Demand will continue to drop as the manufacturing sector continues to move offshore.
Los Angeles, CA (PRWEB) February 23, 2013
The Cardboard Box and Container Manufacturing industry has battled adverse conditions over the past five years. From 2008 to 2013, revenue is expected to decline at an annualized rate of 2.9% to an estimated $4.3 billion. The industry includes corrugated and solid fibre boxes, folding paperboard boxes, food containers and other assorted converted paper items. According to IBISWorld industry analyst Caitlin Moldvay, “The industry is highly dependent on the manufacturing sector, of which it derives over three-quarters of total demand.” In particular, the food, beverage and tobacco manufacturing sector is the largest source of downstream demand for cardboard boxes and corrugated packaging. Over the past five years, demand from this market has fallen due to the long-term trend of domestic companies offshoring their manufacturing operations to low-cost countries, which has reduced domestic packaging requirements. Although revenue briefly turned a corner in 2012, posting 0.5% growth, it is expected to continue its downward descent in 2013, falling 1.0% due to an expected decline in food and beverage production.
The Cardboard Box and Container Manufacturing industry is currently facing rising competition from imported products. Currently, imports make up over one-fifth of all cardboard used in Canada. Moreover, in light of a strong dollar over the past five years, imports have grown significantly, rising at an estimated annualized rate of 3.9%, according to the latest data from Statistics Canada. During the same period, export sales are anticipated to decline at an average annual rate of 2.7%, reflecting continued weakness in overseas markets, particularly the United States, and the appreciation of the Canadian dollar, which made exports relatively less competitive in global markets. “Because the industry is highly fragmented with a large number of small players, these competitive pressures forced many companies out of the industry,” says Moldvay. Meanwhile, major players like Rock-Tenn took advantage by acquiring these struggling operations to increase market share and geographical reach.
Over the five years to 2018, revenue is projected to continue declining. The industry will continue to contend with declining domestic production, particularly food and beverage manufacturing, which is forecast to decline as a share of GDP. The industry will also likely experience greater competition from flexible packaging, which is increasingly replacing rigid packaging since it is a lighter-weight material and takes up less shipping space. However, the industry is expected to continue retailoring its products by introducing a greater range of smaller packaging options, helping it compete more effectively through cost savings. For more information, visit IBISWorld’s Cardboard Box & Container Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies which primarily convert purchased paper, paperboard and old corrugated containers into cardboard boxes, containers and similar packaging. The industry produces corrugated and solid cardboard packaging for a range of industries, including manufacturing, agriculture, wholesale, shipping, retail and others.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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