Manufacturing, Construction and Energy Division

Étienne Saint-Pierre

October 1999

For some manufacturing industries, containers and packaging products represent a relatively high production cost. Based on data from the Annual Survey of Manufactures (ASM), this article shows that the consumption of containers by manufacturing industries was similar in 1996 and 1997, and describes changes in the consumption of packaging products by manufacturing industries in Canada in recent years and the main consumers of those products. Changes in consumption of containers by manufacturing industries also indicate that various types of consumers are being replaced by others. Some types of containers, once very popular with Canadian manufacturers, are now used less frequently than other packaging products. Also, the article briefly shows that the portrait of container consumption differs from region to region in Canada.

Stable consumption of packaging products in 1997

Canadian manufacturing shipments increased 6.7% in 1997. Given that the consumption of packaging products is very closely related to manufacturing production, it is not surprising that for the fifth straight year, consumption of containers and other packaging products by Canadian manufacturing industries rose in 1997. Although that number reached $7.3 billion, it was only $27 million higher than 1996, a 0.4% increase. Falling prices(1) in 1997 for set-up and folding boxes, corrugated boxes and glass containers explain the weak increase in the value of containers and packaging products consumed by the manufacturing sectors. In 1992 constant dollars, however, consumption of those five types of packaging products was up 3.4%.

The cost of packaging products rose more slowly than the costs of the materials and supplies used.

The percentage of expenditures for packaging products compared to the total cost of materials and supplies used by the manufacturing industries dropped again 1997. Packaging products accounted for 2.9% of the cost of materials and supplies used in the manufacturing industries. This percentage has been dropping steadily since the beginning of the decade (Table 1. Deliveries, materials and supplies, packaging products, Manufacturing Sector, 1990-1997). In 1990, that figure was 3.8%.(2) The drop can be explained by the industry’s desire to meet the objectives of the National Packaging Protocol to reduce the volume of packaging materials destined for the dump by 35% in 1996 and by 50% in 2000. To achieve that objective, industries began cutting back, recycling and reusing: "The amount of packaging reused in 1996 was about 4.07 million metric tonnes, representing about 47% of packaging use that year. In 1992, only 36% of packaging was reused. The country’s largest consumer of packaging, the food industry, increasingly employs wood pallets, and plastic and corrugated shipping containers to move goods from factories to stores."(3)

Also, for 19 of the 22 industry groups that make up the manufacturing sector, the percentage of expenditures for packaging products compared to expenditures for all materials and supplies used fell between 1990 and 1997. The most spectacular drop was in the Beverage Industries, where that percentage fell from 61% to 49%. Figure 1. Increase in the cost of packaging products vs. materials and supplies, 1990 to 1997 (1990=100) clearly shows the growing gap between the cost of packaging products and total expenditures for materials and supplies used in the five industry groups that consume the most packaging products.

The main consumers of packaging products

Consumption of packaging products is highly concentrated in a few industries. Four industry groups account for approximately 75% of total consumption of packaging products (Food, Beverages, Chemicals and Chemical Products and Paper and Paper Products). With $2.7 billion in packaging products expenditures in 1997, the Food Industries take first place as top packaging products consumer. Beverage Industries are next, spending $1.4 billion expenditures on packaging products in 1997. The Beverage Industries also experienced the most spectacular increase in container consumption among manufacturing industries, with an increase of $70 million, or 5.2% more than 1996 (Table 2. Consumption of containers per industry group 1992-1997). However, both the Food and Chemicals and Chemical Products Industries recorded drops of $34 million in packaging product consumption in 1997, despite increases in the value of manufacturing shipments. For both those industries, this was the first drop in the consumption of packaging products since 1992. Nine of 22 industry groups spent less on packaging products in 1997 than in 1996.

The wide variety of industrial products means that packaging expenditures are very different from one industry to the next. In the Beverage and Tobacco Products Industries, those expenditures represent a relatively-high operating cost. For each dollar spent on materials and supplies in the Beverage Industries, 49 cents is spent on packaging products. In second place are Tobacco Products Industries, where 16 cents of each dollar spent on materials and supplies goes to packaging. At the other end of the continuum are primary Metal Processing Industries, Transportation Equipment Industries, and Refined Products and Coal Industries, which spent less than one cent per dollar of materials and supplies on packaging products.

Consumption per type of container

To protect and preserve goods during transportation, and facilitate transportation, manufacturers use a wide range of packaging products, depending on product characteristics. Among the main types of packaging products used are plastic containers and packaging materials, corrugated boxes, metal containers, set-up and folding boxes and glass containers. It should be noted that these five types of packaging products accounted for just over 70% of total consumption of packaging products by manufacturing industries in Canada in 1997.

For the fourth consecutive year, industries spent the most on corrugated boxes, i.e., $1.5 billion in 1997 ($25 million less than in 1996). As in previous years, expenditures for plastic containers and packaging materials was almost the same as for corrugated boxes, although it was just under $31 million in 1997. Table 3. Consumption of containers by industry group per type of container, 1997 clearly shows the popularity of those two types of containers for packaging manufactured goods.

To effectively assess the change in actual product consumption, it is useful to compare figures in constant dollars. In 1992 dollars, consumption of both glass containers and set-up and folding boxes increased by 12% in 1997. Consumption of metal containers continued to drop in 1997, falling by 4%. In constant dollars, consumption of plastic packaging products continued to rise, increasing 4%, for the fifth consecutive increase. Consumption of corrugated boxes remained relatively stable, with a slight 1% increase over 1996.

A study of changes in the consumption of various types of containers during the 1990s shows a difference between the early 1990s and 1997 in terms of packaging consumption. In 1990, consumption of plastic containers and packaging materials was almost the same as for metal containers, which was no longer the case in 1997, when consumption of plastic containers and packaging materials was 1.6 times higher than for metal containers (Figure 2 – Consumption of containers based on type of container (in 1992 dollars), 1990 to 1997). In 1992 dollars, plastic containers and packaging materials were the most popular in 1997, dethroning corrugated boxes, which had been in first place at the beginning of the decade. In 1990, consumption of plastic packaging products was 92% of corrugated cardboard box consumption. In 1997, plastics had surpassed corrugated boxes by 9%. Obviously, there has been a switch – plastic packaging products have become increasingly popular, to the detriment of metal and glass containers, which show a downward trend in consumption, i.e., dropping 21% and 20% respectively between 1990 and 1997.

Provincial consumption

Given that industrial activity is highly concentrated in Quebec and Ontario, it is no surprise that those two provinces account for over three-quarters of manufacturing industries’ consumption of packaging products. Ontario manufacturers spend $3.5 billion on packaging products in 1997, and Quebec manufacturers $2 billion (Table 4 – Consumption of packaging products by region, 1997).

The popularity of packaging products varies from province to province according to the type of industry. The most popular type of packaging (among the five main types listed above) among manufacturers in the Atlantic provinces was corrugated cardboard boxes, which accounted for over 27% of total consumption of packaging products by manufacturers in that area in 1997. This type of container was also the most popular among Ontario manufacturers, who accounted for 22% of the market in 1997. Manufacturers in Quebec and the Prairie provinces used more plastic packaging products than any other type of containers, with market shares of 22% and 27% respectively. In British Columbia, the most popular packaging among manufacturers was metal containers, which accounted for 18% of all expenditures on packaging products.

Conclusion

The amount of money spent on packaging containers and products by manufacturing industries in 1997 was almost the same as the previous year, despite the increase in manufacturing shipments. The result of that stability is that the ratio of packaging expenditures to the total cost of materials and supplies continues to fall, and has fallen for almost all industries over the decade. Another notable change during the 1990s is the growing preference for plastic containers over metal and glass containers.

Monthly Survey of Manufacturing (MSM) (4) data show that manufacturing shipments were up 3.2% in 1998, and that the four industries consuming the most containers (i.e., Food, Beverages, Chemicals and Chemical Products, Paper and Paper Products) reported increases of between 2.8% and 4.3% in manufacturing shipments during that same period.

References

1.  Statistics Canada, Industry Price Indexes, Catalogue No. 62-011-XPB.

2.  It should be noted that in 1992, there was a 15% drop in the number of establishments required to respond to the question on purchases on containers and other materials.

3.  Packaging Association of Canada, Industry Exceeds Year-2000 NAPP Target, (http://www.pac.ca/pacnews.htm)

4.  Statistics Canada, Monthly Survey of Manufacturing, March 1999, Catalogue 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-XCB), available annually for $430 per issue in Canada and for $430 U.S. outside Canada. Order these products and other Statistics Canada publications by telephone, dial 1-800-267-6677, by fax: 1-800-889-9734, or by Internet.

For more information about manufacturing data or time-series, call the Disclosure and Dissemination Unit, Manufacturing, Construction and Energy Division at (613) 951-9497 or by Internet: manufact@statcan.gc.ca.   For information from International Trade Division telephone 1-800-294-5583 or by Internet: trade@statcan.gc.ca.