Cartonmakers Must Accentuate Positives

The carton industry posted modest gains in 1999, but could renewed strategic smarts bring major momentum in 2000?

By Susan Friedman

At first glance, the folding carton's economic health could be summed up as simply "all good." According to Liz Hill, director of industry information at the Paperboard Packaging Council, "the national economy is still in an upswing, and the folding carton economy is following."

Hill's rundown of folding carton gains in 1999 includes a .7 percent rise in annual sales, and a 2.3 percent increase in tonnage. She also reports a .5 percent export volume increase, as carton companies pooled their strengths through both domestic consolidations and alliances with European and South American countries to serve the needs of this market. Hill says reinvestments in equipment, the growth of flexo printing, and improved management and financial responsibility forced by customers' strategic sourcing are part of the basis for these satisfactory returns.

Boxboard Containers International continues the feel-good economic feedback by calling 1999 "the second consecutive year of marked growth [for folding cartons] following a disappointing sales performance in 1997." BCI's list of positives includes product shipments increases—1.14 percent in terms of volume, and 1 percent in terms of dollar value—as well as manageable changes in raw material grade prices— less than 5 percent in the past three years.

But there are some experts who diminish the upbeat tone of these statistics with the following question: Could the folding carton industry be doing better? "Perhaps the more interesting story is why there has been so little annual growth [for folding cartons] during one of the longest [national] economic booms," states Mike McGuinness, president of consulting firm PacSys Packaging Systems Solutions. McGuinness points out the carton industry's 1.5 percent to 2 percent annual growth rate in the past few years isn't that impressive in light of national strengths such as real GDP growth, increased real disposable income, and bolstered purchases of non-durable goods.