The Present and Future of the North American Corrugated Carton Industry
Mr. Charles Malo, Vice President and Chief Operating Officer of Norampac’s Corrugated Products Division, opened the conference. He focused on the current status and future trends of the North American corrugated box manufacturing industry. U.S. corrugated carton shipments will grow by less than 3 percent in 2021 – a figure that has not increased in the past three years – and Canadian corrugated carton shipments will be about the same in 2021 as in 2020.
The Canadian dollar has been very stable against the U.S. dollar over the past few years, remaining at around 30 percent. The U.S. trade deficit, on the other hand, continues to rise. The latest projection is that this year’s trade deficit will reach about 620-64 billion.
The pace of Canada’s economic development is expected to remain steady in 2023 and 2024. The corrugated box manufacturing industry is now receiving attention from the Canadian government. Several corrugated box manufacturers have already announced their intention to expand production.
MasterPackaging will build a new 1-billion-square-foot facility in Moncton, and Norampac plans to open a new plant in Vaughn. Norampac plans to open a new plant in Vaughn and close two smaller plants at the same time. Mitchell Lincoln’s new facility in Drummondville will have a capacity of approximately 1 billion square feet.
Mr. Malo also concluded, to the dismay of developed countries such as Canada, that the North American corrugated box market will not experience significant growth in demand. The North American market will be oversupplied now and for some time to come. The pressure for continued growth will come primarily from corrugated box customers. This could lead to reduced profits for corrugated box manufacturers and even less optimism for the survival of box companies.
Mr. Malo also addressed this important issue regarding return on assets. And the return on assets for 2019 was used as the selection criteria. Georgia Pacific was selected as the best-corrugated carton producer with a return on assets of 14%. In addition, a number of other large corrugated box producers were selected. They included International Paper, PCA, and Smurfit, all with returns on assets in the 7% to 8% range.
In the face of the current difficult situation, Mr. Malo offered some guidance to the corrugated box industry and suggested ways to overcome the difficulties. He believes that the future trend of the corrugated carton industry is to use lighter materials, fewer raw materials, and more recycled materials. He therefore concluded. Carton manufacturers must make the most of their assets, continue to invest in technology, improve their processes, build and maintain good relationships with their customers, and meet the changing needs of their customers.
Carton manufacturers must be fully aware. In the wave of packaging globalization, long-term agreements will make all parties in the packaging supply chain profitable.
To be successful, corrugated box manufacturers also need to invest more and reduce production costs. Therefore it is very necessary to reduce packaging materials. And this requires reducing the weight of the cardboard while improving its structure of the cardboard.
The corrugated box industry must find a new packaging solution. A solution that will actually help carton users to reduce their packaging costs. With this as a guiding principle, coupled with high-quality products and after-sales service, corrugated box manufacturers are sure to be invincible in the competitive marketplace.
Of course, he also pointed out that some carton production enterprises can also temporarily hold back. But it must be clear where their business road is, and where to go. In short, to find a favorite way to use low-grain materials to produce carton products.
China is always a hot topic of attention at any conference on packaging products. At the conference, Mr. Malo specifically predicted that China’s economy will continue to grow at about 7% until 2030. Currently, the average hourly wage in the United States is over $21, in Japan it is about $18, in Hong Kong and Taiwan it is $5, while in China it is only $0.75. Therefore it has become indisputable that more and more production and processing operations will move to China.