John Kalkowski

January 30, 2014

2 Min Read
Flexible packaging revenues expected to grow 8.1% in 2011

Based on a continuing economic recovery, the U.S. flexible packaging industry is expected to see sales grow to over $27.5 billion or about 8.1 percent in 2011, according to a state-of-the-industry presentation by William Burke, president and COO, Nordenia USA, and chairman of the Flexible Packaging Association (FPA). That is about $2 billion more than in 2010 and nearly $4 billion above the severe dip in industry activity during 2008.

Speaking at the group's annual meeting last week in Florida, Burke says the FPA expects that the flexible packaging sector not only will see higher revenues, but volume will be higher and profits are expected to be up slightly. The FPA also sees significant opportunities for its members due to increasing conversion from rigid to flexible packaging, growth in emerging markets and ongoing industry innovation.

An important factor, Burke says, is that flexible packaging has made significant reductions in material usage through downgauging, while seeing large productivity gains. As a relative measure of productivity, Burke points out that average sales per employee leaped to $322,000 per employee in 2010 from $213,000 in 2000.

The top concern for businesses in flexible packaging continues to be volatility in the cost and availability of raw materials that could be exacerbated by recent volatility in the petroleum market, which provides the basic feedstock for many flexible applications.

Burke says that other areas of ongoing focus for flexible packaging include the competitive market environment, industry consolidation, imports and sustainability initiatives. He pointed out that flexibles continue to be one of the fastest growing segment of the packaging market , and that the sustainability benefits are major contributors to that growth.

The FPA report also indicates that imports of flexible packaging to the U.S. are growing faster than exports, with imports of about $2.8 billion in 2009 versus exports of $1.3 billion in that same period. Of the total imports, 37 percent are from China. At the same time, only 2 percent of U.S. flexible packaging exports go to China.

Burke says that U.S. packaging companies do enjoy some advantages in their own market. The U.S., he says, is a very large market with complex demands, such as short runs and limited delivery windows , which can only be met by companies able to deliver within shorter time frames. Also, many imports are lower-value, unprinted items manufactured with long lead times, such as retail poly bags.

Burke and other speakers at the FPA's annual event noted that mergers and acquisitions in flexible packaging rose sharply in 2010, and that trend is likely to continue in 2011. Flexible packaging remains an attractive investment , they say, due to its steady growth that is less affected by economic swings than other industries.

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