PLASTICS CUSTOM RESEARCH SERVICES
695 Burton Road
Advance, NC 27006
NEW MARKET DYNAMICS IN THERMOFORMED PACKAGING
The period 2001-2004 has been a tumultuous time for North American plastics processors, depending on the markets they serve. The irrational exuberance of the second half of the 1990s has left a legacy of over-capacity in many industries. China has emerged as a formidable competitor in the global market for manufactured goods. The events of 9/11/01 adversely impacted consumer and producer confidence, and economic conditions in all three regional economies deteriorated. Only in 2004 did these economies regain some semblance of supply/demand balance.
Intuitively one would think that the packaging thermoformers would have sailed safely through these turbulent waters since the majority of their output is directed to relatively recession-resistant markets such as food processing, food-service, healthcare/medical/pharmaceutical, and consumer products. Yet the packaging thermoformers also serve a wide range of durable good manufacturing industries that have felt the brunt of recent domestic and global market disruptions. As a result the growth of the overall regional thermoformed packaging business slowed down perceptibly in 2002, and not all lost sales were recovered in 2003 and 2004. In fact, most of the growth in the value of thermoformed packaging in 2004 was related more to an unprecedented series of resin price increases than underlying volume growth. Some packaging thermoformers were able to pass along a portion of this raw material cost increase whereas others were not. And since raw material figures so prominently in the total cost calculus of thermoformed packaging the result was an industry-wide profit compression.
In 2002 PCRS conducted its initial survey of the packaging thermoformers and the companies on their material/machinery/tooling supply chain. Over the period December 2004-February 2005 we revisited this marketplace. Our primary objective was to determine the pattern of growth and technological change in this business over the recent past, as well as the strategies being pursued to fuel future growth and productivity improvements. We determined that at this stage a whole new set of market dynamics and market imperatives exists. The response by several of the larger players has been to seek additional economies of scale through corporate consolidation, and consequently the degree of industry concentration has increased. The response by several of the mid-sized players has been to pursue increased vertical integration, bringing either sheet extrusion or tool-building in-house or adding contract packaging to their repertoire. Meanwhile the response by virtually all players has been to accelerate their cycle times and improve their overall plant efficiency, retiring some older machines and installing new ones, including larger machines able to accommodate larger-cavitation tooling.
The packaging thermoformers are responding to new conditions applying in their customer base. Long-term economic and demographic changes have created an increased demand for take-out packages in restaurants and portion packaging in delis and grocery stores. The mass-merchandisers have assumed a more active role in package specifications, and they prefer clear, see-through, tamper-evident packaging. They are also pursuing cost economies throughout their distribution channels, and radio frequency identification (RFID) will play a role in this process in the future. And as for the ultimate end-use consumers, they are finally beginning to accept the merits of biodegradable packaging.
Publication: March 2005
TABLE OF CONTENTS
FOREWORD BY DR. JAMES L. THRONE
PART I - AN OVERVIEW OF THE PLASTIC PACKAGING BUSINESS
The Essentials of the Thermoforming Process
Thin-Gauge versus Heavy-Gauge Sheet Thermoforming
The Cost/Performance Advantages of Thermoformed Packaging
PART II – THE EVOLVING ECONOMICS OF THERMOFORMED PACKAGING
The Recent Growth Dynamics in Thermoformed Packaging
Corporate Consolidation in Thermoformed Packaging
The New Resin Pricing Regime
The Drive to Vertical Integration
The Changing Production Function in Thermoformed Packaging
PART III – THE SIZE AND GROWTH OF THE THERMOFORMED PACKAGING BUSINESS
Value Growth: Annual Sales of Thermoformed Packaging Output, 2001-2004
Volume Growth: The Consumption of Plastic Material in Thermoformed Packaging, 2001-2004
The Likely Future Growth of Thermoformed Packaging Value and Volume, 2004-2009
PART IV – THE THERMOFORMED PACKAGING PROCESSORS
The Shares of Captive, Custom and Proprietary Thermoformed Packaging
The Extent of Multi-Dimensional Thermoforming: Packaging and Industrial Product Customer Bases
The Geographical Distribution of Thermoformed Packaging Plants
Intra-Regional Distribution
Inter-Regional Distribution
PART V – THE PACKAGING THERMOFORMERS’ SUPPLY CHAIN
The Resins Used in Thin-Gauge Sheet for Thermoformed Packaging
The Styrenics (EPS, HIPS, OPS)
Polyvinyl Chloride (PVC)
Polyethylene Terephthalate (PET)
The PET Supply/Demand Balance
Amorphous PET (APET)
Crystalline PET (CPET)
PET Glycol (PETG)
Foamed PET
Recycled PET (RPET, RPETG)
Polypropylene (PP)
Polyethylene (HDPE, LDPE)
Polylactic Acid (PLA)
Other Specialty Resins
Recent Resin Price Increases: The Trend to Resin-Switching
The Distribution of Resins in Thermoformed Packaging, 2001-2009
Leading Commercial Thin-Gauge Sheet Extruders
The Machinery for Thermoformed Packaging
Leading Suppliers of Thermoformed Packaging Machinery
The Tooling for Thermoformed Packaging
Leading Suppliers of Tooling for Thermoformed Packaging
PART VI – THE MAIN APPLICATIONS AND MARKETS FOR THERMOFORMED PACKAGING
Primary Thermoformed Packaging Applications
Blister Packs
Clamshells
Cups and Containers
Trays
Others
Primary Thermoformed Packaging Markets
Airline Products
Automotive Products
Electronic Products
Food Products
Food-Service Products
Healthcare/Pharmaceutical Products
Medical Products
The Size and Growth of Thermoformed Packaging Markets, 2001-2009
PART VII – OPPORTUNITIES AND CHALLENGES CONFRONTING THE PACKAGING
THERMOFORMERS
The Recent Pattern of Technological Change in Thermoformed Packaging
Package Integrity vs. Consumer Convenience
Radio Frequency Identification (RFID)
Globalization: The Looming Challenge of Competing with China
The Emergence of Global Packaging Standards: US/EU Harmonization
PART VIII – PROFILES OF PLAYERS IN THERMOFORMED PACKAGING
The Hierarchy of Players in Thermoformed Packaging
The Distribution of U.S., Canadian and Mexican Packaging Thermoformers
The Presence of Global Companies in Regional Thermoformed Packaging
Profiles of Players (82 companies in total)
APPENDIX: THE PCRS THERMOFORMED PACKAGING SURVEY QUESTIONNAIRE
145 Pages 24 Tables 10 Figures
ABOUT THE AUTHOR
Dr. Peter J. Mooney is the founder and president of Plastics Custom Research Services. Dr. Mooney holds a Ph.D. in economics from the University of North Carolina, and he has covered the plastics industry as a technical/economic market research analyst and consultant since 1980. He is a member of several plastics industry associations such as the Society of the Plastics Industry, the Society of Plastics Engineers, and the Association of Rotational Molders. He is also a member of the National Association of Business Economists. He has researched and written over 75 multi-client reports, as well as over 100 single-client reports, in the field of plastics and related industries. He has also organized, chaired, and made presentations to numerous conferences on critical issues facing the domestic and global plastics industry.
ABOUT PLASTICS CUSTOM RESEARCH SERVICES
Plastics Custom Research Services was formed in 1993 in response to the growing demand for accurate and insightful market research tailored to the evolving needs of plastic industry participants. PCRS is able to utilize research methods developed through 25 years of experience in this field - methods that yield cost-effective and timely data and insights of relevance to the product and service offerings of the plastics industry. These research methods include telephone-based and in-person surveys of key decision-making officials in the field, as well as hard-copy and electronic searches of trade literature and patents. Research findings, conclusions and recommendations are provided in written and oral reporting formats. PCRS also provides multi-client Plastics Industry Reports, dealing with subjects that are part of its core competencies and that have relevance to a wide range of plastics industry operatives.