A Closer Look at Packaging Industry Business Challenges and Solutions

The packaging sector of the printing industry is undoubtedly one of its strongest, with growth opportunities prevalent throughout the four major packaging segments. But in order to maximize the opportunities the packaging industry offers, printers of labels, folding cartons, flexible packaging and corrugated need to be aware of the business challenges they face and have a plan to mitigate their impact.

Throughout January and February of 2018, packagePRINTING, in conjunction with NAPCO Research, conducted a survey of our audience of package printers and converters from across the packaging spectrum to gain an understanding of the top challenges impacting their businesses and the actions they have taken, or plan to take, to mitigate them. The results indicate multiple trends and commonalities, indicating that packaging printing companies are facing similar challenges, no matter which segment they primarily serve.

Pinpointing the Top Package Printing Challenges

Prior to diving deeper in the specific challenges package printers face on a daily basis, the survey asked respondents the categories of business challenges that are presenting the highest hurdles. By a significant margin, increasing sales was the No. 1 category chosen. What was particularly interesting about this result was that the reasons behind why increasing sales presented a challenge were varied.

For example, some respondents indicated that market consolidation is making sales growth difficult. With rapid rates of mergers and acquisitions, some respondents stated that as well-established, large package printers grow even larger, it makes it more challenging for small companies to compete.

Another key sales challenge stemmed from pricing. One respondent in particular stated that sales at his or her company were up, but profitability was not following suit, due to pricing pressure from brands. While sales challenges are having a significant impact on the packaging industry, respondents indicated that they are actively seeking to expand their customer base. More than half of the respondents indicated they are seeking to both sell more to their existing customers and/or find new customers to sell their products to.

Beyond sales, the package printers and converters that took part in this survey also indicated that they were facing challenges on the production floor, whether it be in printing, production or overall operational efficiency. When diving into the specifics of these production challenges, the results were consistent with packaging industry trends that have been recurring themes in recent years, such as decreasing run sizes and SKU proliferation.

As brands continue to demand quick time to market and fast turnarounds, package printers are seeking to increase their efficiency and automation throughout their production process, and finding ways to connect prepress, printing and finishing could be an answer to potential bottlenecks in the manufacturing process.

A particularly eye-opening statistic that emerged from this survey was the quantity of respondents that indicated they either have invested or are exploring investing in digital printing. While it’s hardly a secret that digital printing can be an ideal solution for short-run production in part due to its lack of plate changeovers, the total percentage of packaging being produced digitally is often reported to be in the single digits.

While conventional printing still reigns supreme across the packaging market, the results of this survey indicate that digital is poised to experience an upward trajectory.

How is the Packaging Sector Handling Staffing Issues?

Despite the growth opportunities prevalent throughout the packaging industry, a significant number of respondents indicated that staffing challenges are currently plaguing them. In particular, respondents expressed concerns over bringing in new employees representing the younger generation of the workforce.

This concern then compounds with the issue of current employees reaching retirement age and leaving the business. As these established workers round out their careers, package printers and converters indicated they are struggling to replace them with eager young people seeking a career in the printing and packaging industries.

While finding new labor has been a struggle throughout many manufacturing industries, the print industry has suffered in recent years from a perception problem, as young people do not recognize the opportunities for growth to work in a high-tech field so many of them desire. The results of this survey however, indicate that many package printers and converters have not made an effort to conduct outreach to local students in their area, among other potential solutions that can be found in the full-length report.

The Impact of Printing Industry Consolidation

As part of this packaging industry analysis, this survey also sought to determine the impact of printing companies’ consolidation on package printers. For example, as commercial printers seek to enter packaging and package printers seek to expand into new packaging segments, the industry’s competition structure will likely evolve.

On the commercial printing side, as document digitization continues to erode profits, the opportunities prevalent in packaging have become enticing to commercial printers who are seeking a way to join in. Likewise, packaging printers who have long specialized in a certain packaging market segment are seeking to expand their repertoires and enter new segments.

While the impact of this industry consolidation is up for debate, it’s hard to deny its presence, and the results of this survey indicate that package printers are seeing it come to fruition.

To learn more about the business challenges facing package printers along with potential solutions, download the full report, "Understanding and Mitigating Packaging Industry Business Challenges."