Packaging Paper and Plastics Film, Coated and Laminated

The coated and laminated packaging paper and plastics film industry is one of the smallest segments within the paper industry group. According to the U.S. Census Bureau, the value of goods shipped in 2008 totaled $1.91 billion. Manufacturers in this industry make the raw materials used to make specialized packages, such as those used for razor blades and other "carded" products, as well as other packaging products. The industry is more fragmented than most paper industries, with a number of small players competing either in highly specialized product niches or regions. For example, a company might have a leading position in one segment but have no products in any of the other segments. A distinguishing feature of the industry is the fact that a high percentage (approximately 20 percent) of potential clients, such as manufacturers, package their own goods, which means that firms within the industry often compete with potential clients.

This industry was made up of roughly 566 establishments in 2009. These firms employed 27,800 and generated revenues of $5.04 billion. The states with the largest number of employees in this industry were Tennessee, Wisconsin, and Illinois. The states with the most firms were California, Illinois, New York, and Ohio. By revenues, the top states were Idaho with $1.98 billion (39 percent), Wisconsin with $902.8 million (17.9 percent), and Illinois with $846.2 million ($16.8 percent).

The unspecified coated and laminated packing paper segment made up the biggest sector with the industry, with 297 firms (52.5 percent), 14,576 employees (52.3 percent), and $2.31 billion in revenues (45.8 percent). Paper, coated or laminated for packaging, was the next largest sector by revenues, with 89 firms (15.7 percent), 5,646 employees (20.3 percent), and $2.24 billion in revenues (44.4 percent). Plastic film, coated or laminated for packaging, had 139 firms (24.6 percent) and 4,732 employees (17.0 percent) but only $420.1 million in revenues (8.3 percent). Even smaller subcategories within this industry included bread wrappers, waxed or laminated ($28.3 million), waxed paper ($24.1 million), resinous impregnated paper for packaging ($10.5 million), waterproofed or coated wrapping paper ($7.5 million), and thermoplastic coated paper for packaging ($4.4 million).

The paper, coated, and laminated packaging industry, while small, has proven resilient, producing a gain in the value of shipments in most years. Beginning in 1987, the value of shipments for the industry increased every year through the late 1990s. As the U.S. economy gained strength in the late 1990s, the industry appeared to be driven toward increased sales and new markets as a result of increased emphasis on research and development along with the expansion of niche markets. The value of industry shipments between 1997 and 1999 increased from $1.47 billion to $1.48 billion. However, after climbing to $1.5 billion in 2000, the value of industry shipments began to decline, falling to $1.48 billion in 2001 as the U.S. economy weakened considerably.

The plastics packaging film and sheet (including laminated manufacturing) sector was valued at $7.33 billion in 2002 and climbed to $7.97 in 2005. The total cost of materials grew from $3.27 billion in 2002 to $4.11 billion in 2005. The total number of employees fell from 24,492 in 2002 to 23,324 in 2005, with production workers accounting for 18,352 of the total employees.

According to industry statistics, there were an estimated 579 establishments engaged in manufacturing coated or laminated flexible materials made of combinations paper, plastics film, metal foil, and similar materials (excluding textiles) for packaging purposes with a value of just over $6.4 million in 2007 and 29,279 employees. States with the highest numbers of industry firms were California, Illinois, Ohio, and New York, which collectively shipped $1.5 million in products.

Manufacturers of coated and laminated packaging paper accounted for 52.5 percent of market share in 2007 and $3.5 million in shipped products. The paper, coated or laminated for packaging segment held 16.9 percent of market share with $1.5 million in sales. The manufacturing of plastic film, coated or laminated, for the packaging category was responsible for 23.3 percent of market share and $1.3 million in sales. Manufacturers of waxed paper made from purchased materials shipped $112.3 million in products.

The manufacturing of U.S. flexible packaging grew three percent in 2007, while revenue increased 3.5 percent. Packaging for produce, pet food and supplies, beverages, and health and beauty aids were the market drivers. Domestic demand for plastic sheet was forecast to reach $7.2 billion by 2011.

Current Conditions

According to the U.S. Census Bureau's Annual Survey of Manufactures, the coated and laminated packaging paper and plastics film manufacturing industry grew each year between 2005 and 2008. In 2005 and 2006, the value of goods shipped totaled $1.23 billion and $1.48 billion, respectively. In 2007, the industry grew to $1.72 billion, and, despite the onset of an economic recession in 2008, the value of goods shipped in the industry rose again in 2008 to $1.91 billion.

The downturn in the U.S. marketplace, however, caught up to the industry in 2009 as demand weakened. Market Research put the industry's revenues for 2009 at roughly $1.5 billion. According to the Market Research report, the coated and laminated packaging paper and plastics film manufacturing industry only operated at 32 percent of its full production capacity in 2009. If operating at its full capacity, the industry could increase the value of goods shipped to $4.7 billion. The low utilization rate suggests that the industry geared up for significant growth just in time for the recession to drive demand way down.

Although the economy began to turn upward during 2010, recovery was expected to be slow. Also affecting the industry was high wood pulp prices, which added to the cost of doing business. Considering the weak demand, manufacturers were having a difficult time passing those additional costs onto consumers, thus cutting their margins thin. Cheap imports also threatened some segments. In 2010, the U.S. Department of Commerce acted against Indonesia, imposing anti-dumping duties on the country's coated paper producers for unfairly down-pricing the products they imported into the United States.

Industry Leaders

Bemis Company Inc. of Neenah, Wisconsin, which was primarily active in flexible film packaging, was one of the leading companies in the industry with sales of $3.51 billion in 2009. Other leading companies in the industry included privately held Printpack Incorporated of Atlanta, Georgia and Minnesota Mining & Manufacturing (3M) of St. Paul, Minnesota. Printpack employed 3,800 people and manufactured packaging materials at about 25 plants in the United States, Mexico, and the United Kingdom. In 2009, 3M, which operates across multiple industries, reported sales of $23.12 billion and 74,835 employees.

Research and Development

Some of the more notable changes the industry has experienced include new materials, environmentally conscious products, specialization, and technological innovation. The industry experimented with new materials as customers demanded lighter weight, stronger materials for packaging, resulting in production of lighter, high-tech plastics, and reinforced paper being used. The increased popularity of the microwave, for example, produced a growing need for a wider range of uses for existing and new materials.

Biodegradable, recyclable, and recycled materials have become essential in the packaging industry. In response to environmental pressures, as well as to higher prices for landfill usage, producers have incorporated "green" products and recycled raw materials into their packaging. However, the commercial viability of "green" products was questioned. While consumers often respond to surveys saying that they want to buy more environmentally friendly products, when asked to pay more for them, they usually decline.

With manufacturers demanding more from packaging, producers have needed to incorporate new skills and materials into producing packages. This has led to specialization and technological innovation, such as razor packaging, which has been made to simulate the look of a mirror.