Ups & Downs of Business Make Escape an Attractive Option

Published: August 01, 2003, By Yolanda Simonsis, Associate Publisher/Editor

Here's some news we've all been waiting to hear from the Foodservice & Packaging Inst. (FPI). Its June 30 press release raised my spirits considerably.

In FPI's annual “State of the Industry Report,” it released some surprisingly positive findings. In a survey of industry manufacturers and suppliers in North America and Europe, FPI queried respondents for their expectations of volume, profit, and production levels for 2003 versus 2002.

According to the survey, an encouraging 56% of North American converters plan to purchase new machinery in 2003, and 70% of the North American foodservice packaging manufacturers said they plan to expand their operations in 2003, with the large majority of that expansion aimed at the food service segment of their business.

John R. Burke, FPI president, tried to understand the implications of the responses, “because they are very optimistic despite the current general uncertainty about where the economy is headed. The survey was conducted in March of this year, a time of upset and uncertainty due to the war in Iraq, but despite that, manufacturers in our industry said they expected their businesses to be better, moving forward, during the course of the year.”

While the North American scene in this survey appeared rosier than anticipated, Burke said European converters were less optimistic about volume and profits for '03. Even so, the majority of these respondents said they would expand their operations in '03, but of those expansions only 30% will serve the foodservice segment of their business.

Where both North America and Europe agreed was in what they perceived as the top challenge facing them within the next five years: margin compression. For North Americans, the second most challenging issue was economic uncertainty; Europeans cited globalization and competition from outside country borders, reflecting an uncertainty over the European Union's expansion.

Material and machinery suppliers that participated in the survey gave mixed responses. While expecting 2003 to be “worse or the same” in terms of profit and volume, material suppliers were upbeat along with machinery manufacturers in reporting that 40% of both groups combined would have increased production levels over 2001, some by as much as 13%.

On the other side of the coin are those converters struggling through '03. In my June editorial I announced several positive events that managed to cluster within a brief time period. I recounted how my staff and I had enjoyed one particularly positive week. Of course there were a few not-so-great things that also had occurred during this timeframe, but on the whole, it was a pretty “up” week, and I chose to write about these positive things in my editorial.

As with any positive sequence of events, there always seem to be an equal or greater number of accompanying negative events to keep your general outlook at least off balance. One of PFFC's readers shared with me a good dose of reality. To protect the writer's identity, I've opted to include the comment anonymously here:

Your comments about the “perfect week” prompted me to react with a few words. Count yourself fortunate. For myself and almost all of the vendors that I deal with, a “perfect week” is a fantasy. A halfway decent week is the most we can ever hope for. It doesn't matter if it is plastic bags, corrugated boxes, aluminum, rubber rollers, resin, staples, printing plates, etc., every day is RUSH, problems, bad news, major crises, etc. NOT minor, major. Prices keep going up, quality keeps going down, and lead times are increasing across the board. This was the case before the economy went south, and I can point to lots of specific, detailed examples. With ongoing downsizing and the resultant understaffing, the use of JIT as a magic panacea, and increasing foreign competition, things are less likely than ever to be “perfect.”

Especially in difficult times, sometimes we must make ourselves responsible for our own happiness.

I decided to go on vacation.

For more information on the converting industry beyond this issue's contents, visit pffc-online.com. We offer content there you cannot find here, and it is updated weekly. Once there, be sure to e-mail your feedback to me, This email address is being protected from spambots. You need JavaScript enabled to view it..