of the past five years, highlighted by an especially robust and consistent growth pattern extending from 2004 through 2006. The condition of the general U.S. economy (GDP) has historically tended to be the single most influential factor of the many that affect the growth or decline of U.S. packaging machinery shipments, and the recent string of solid annual U.S. GDP growth rates from 2004 to 2006—coinciding with the strong run-up in packaging machinery shipments during that same period—lend further support to the pattern. At the same time, due to the increasing global influence on the packaging machinery marketplace, both in terms of expanding demand from emerging markets and intensifying competition from foreign packaging machinery manufacturers, international trends and economic conditions have begun to exert a more powerful weight on the U.S. packaging machinery industry's growth patterns and will likely wield even greater control.

U.S. domestic demand (the total of U.S. manufacturers' domestic shipments plus imports) increased by 8.4 percent in 2006 to $6.637 billion, following a nearly as strong 7.6 percent advance in 2005 and a sharper 9.8 percent gain in 2004. Throughout the solid three-year stretch, U.S. manufacturers' domestic shipments maintained a consistently high-single-digit growth rate, while the smaller imports component fluctuated more dramatically with growth rates of 14.2 percent in 2004, 2.7 percent in 2005, and 12.6 percent in 2006. Non-U.S. packaging machinery manufacturers have established a strong presence in the U.S. market and continue to grow in number and in extent of coverage each year, with a particularly strong push from emerging market competitors, such as China and Latin America. U.S. manufacturers continue to expand domestically as well, and more recently have been aided in competing against non-U.S. manufacturers by a weaker U.S. dollar.

Shipments by market

Food packagers accounted for the largest share of the dollar volume at 37 percent, followed by beverage packagers at 26.1 percent, and pharmaceutical/medical device packagers at 11.3 percent. Together, those three major market segments were responsible for nearly three-quarters of the year's total shipments (74.4 percent), more or less the same as in recent years. The other roughly one-quarter of the 2006 volume was generated by a variety of other defined market segments, each contributing between 3 and 5 percent of the year's total.

While the composition of the market has remained unchanged in the broad sense throughout the period, a more detailed assessment reveals an upward trend for the beverage segment since 2003, and a less pronounced, yet consistent growth pattern for the pharmaceutical/medical device segment throughout the five-year stretch.

Forecasts: 2007 to 2009

U.S. packaging machinery shipments are forecast to grow at an average annual real rate of 3.1 percent over the next three years, increasing from an estimated $6.110 billion in 2006 to $6.689 billion (constant 2006 dollars) by 2009. Growth is expected to be essentially flat in 2007, but will regain momentum in 2008 and 2009. The three-year projections for each of the study's defined machinery categories fall into a relatively narrow growth range of between 2 and 4.2 percent. Macroeconomic and market developments, which are expected to more or less impact shipments growth for the packaging machinery industry as a whole during the forecast period, are also factored heavily into the projections.

—Edited by Mary Ann Falkman, editor in chief, Packaging Digest