The U.S. packaging machinery industry remains one of the more positive segments of the broader manufacturing sector. High interest rates, inventory levels and other economic factors in recent years have led to unpredictable market conditions, but the industry has fared better than many other sectors.
A high level of flexibility and investments in new technologies are contributing to the packaging industry’s resiliency. According to the “2024 State of the Industry: U.S. Packaging Machinery Report” from PMMI, The Association for Packaging and Processing Technologies, the industry rarely experiences negative growth because it is able to adapt to consumer needs.
“[The industry] has been growing consistently for a significant number of years,” said Jorge Izquierdo, Vice President, Market Development at PMMI, during a presentation on the State of the Industry report at PACK EXPO International 2024 (see sidebar below for more information on this event).
He said the industry is still feeling the effects of the COVID-19 pandemic which caused significant growth for packaging materials and machines from 2020 through 2022. A slowdown began in 2023 for the sector due to high interest rates and order backlogs.
However, continued workforce challenges have led to a high level of investment in technologies to overcome these challenges, he said, mitigating as sharp a slowdown in demand as other sectors have experienced in the current economic climate.
PMMI reports the industry experienced 5.8% growth in 2023, reaching a value of $10.9 billion, and 2024 is expected to be another slower growth year.
Packaging Machinery Demand has Slowed, but Will Improve Through 2027
PMMI stated in its report that the first half of 2023 saw growth as packaging machinery manufacturers continued working through their backlogs built up during the pandemic. Continued adoption of automated solutions and increased demand for new machines enabling new packaging styles also helped drive growth in the first part of the year.
Demand began to slow in the second half of the year though as new orders started to fall, leading to slower growth for the industry. This continued into the first part of 2024 as high interest rates and uncertainty about the outcome of the U.S. election contributed to weaker demand.
PMMI anticipates new machinery sales will pick up again in the last half of 2024, aided by the U.S. Federal Reserve lowering interest rates; on November 7 it announced its second rate cut of the year with more anticipated. In addition, results of the U.S. Presidential Election are now known — although what policies could be enacted and have impacts on the industry remain to be seen. Both of these factors should help to lessen the wait-and-see mentality many have had all year which hindered some business investments.
Given these factors, PMMI is forecasting growth of about 2.4% for the packaging industry in 2024. Izquierdo said it’s not double-digit growth like that seen in the early 2020s, but the market isn’t shrinking either.
The Canadian packaging machinery industry has performed similarly. It also experienced a slowdown in 2023 with a growth rate of 4.4% and new machine sales are expected to be low in 2024 as well with just a 1.3% year-over-year growth rate anticipated.
With expectations of improving global economic conditions in 2025 and beyond, PMMI is forecasting the packaging industry to rebound as well with higher levels of growth anticipated through at least 2027 where it believes growth will peak at 8%.
Sectors Driving the Packaging Industry
Despite the slower growth conditions currently being experienced, PMMI is anticipating sustained growth from several sectors served by packaging machinery in 2024 and beyond. The food industry continues to account for the largest share of the packaging market, 43% of total industry revenue in 2023, said Izquierdo due to consistent demand for food products.
In its report, PMMI stated the need for food packaging is steady whether consumers dine out or buy groceries and the necessity of food makes it more resilient to economic conditions. According to the association, there was a boom of investments in this sector in 2023 as many major companies built new facilities and upgraded existing ones. For 2024, PMMI is projecting 3.4% growth for the food sector and further growth in the coming years.
The beverage sector is another resilient one as it also experiences steady demand. PMMI said this sector saw a rebound in investments in 2023 as well. It noted a trend to watch in this market is the shift from plastic to glass and can packaging materials in an effort to be more sustainable as these materials can more easily be recycled.
Pharmaceuticals had the largest rate of growth in 2023 at 9% according to PMMI’s report, which has so far continued into 2024. The association said companies that oversupplied goods during the pandemic are now needing to restock which is contributing to growth in this sector. Several large players in this market announced investments in existing and new facilities, also contributing to the growth conditions in this sector.
Growth of 5.2% is anticipated for the pharmaceuticals sector in 2024, with continued high growth rates anticipated through 2027 where it is currently projected to top out at 9.3%.
Chemicals and personal care are also high-growth end-use sectors for the packaging machinery industry noted PMMI in its report.
Major Trends Influencing Packaging Machinery Designs
During his review of PMMI’s State of the Industry report, Izquierdo pointed to four macro trends which are influencing technology developments for the packaging machinery industry.
Workforce
Like so many industries, a lack of skilled labor is posing challenges for both machine builders and users. There are many people leaving the workforce due to retirement — taking with them years of knowledge — and not as many entering it to fill those jobs.
Izquierdo said there are two major needs the industry is trying to address in this area, training and filling the skills gap. In terms of training, it comes down to figuring out how to make it effective. The younger generations coming into the industry learn differently, he pointed out, so it is necessary to determine how best to provide them with the skills they need.
In PMMI’s report, it said many machine builders are collaborating with trade schools to help recruit and retain skilled workers while also offering internal training programs.
To fill the skills gap, technology is playing an important role by making things more automated and easier to use. Simplifying human machine interfaces (HMI) and other components is aiding this as well as the integration of preventative and predictive maintenance systems, artificial intelligence (AI) and remote access capabilities said Izquierdo.
These types of technologies could be seen at booths throughout the PACK EXPO International show floor. Weidmuller, a developer of smart industrial connectivity and automation solutions, is one such example; the company was providing a sneak peak of its PAC Controller which integrates the functionality of a PLC and a PC to make it easier to create automated systems. In addition, it showed its terminal blocks with SNAP IN technology which allows for easier wiring of the terminal blocks. This work can also be done by a robot if desired.
Sustainability
According to Izquierdo, the packaging industry has been on a continuous journey of becoming more sustainable. He said for many, this has translated into using new materials for packaging including moving away from single-use plastics.
This shift is due to a combination of regulations and consumer demand for more environmentally friendly alternatives.
One challenge he pointed to with this shift is the ability of machines to work with these new materials. A machine may not work as efficiently if running a material with more recycled content in it he said which could negatively impact productivity.
Machine builders and users therefore need to find ways to adapt new as well as existing machines to utilize different materials. Izquierdo said many equipment manufacturers are working closely together with packaging material suppliers to ensure compatibility between the machines and materials.
The shift to greener materials like paperboard is expected to help drive growth for certain types of equipment as well, specifically Cartoning, Multipacking & Case Packing machinery. PMMI is projecting significant growth for this machine segment through 2028 due to increased use of this material and the push toward automation.
Given the importance of sustainability to the packaging industry, PMMI added a new section to PACK EXPO International known as Sustainability Central where attendees could easily find sustainable options for manufacturing, materials, recovery, logistics, analytics, and design.
Sanitation
Izquierdo said there is significant investment being made in solutions which can help ensure the safety and sanitation of goods. The recent uptick in recalls within the food and beverage industries in particular are leading to increased demand for clean-in-place (CIP) products to help minimize contamination risks.
Automated systems to document cleaning times and temperatures are also in higher demand to aid compliance and reduce the potential for recalls.
PMMI anticipates Inspection & Testing Equipment will have the second highest growth rate among the packaging machine types it tracks due to the greater focus on improving sanitation. The association said this segment is forecast to grow to $1.1 billion by 2028 as companies are investing more in inspection machines like x-rays and thermal sensors to ensure quality standards are met.
The Packaging and Inspection Equipment machine sub-type is also seeing a high level of investment to aid with quality and safety of packaged goods. PMMI is estimating it will reach a value of $823 million by 2028.
Automation
As noted previously, workforce challenges have given rise to more automation in the packaging industry. PMMI said it is hearing from industry members that companies are more willing to invest in these types of technologies now to overcome labor shortages and employee retention issues.
The focus on automation was evident at PACK EXPO International where almost every booth was demonstrating automation in some manner, such as robots or components capable of aiding the creation of an automated system.
Universal Robots, for instance, showed how its cobots can be used for an emerging application in the industry, end-of-line palletizing. The company said using a cobot versus traditional methods allows the creation of a safer work environment and more flexible deployments. As it is more compact in size, the use of a cobot also reduces the amount of floor space required at a facility, which is an increasingly important concern for many.
PMMI noted in its state of the industry report that requests for end-of-line automation technologies like this are likely to increase in the coming years due to the labor challenges facing so many companies.
Automation is expected to drive growth for various packaging machine types in the coming years including:
- Conveying, Feeding, and Handling Equipment
- Cartoning, Multipacking, and Case-Packing Machinery
- Palletizing and Load Stabilization Equipment and
- Pallet Conveying, Dispensers, and Slip Sheets.
Izquierdo concluded by saying the packaging industry is an extremely valuable, flexible and quick-changing industry in many respects. Over the next few years many of the technologies that have been promised in the past will come to fruition to help address workforce, sustainability and other industry trends.
