Carton Converters Awash in Optimism

Continued economic strength, new end-use market opportunities and better production strategies all paint a bright picture for this once over-shadowed segment.

By David Luttenberger

By most accounts, the U.S. folding carton industry had a banner year in 1998. According to Gary Stanley of the U.S. Department of Commerce (DoC), segment records were set for both quantity and value of product shipments. DoC figures estimate the value of shipments at $9.7 billion. That's a 3.5 percent increase over '97.

Much of the good news for the paperboard carton segment can be directly attributed to the strength of the national economy and a better-than-expected export climate. U.S. exports of folding carton-related commodities in '98 were valued at $292 million, a 5 percent hike vs. a year ago. Exports of finished folding cartons were valued at $187 million, a whopping 12 percent greater than the previous year.

This was the second consecutive year of significant growth in this segment. Factors most positively affecting this continuation were a real GDP growth of 3.7 percent, continued availability of disposable income, growth in U.S. industrial production, an upswing in purchases of non-durable goods and the afore mentioned record exports of folding cartons.

Marla Donahue, president of the Paperboard Packaging Council (PPC), an industry trade association representing independent and integrated folding carton converters and suppliers, says converters here can expect the stability they encountered in '98 to continue this year, despite an extremely competitive business climate.

"The folding carton industry generally follows the non-durable goods market, which has been very good," says Donahue, who adds that this segment's success is tied directly to consumer confidence. "If there is a a downturn in the national economy, there could be a blip in the folding carton industry."

Another positive driver here has been the steady price and availability of raw materials. During the period 1996 through 1998, the price of pertinent grades of folding boxboard material has varied less than 5 percent. This has allowed box makers to control costs somewhat, particularly during the inventory buildup period of April through June.