By Fred Wilkinson
Chief Editor

LAS VEGAS – According to PMMI research, economic uncertainty and high interest rates have led to conservative spending for packaging equipment by many end-users.

PMMI’s Vice President, Market Development, Jorge Izquierdo provided a packaging equipment marketplace update to the crowd at the State of the Packaging Industry presentation during Pack Expo Las Vegas 2023 in September.

PMMI market research suggests that while projects have not largely been canceled, they are being delayed while the market is in a “wait and see” mentality. This is slowing the growth of shipments in 2023 to a lower, yet healthy, 3.4% for the year.

Also in its State of the Packaging Industry Report 2023, PMMI said, “There are a few instances of large planned expansions which were announced in 2023; notably, Tyson’s $1.3bn investment which it plans to see through over our forecast period. However, this is the exception. We believe food manufacturers are in a holding pattern given the current economic uncertainty which is likely to dampen market growth during 2023 and 2024.”

PMMI's report found the U.S. packaging machinery market for the food sector grew in total revenue value by end-user from $2.6 billion in 2016 to more than $3.8 billion in 2021. PMMI packaging market growth projections suggest the food sector’s total revenue value by end-user will surpass $5.6 billion by 2027.

Among other key report findings:

• Higher interest rates disproportionately affect end-user demand — Continued higher rates for borrowing are leading many smaller customers that are more reliant on borrowed funds to delay planned investments. Higher interest rates have not impacted large, cash-heavy end-users to the same degree.
• Price increases have largely cooled in 2023 — A high inflationary environment coupled with widespread supply shortages led to price increases by the majority of packaging machine builders in 2021 and 2022. Many core component prices experienced increases in the double digits. Large price increases have stopped in 2023 as raw material prices and component costs have begun to fall. However, component costs faced by machine builders are likely to remain sticky.
• End-of-line machinery growing above market average — The fastest-growing machine types in the packaging machinery market are at the end-of-line. Greater penetration of automation within warehousing and logistics operations, in addition to challenges surrounding hiring and retaining labor for manual tasks, has fueled growth for end-of-line machinery. Palletizers, case packers, and wrapping and bundling machines are among machine types seeing growth above market average as a result.
• Sustainable packaging continues to drive machinery design — Ongoing emphasis by large CPG companies to increase the sustainability of the packaging used for their products continues, whether using more environmentally friendly materials or less material entirely. This trend increases the complexity of machine design, requiring packaging machinery that can handle more delicate items. Machines need to be adaptable to changing needs, driving an increased level of automation.
• Rise of the robots — The proliferation of robots across manufacturing continues to drive the cost of implementing such systems down. Robotic systems are growing particularly strong in end-of-line applications, such as robotic palletizers. Robotic palletizer sales have been growing steadily above conventional due to their broad applicability and low price point.

www.provisoneronline.com   |   october 2023