Report on the state of packaging – June 2012

Sep 05, 2012

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Quarterly packaging industry observatory. Situation at the end June 2012

Here is a glimpse of the performance of the manufacturing industry sectors where the level of packaging consumption is the most intense, divided into macro areas of food and non food. Following that, the relative evolution of the packaging industry. The prospected growth pictures of the manufacturing sectors have been drawn from the sectorial analyses made by the professional associations or by Prometeia.

Food industry
(food and beverages)
During 2011 the Italian food industry showed a growth trend of 0.5% in the food area and 1.5% for the beverage area.
Projections for 2012 are not optimistic, due primarily to a reduction in domestic consumption determined by rising unemployment as well as by curbed household spending, implemented as a precautionary measure to meet the progressive drop in purchasing power. An attitude also brought on by tax increases, the possible reduction of free healthcare, as well as the progressive increases in the cost of energy consumption.
The drop in food industry production has been mitigated by exports that, while showing a slowdown during the first months of 2012, should still show growth during the year.
However, domestic demand shows a gradual slowdown and it is assumed that 2012 will show a contraction of around 2%.
Obviously the mid-to-top-range products are the most affected, while the cheaper products should put in a small growth.
All told production should be seen to drop by 1-2%, with a specific contraction in the food area; as far as the beverage area is concerned, 2012 should close showing a slight rise, led on by a good performance of exports.

Non-food
Pharmaceuticals manufacturing activities in this area show a substantially positive growth trend, this both due to flourishing exports, with fluctuations of varying intensity depending on the trade policies of various multinational companies present in Italy, as well as due to a domestic demand that is substantially stable, with slight increases here and there.
The holding of domestic demand can be put down to two factors: the aging population and characteristics of the Italian healthcare system that, at least until now, has guaranteed free medical services for certain social categories and limited contributions for other categories. According to Prometeia 2012 should mark a growth at around 0.2-0.4%, driven both by domestic demand and exports.

Fashion system According to Prometeia, after a sharp decline in 2011 following the collapse of domestic demand and only slightly offset by a modest growth in exports, for 2012 production activity in this area will show a decided downturn. Domestic demand is forecast to decline by 4% and the slight increase in exports will probably not lead to a growth in production.
Cosmetics & toiletries Although hampered by a lower purchasing propensity, according to the sector trade association Unipro, in 2012 the area should still show an upturn.
Domestic demand should still put in a slight increase of + 0.6%; exports on the other hand should continue to show satisfactory growth trends that could even touch the figure of 10%.
Production for 2012 should show growth of approximately 3%.

Furniture & furnishing In 2011 the sector reconfirmed the downturn that featured in the years 2009/2010.
The slight increase in exports has not offset the tumble in domestic consumption. In 2012, according to the analysis by Prometeia, production in this important sector should decline even further (approximately -5%), due to a further drop in both domestic demand and exports.

Chemical products According to Federchimica estimates, the Italian chemical industry concluded 2011 with a modest growth in production of 1.5%, supported mainly by exports. Like most manufacturing sectors, the situation worsened in the last quarter of 2011. Basing ones estimates on the growth trend seen in the first quarter, 2012 promises to be difficult, featuring a drop in production caused by a weak and waning domestic demand, a situation only partially offset by the growth in exports.

Mechanics After ending 2011 with a production showing an increase of 3%, thanks to the positive trend in exports, the picture for 2012 is one of recession. According to Prometeia 2012 should see a drop in production of 1.3% due to a clear drop in domestic demand; the considerable slowdown will not be compensated by an increase in exports.

Household appliances The economic situation in 2011 worsened even further compared to an already bleak 2010, concluding with a decline of 4-5%.
The crisis in this area stems not only from the bad overall economic situation, but also from the transfer of production activities abroad, which obviously affects exports; the situation deteriorated further in 2012, with a drop estimated at 5-6%.

Building materials This segment has been in a crisis for the last three to four years, involving both residential and industrial building. Hence building materials (cement, bricks, building glass, lime and plaster, etc..) are consequently affected; On average the segment will suffer declines of 3 to 5%, to be added to previous year losses.

The data used to compile the report has been drawn from the Istituto Italiano Imballaggio database.

Plinio Iascone - Istituto Italiano Imballaggio

The economic picture
During the first half of 2012, at international level there was a slowdown in U.S. economic growth and in that of the “BRIC” group of countries. With regard to EU countries (UK included), the situation remains critical, a climate of progressive recession persists. The latest indicators point to the fact that the recession is widening: in the manufacturing sector both production and acquisition of new orders are waning.
The situation affects all EU countries and is even beginning to affect Germany, that is managing to contain the negative effects of the economic crisis thanks to the growth of services and the holding firm of exports.
In Italy the recovery appears to be even further away: the drop in domestic demand has exceeded forecasts made at the beginning of the year, exports are losing momentum and the number of people seeking employment has increased due to further lay-offs.
A synthesis of the Italian economy shows consumption stagnating and investment in machinery and equipment close to zero; the building industry shows no signs of recovery from the crisis that has beset it these last few years. Hence 2012 is a year of recession for the Italian economy, in a European setting that is substantially similar.
Both nationally and at European level, the forecasts for 2013 remain focused on a trend of slow recovery, though the rates will be limited.
According to calculations made by Prometeia estimating growth trends, after concluding in 2011 with a modest increase in production (0.1%), for the Italian manufacturing industry 2012 will be a year of open recession: - production down 2.7%, with domestic demand contracting by 4%, imports and exports down 2.1% and exports up 1.1%.
In 2011 exports were able to put in a satisfactory increase of 5.6%; however unfortunately today, given the economic crisis at European level, competition is definitely very high.
All economic analysis organizations assume a slow and contained recovery will take place during 2013, that at the current moment in time, is not estimated to exceed a modest 1-1,5%: a recovery that does not enable either a return to 2010 figures, never mind a return to those for 2007.