Material cost & availability, labor shortage are top issues for flex-pack converters

By Mark A. Spaulding

The US flexible-packaging industry saw strong growth in 2020 despite the COVID-19 pandemic, and projections for the future are high. Still, issues such as raw-material cost & availability, hiring talented workers, and the ever-present sustainability trend remain.

That sums up the “State of the US Flexible Packaging Industry” presentation by Kathy Bolhous, chairperson/CEO of Charter Next Generation, and FPA Board Chairperson, at last week’s 2021 Flexible Packaging Assn. annual meeting in Amelia Island, FL. FPA’s last such in-person program was held back in March 2019, and this year’s event was delayed another six months to allow attendees to safely gather following the availability of COVID-19 vaccines.

Here are some Converting Curmudgeon bullet “points-of-interest” from the report:

  • Of the total $183-billion US packaging market in 2019, flexibles made up 19%. For 2020, the US flex-pack field stood at $34.8 billion, of which nearly 60% went to food end-use applications, followed by the medical & pharmaceutical category at 14% or almost $5 billion.
  • Industry growth continues at a healthy pace of about 3.5% CAGR over the past 10 years with volume and dollar-growth both up in 2020; this despite the US GDP benchmark falling 3.4% last year due to the pandemic.
  • While 36% of flex-pack converters said their capital expenditures would be higher in 2020 than 2019, that number is down to 29% higher for 2021 vs. 2020. Only 14% said their capex investments for 2020 and 2021 would be lower. Equipment represents the top category for spending by 93% of respondents, followed by 71% for upgrades and 64% for buildings & infrastructure.
  • Among converters’ expectations for growth markets, the top three categories are medical & pharmaceutical, retail food and non-food retail. Institutional non-food apps received the lowest score for future growth.
  • Top business issues for 2021 vary based on company size (whether small at <$25 million or up to very large at >$300 million). But overall, No. 1 was the current cost & availability of raw materials, whether plastic films, resins, inks or coatings & adhesives. No. 2 was the challenge of hiring talented workers; as of June 2021, US manufacturing had more than 800,000 open positions. Company growth and developing new products were concerns for many converters, along with the continuation of “green initiatives” and how to simultaneously boost productivity and cut costs.

My Thoughts: It was great to attend a real in-person conference again for the first time since March 2019. I was very surprised when FPA put out an informational email two weeks ago basically asking non-vaccinated people not to attend, but they did a fantastic job making attendees feel safe with various protocols and social distancing. This is the unfortunate future, folks. COVID-19 is here to stay, but that doesn’t mean we must stay in our bunkers. We just have to be smart about it.