Report on the state of packaging – March 2014

May 20, 2014

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Quarterly packaging industry observatory. Situation at the end March 2014.

Here is a glimpse of the performance of the Italian manufacturing industry sectors where the level of packaging consumption is the most intense, divided into macro areas of food and non food.
Compared to figures given in 2013, at the time of completion of the present analysis (end March 2014), the developmental activities of the different manufacturing areas does not show substantial changes on what was published in issue 1-2/2014 of ItaliaImballaggio, page 29-31; hence readers are invited to consult that issue.
Summing things up, all sectors closed 2013 showing a downturn, despite a slight abatement of the recession registered between November and December. Expectations for 2014 are oriented towards a slow recovery, mainly bolstered by growth in exports.
Plinio Iascone

The packaging industry
After the contractions recorded in 2012 in production (-5.1%), domestic demand (-4.6%) and foreign trade (exports -5%, imports stable at low levels ) 2013 too shows a downtrend, even though featuring a progressive abatement of the rates of degrowth.

In particular, it is estimated that:
-   production showed a drop of 1.7%;
-   exports showed a modest increase of 0.4%;
-   imports are down by 7.4%;
-   domestic demand has ended the year down 2.7%.
Hence for the third year running the packaging sector shows drop in production, in line with Italian manufacturing growth figures and the economic crisis affecting the European Union.
By analysing the performance of the various sectors of production, we find that:
-   steel packaging is down by 2%;
-   aluminium packaging reconfirms the low levels of activity of 2012;
-   cellulose packaging is down by 1.8%;
-   rigid polylaminate containers reconfirm the unsatisfactory quantities of the previous year;
-   plastic packaging shows a decline in production of 2.7%;
-   flexible converter packaging, thanks to the good run of exports, was able to reconfirm 2012 figures;
-   glass packaging, also thanks to good export flows, should have limited the drop in production to 0.8%;
-   wood packaging ended the year with a drop in the production of 1.5%.
For the Italian packaging sector, expectations for 2014 are tinged with moderate optimism, in consideration of a possible resumption of the manufacturing industry, this also including the main countries of the European Union.
For 2014 a recovery of 1.2% of domestic consumption is predicted, along with a of 3.2% increase in exports, a 3.4% increase in imports and production showing growth of 1.7%.

The information used for the calculations in this report are taken from the database of Istituto Italiano Imballaggio Istituto Italiano Imballaggio

The general economic situation
According to Confindustria, the crisis affecting Italy (the second in six years) had ceased its vertical drop, but its negative effects are still weighing on the country.

The damage caused by the long recession is worrying. Some 7.3 million people are partially or totally out of work, approximately twice the figures of six years ago.
The poor have increased and reached 4.8 million and, overall, there has been a significant reduction in household consumption. 2013 ended with GDP down 1.8%, following the drop of 2.5% in 2012.
The total GDP in 2013, compared to 2007, has decreased by 9.1%, equivalent to a 11.5% per capita drop.
Industrial production ended the year with a decline of 3%, which is added to the decline of 6.4% in 2012.
As for the outlook for 2014, Confindustria believes it will be the year of recovery, but it suggests that this will be limited to 0.7% for GDP, while for 2015 it is assumed that GDP will grow by 1.2%.
Prometeia also believes, that after about two years of contraction in manufacturing activities, in 2014 a recovery of 1.7% will set in.
Unfortunately, this does not include recovery of the 10% slide that occurred 2012/2013.
The companies though will not be solely responsible for hooking up to the turnaround, the newly-found stability of national politics requires support, along with the gradual consolidation of public finances and better conditions on the credit side of things.
Also according Prometeia, in 2014 the manufacturing industry should show a 1.7% growth in production, mainly supported by an increase in exports of 3.2%, while domestic demand is expected to mark a limited recovery of 1.2% after the general collapse of 10.7% in the period 2011/2013.
The recovery of domestic demand will be slow and cumbersome. The slight improvement underway between the end of 2013 and the beginning of 2014 though essentially derives from orders, but the situation remains worrying in terms of household consumption, affected as it is by the erosion of the labor market and, of course, the related purchasing power.
In order to reverse the downward trend of recent years, in the near future the Italian manufacturing firms should aim at intercepting global demand, since the recovery of Italian domestic demand will unfortunately be very slow.

Plinio Iascone
Istituto Italiano Imballaggio