North American Folding Carton Markets Showing Positive Growth

At the 2013 European Carton Makers Association (ECMA) Congress in Dubrovnik, Croatia, Ben Markens (see photo), president of the Paperboard Packaging Council (PPC), delivered a presentation on PPC's newly released Trends 2013 Industry Outlook and Market Data Report, the 2013 Business Sentiment Report to some 150-plus attendees. Markens described the results of, and discussed the legislative changes and challenges currently affecting, the North American paperboard packaging industry
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Highlights from his presentation included the 1.2% increase in 2012 of North American folding carton shipments—an encouraging uptick after four consecutive years of decline. He also noted that based on a recent Business Sentiment survey, which tracks data from North American and European folding carton manufacturers, North American converters are significantly more hopeful about business growth than their European counterparts.

"It was an honor to be invited to present at ECMA again this year, said Ben Markens. "As our European counterparts in the industry, it is important that we learn about their latest advancements and what obstacles they are encountering, and share the latest trends we've observed here in North America." 

Produced by RISI, Boston, Mass., USA, the Trends 2013 Industry Outlook and Market Data Report is organized into business conditions, folding carton industry forecasts, and the trends for 17 key end-use markets such as pharmaceuticals, tobacco, and dairy products. While the Trends report is free to PPC members, a summary of the findings is available at paperbox.org/trends.

A summary of the report shows that, after four years of decline, 2012 saw the first positive growth in the folding carton industry—a 1.2% increase in tons shipped. While moderate growth is expected to continue through 2015, 2012 shipments still fell approximately 537,000 tons short of the total reached in 2007. Slow growth in tons of cartons shipped is expected to continue, averaging 0.8% per year between 2013 and 2017.
 

Cumulative folding carton shipments remained 9.2% below the 2007 peak. Historically, carton demand has lagged approximately 2% behind overall growth in consumer spending on nondurable goods, a pattern that was fairly consistent throughout the macroeconomic cycles of the past decade. In 2008-09, folding carton shipments plummeted 6.6%, which was in line with the 3.0% decline in consumer spending on nondurables. However, in 2010-11, carton demand continued to decline 4.1% while nondurable spending increased 4.6%. The Great Recession's impact on the industry will be felt for years to come.

The U.S. economy continues its gradual return to growth, and consumer spending has increased at the fastest rate in more than two years. Consumer deleveraging, assisted by low interest rates, has reduced the household debt service ratio to its lowest point since 1980. Perhaps just as important as slow but marked increasing employment, household wealth has returned to the level just prior to the Great Recession, on the backs of a rebound in home prices and a seemingly unstoppable stock market.

Housing has finally started to rebound and is now one of the key drivers of the U.S. economy. For the first time since 2005, housing added to overall GDP growth and should continue to do so for the near to medium term. Housing starts have rebounded dramatically and prices have risen almost 10%, compared with the same time last year. With interest rates remaining low, affordability of homes remains near all-time highs. U.S. real GDP is expected to grow by 2.2% in 2013 and 3.3% in 2014.