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Historically, expenditures for containers and packaging products used by Canadian manufacturers vary at the same rate as does the volume of shipments. However, the types of containers selected by major container consumers change continually with time. This article provides an overview of the packaging products used by Canadian manufacturing industries, and identifies recent trends regarding the types of containers used.
Containers and packaging products are a major component of production costs for some manufacturing industries. Fluctuations in demand, in price level, in consumers preferences, in regulations, and in development of new technologies, directly affect the amounts spent on these inputs as do the types of containers selected. Therefore, these factors explain the observed increase in consumption of packaging products since 1992, and the substitution of plastic and corrugated cardboard packaging products for metal boxes and glass containers.
Manufacturing establishments use several types of containers and packaging materials to protect, preserve, and facilitate the delivery of products. The most common types of containers and other packaging products used by manufacturers are: plastic containers and packaging materials; corrugated boxes; metal cans; set-up and folding boxes; and glass containers.
In 1996, manufacturing industries experienced a 2.6% increase in the value of their shipments. This is lower than the sectors increase of shipments in 1995, i.e. 12.3%. The growth rate of the value of manufacturing shipments, and that of containers and other packaging products expenditures, has almost always followed the same lines. The year 1996 was no exception. In 1996, manufacturing industries spent 7.2 billion dollars for containers and packaging products, i.e. 2.9% more than in 1995. That same year, the increase in consumption of containers was 11.6%, compared to the previous year.
In 1995, a significant part of the increase in expenditures for packaging products owed to the effects of the increase in price for all major types of containers. This was not the case in 1996. The rise in the total expenditures for containers and other packaging products by manufacturing industries was due mainly to an increase in demand for these products. Indeed, the price levels for various types of packaging were much more stable (and, even, in some cases, lower) in 1996. This stability and the decline in price levels are the major reasons for the decrease in the growth rate of expenditures for containers compared to 1995. It should be noted that this phenomenon was observable not only for packaging products, but also for manufacturing products in general. Low interest rates, a weak Canadian dollar, a strong demand in North America, and a healthy construction sector all played a part in the increase in the demand for Canadian industrial products, and, consequently, for related packaging products. The increase in the consumption of containers can be explained almost entirely by the rise in consumption of plastic and corrugated cardboard packaging products.
The cost of containers and packaging materials accounted for 3.1% of the total costs of materials and supplies for manufacturing industries in general. This percentage has been stable for the last three years. However, it has been diminishing progressively over the years. Thus, expenditures in packaging products did not increase at the same rate as the overall materials and supplies expenditures in the manufacturing industries (Chart 1 - Shipments, cost of materials and supplies and cost of packaging supplies). This decrease can be explained partly by the increasing trend to reduce, reuse or recycle containers and packaging materials owing to environmental considerations. (For example the National Packaging Protocol, announced in 1990, aims at reducing by 35% the amount of packaging waste for 1996, and by 50% for the year 2000)(1).
About 56% of the expenditures for containers and other packaging products in 1996 can be attributed to the Food Industries and Beverage Industries. Traditionally, these two industries have been the largest consumers of containers for their transformed products (Table 1 - Consumption of Containers by Industry Group). In 1996, 16 of the 22 industrial groups in Canada spent more than the previous year for containers and packaging products. Among the industries who spend the most for packaging products, Chemical and Chemical Products Industries were those who most increased their expenditures for containers in 1996, an increase of about 75 million dollars (almost 10%). On the other hand, Beverage Industries reduced their consumption of containers by more than 67 million dollars (almost a 5% decrease) during the same period.
Over a longer period, it is possible to note that only two industries spent less for their containers and packaging products in 1996 than in 1990. These are the Textile Products Industries and Clothing Industries, which have seen a decrease in their packaging products during this period. This result can be explained by the decrease in shipments for these two industries.
The cost of containers and other packaging materials forms a substantial portion of the total cost of materials and supplies used in manufacturing activities in some industries. In the Beverage Industries, for each dollar spent for materials and supplies used in manufacturing activity, 50 cents were spent on containers and packaging products. By far, the proportion of cost for containers is the highest in this industry. With a portion of 19 cents for the purchase of containers per dollars of materials and supplies used, the Tobacco Products Industries come in second place. At the other end of the scale, the cost of packaging products was minimal, compared to the overall costs for materials and supplies used by the Transportation Equipment Industries and the Refined Petroleum and Coal Products Industries (less than ˝ cent by dollar in materials and supplies used).
Manufacturing industries use a wide variety of containers and packaging products. Plastic containers and packaging products, corrugated boxes, metal cans, set-up and folding boxes, and glass containers accounted for more than 70% of the total expenditures in packaging products for manufacturers. Table 2 (Consumption of Containers by Industry Group and Type of Container) shows the most popular containers by various manufacturing industries.
Corrugated boxes are the main packaging products used by Canadian manufacturing industries. In 1996, consumption expenditures for this type of product amounted to some 1.5 billion dollars, which represent an increase of more than 9% compared to the previous year. This increase is by far superior to the increase of all packaging products (2.9%). The 22% increase, in constant dollars, in the value of the consumption of this type of container, compared to 1995, shows how dramatic the increase in demand was for this type of container.
This increase, the most significant in the past ten years, translated into a market share increase for this type of container, now 21.2% of the market. The consumption of this type of container is now almost at the same level as in 1990 (see Chart 2 - Consumption of containers, by type, 1992 constant dollars). The 10% decrease in price level for this product in 1996 certainly played an important role in making corrugated cardboard boxes more attractive as packaging products for manufactured goods.
The development of new technologies allowing superior graphic quality printing of lettering and illustrations of finished products on boxes, such that consumers can "see" better the goods they are buying, played an important role in the success of this type of packaging. Moreover, cardboard boxes are also popular for environmental considerations: "Made from a renewable resource, only 13% of corrugated is comprised of logs. The rest comes from recycled boxes at the retail level and from leftover chips, shavings and sawdust from logging and sawmills."(2)
With 546 million dollars spent on corrugated cardboard boxes, the Food Industries are the main consumers of corrugated cardboard boxes.
The consumption of plastic containers and packaging materials in 1996 by manufacturing industries amounted to 1.4 billion dollars, an increase of about 5% compared to 1995. More than half of the total of this use comes from the Food Industries, that is 757 million dollars. Since the beginning of the 1990s, the market share for this type of containers has remained relatively steady. Indeed, the market share has remained between 19% and 20% during this period (19.6% in 1996).
However, by comparing this market share over a longer period, it can be noted how much the use of plastic containers and packaging products has increased compared to metal cans and containers and glass containers (Chart 3 - Consumption of Containers by type (market shares) .
The market share of plastic containers and packaging materials has more than doubled during the past 20 years, from 9% to 20%. Fluctuations in prices aside, the use of this type of container has increased the most in the 1990s. Indeed, during the last two decades, more and more plastic containers have been used to replace glass and metal containers.
In 1996, Canadian manufacturers spent almost 980 million dollars for metal containers, which represents a 9% decrease compared to the previous year. This decrease made the use of this type of container reach its lowest level in the last 20 years in 1996, i.e. 13.6%. In 1996, the Beverage Industries spent 507 million dollars for metal cans. The use of this type of container is effectively concentrated in the Food Industries and Beverage Industries. More than 88% of expenditures for metal cans come from these two industries.
The decline in the consumption of metal cans by manufacturing industries is largely due to a decrease in their use by the Food Industries. While, in 1986, Food Industries consumed 46% of all metal containers, this proportion was 10 percentage points lower ten years later. The consumer trend toward reheating food in microwave ovens in its original container, and growing consumer preference for fresh and frozen products explain the substitution for other types of containers(3). The Beverage Industries use more and more metal cans for their products. The regulations concerning the percentage of use for filling and refilling containers, the penetration by American consumer products resulting from free trade, and changes in consumer tastes (for example, the migration in the beer market to large sized cans) have a direct impact on the use of metal containers in these industries.
Manufacturing industries used somewhat less than 350 million dollars in glass containers to package their products in 1996. For the first time in the last 20 years, the market share for glass containers fell below 5%. Chart 2 illustrates the marked decrease in the consumption of glass containers during the last 10 years (a decrease of more than 31% in constant dollars since 1987). The Food Industries, the Beverage Industries and the Chemical and Chemical Products Industries consume almost all the glass containers in the manufacturing industry. The introduction of plastic bottles and aluminum cans in the Beverage Industries largely contributed to the decrease in consumption of glass containers. While Beverage Industries used 58% of the glass containers in 1986, this portion was reduced to 46% in 1996. Without the introduction of glass containers in Chemical and Chemical Products Industries, this decline would have been even more significant. In 1986, the use of glass containers by Chemical and Chemical Products Industries was 8%, and increased to 22%, in 1996.
In 1996, 861 million dollars were spent on set-up and folding boxes by Canadian manufacturing companies. Since the beginning of the 1990s, the market share for this type of container has been oscillating between 12% and 14%. After the Food Industries which, once more, consume most of this type of containers, Tobacco Products Industries spent somewhat more than 80 million dollars in folding boxes in 1996.
Again, this year, the consumption of containers and packaging products fluctuated at the same rate as manufacturing shipments. However, unlike in 1995, it is an increase in the demand for these products, rather than an increase in the price levels, which explains the increase in the value of expenditures for containers. This increase can be explained mainly by the increase in the use of corrugated boxes and plastic packaging products. These types of containers are still more and more popular among packaging products.
Monthly Survey of Manufacturing (MSM) (4) data indicates that manufacturing industries increased their shipments by 6.9% in 1997. This same survey also indicates that Food Industries and Beverage Industries, as well as the Chemical and Chemical Products Industries (the major consumers of containers), increased their shipment in 1997 by between 3.5% and 7%. It should also be noted that the price level for various types of containers has also been stable in 1997.
(1) This can also be explained by the fact that, in 1992, there was a 15% decrease in the number of establishments who had to answer a question on their purchase of containers and other materials.
(2) Purwitsky, Steve; "The Strong and Silent Type, Report on Corrugated Packaging"; Canadian Packaging; April 1997.
(3) Industry, Science and Technology Canada; Industry Profile 1990-1991, Metal stamping, closures and containers, 11 pp.
(4) Monthly Survey of Manufacturing, March 1998, Catalog No. 31-001-XPB.
This article was written by Étienne Saint-Pierre. Étienne is a Statistics Canada economist in the Manufacturing, Construction and Energy Division.
Further information on Canadian manufacturing can be found in the publications Manufacturing Industries of Canada: National and Provincial Areas (Catalogue 31-203-XPB), available annually for $68 per issue in Canada and for $68 U.S. outside Canada, and Products Shipped by Canadian Manufacturers (Catalogue 31-211-XPB), available annually for $67 per issue in Canada and for $67 U.S. outside Canada. Order this publication and other Statistics Canada publications by telephone, dial 1-800-267-6677, by fax: 1-800-889-9734, or by Internet.
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