The State of the Flexible Packaging Industry Report is a definitive source of information regarding the flexible packaging industry size, structure, market segments, and key packaging products. Data in the report is primarily based on research conducted by FPA, which includes surveys of FPA converter and material/equipment supplier members. Secondary data, sourced from the U.S. Census Bureau, U.S. Department of Labor, U.S. Department of Commerce, industry analysts, and investment banking reports is also included within the report. Several aspects of the industry are examined within the report, including performance; materials and processes; end-uses; industry structure; imports and exports; and industry vision and challenges.

The 2018 report provides an overview of the performance of the U.S. flexible packaging industry in 2017 and focuses on the value added segment of the U.S. flexible packaging industry, which enhances flexible materials by performing multiple processes such as extrusion, lamination, and printing.

FPA continues its review of the 2018 report within this issue of the FPA Update. This month, the “Imports & Exports” and “Industry Challenges/Vision” sections of the report are highlighted.

Imports & Exports

Flexible packaging exports have accounted for a relatively consistent share of domestic production (measured in dollars) over the past 10 years. U.S. flexible packaging exports were up slightly at $1,768 million versus $1,698 in 2016. Canada and Mexico remain the two largest purchasers of U.S. flexible packaging exports, followed by the United Kingdom. However, the U.S. flexible packaging industry’s trade deficit – the difference between exports and imports – increased moderately in 2017, rising 3.9% to nearly $2.8 billion, compared with $2.6 billion in 2016.

Global commerce in flexible packaging is expected to continue its solid growth for the foreseeable future. In four of the past 15 years, exports of U.S. flexible packaging have seen double-digit increases, while imports have seen double-digit growth five times in the last 15 years. Over the past 15 years, U.S. exports have grown at an annual rate of 4.9%, while imports have grown at 6.9%, resulting in a steady increase in the trade deficit. Current and proposed duties and tariffs by the U.S., as well as retaliatory tariffs on the U.S. by impacted countries, will impact trade going forward.

Industry Challenges/Vision

A comparison of the top challenges facing the flexible packaging industry for converters and suppliers indicates that labor/talent is the top primary concern for converters (and the second concern for suppliers).

In an open-ended survey question, FPA converter and supplier members were asked their vision of where the flexible packaging industry is headed over the next three to five years. The responses included: industry consolidation to continue with larger converters acquiring smaller ones, impacting primarily small to mid-sized converters, their customers, and suppliers; steady industry growth, based on continued overall improvement in U.S. and global economies; short term overall industry growth expected to outpace the Gross Domestic Product (GDP), averaging about 2% to 4% per year; profitability squeeze will continue to be a challenge due to price pressures from global competition, volatile energy prices, and government regulations (i.e. tariffs), impacting converters’ resin and/or film costs and aluminum foil costs, and the difficulty of passing along higher costs; and increased emphasis on consumer value as converters utilize technical improvements (including advancements in film barrier properties) in aseptic, retort, shelf stable, anti-counterfeit, and child resistant packaging. Smart packaging will continue to evolve by addressing consumer concerns including product safety, tampering, freshness, nutrition, and consumer health concerns.

For More Information

For more information on the FPA 2018 State of the Flexible Packaging Industry Report, contact FPA’s Business & Economic Research Division, at fpa@flexpack.org or 410-694-0800, or visit www.flexpack.org.