Top Folding Carton Converters — Clear Skies Ahead?

Things are looking good for folding carton converters in 2006.

In a July press release, the Paperboard Packaging Council (PPC) announced that folding carton shipments brought in about $4.7 billion and 2.9 million tons in the first half of the year. Shipments increased in dollars by 4.2 percent, and tons increased by 4.7 percent versus the same period last year. If the remainder of the year keeps in step with the first half, those numbers will pass those of 2005, which had decreased from the previous year.

“The primary reason for the lower growth in carton shipments [in 2005] was a much slower economy than expected, and slower industrial production during the first half of 2005. In spite of the slowdown, 2005 was the second strongest year in the past five year,s and expectations for 2006 are positive, as long as energy costs do not escalate too quickly. Economists are suggesting a stronger U.S. economy in 2006, and many are predicting a return to capital investment,” according to the PPC.

The PPC expects the economy to stay strong for the rest of the year and stated that the PMI index remains greater than 50. The Federal Reserve is reporting a 5.7 percent increase year-over-year in industrial production for the first half of 2006.

Converters stand strong

Although the overall economy slowed in 2005, a majority of the respondents to packagePRINTING’s Folding Carton Converters Survey reported that their businesses grew. Only about 10 percent of the converters’ businesses stayed the same and none reported a decrease.

And considering high expectations for the industry in 2006, converters are looking to keep up with the trend.

With 80 percent of respondents operating at capacity levels of less than 90 percent and 30 percent operating at less than 80 percent capacity, those converters hope to expand their businesses. About 67 percent of all of the respondents reported interest in branching out into new end-use markets, and 47 percent expect to expand into new carton printing processes.

A majority of the converters reported using offset printing, as it is a widely used print process for folding cartons. According to the International Paper Knowledge Center, about 40 percent of all print jobs involve offset printing, in which an image is transferred, or offset, from one surface to another. A little less than half of the converters reported using flexography, widely used for printing on non-porous surfaces typically required for food packaging.