Machinery demand expected to increase in 2004.

Consumer and industrial-goods companies will increase their packaging machinery expenditures 4.0% over the previous year to $5.479 billion in 2004, according to a survey of packagers conducted on behalf of PMMI. PMMI's seventh annual Purchasing Plans Study suggests that six of eight market segments (beverages, chemicals, durables, foods, personal care and converters) will grow during the year. These segments account for approximately 81% of the U.S. and Canadian packaging machinery market.

More companies (33% of those responding) plan to increase spending for packaging machinery in 2004 rather than reduce spending (28.7%). Of significant note, the proportion of respondents planning to allocate roughly the same dollar amount as last year fell to 32.5% from 34% in 2003.

"This is the first year since the inception of the Purchasing Plans Study that the 'no change in spending' group did not represent the majority of respondents," says Chuck Yuska, PMMI president. "This is good news, in that there may be a shift away from the overall mood of extreme caution we've seen in the market for many years. Packaging machinery manufacturers serving the beverage, chemical, durable, food, personal care and converter markets should take confidence in this expected growth."

The Purchasing Plans Study is based on in-depth interviews with 424 decision-makers responsible for 12,251 packaging lines in 1,814 plants throughout all key segments of the U.S. market. The study offers a snapshot of the purchasing intentions of consumer and industrial-goods companies and the primary market factors affecting spending levels for the given year.

The top three reasons consumers and industrial-goods companies cite for ordering new equipment in 2004 are:

1. Replacing machinery to gain efficiency, speed, flexibility and productivity (32.5%).

2. Expanding production capacity for existing products (19%).

3. Adding automating machinery to reduce labor costs (15.1%).

"Consumer- and industrial-goods companies are constantly looking to gain a competitive edge," reports Yuska. "They want packaging equipment that decreases downtime but still delivers enough flexibility to help them put the newest and the most innovative products on the shelves, which means new machinery will continue to be in high demand."

The 2004 Purchasing Plans Study includes further details on capital equipment purchasing intentions, including macro- and micro-economic assumptions, reasons for not purchasing this year, the rising influence of major retailers and how purchasing decisions may be affected by radio frequency identification requirements. The report can be found in the Resources & Reports Center on www.pmmi.org, under Industry Research.