February brings our annual processor ranking for North American thermoformers. It includes 209 companies with combined sales of $17.4 billion for fiscal 2022.
Last year's ranking totaled $15.9 billion. Packaging sales are 100 percent responsible for that $1.5 billion increase, because industrial thermoforming sales totals for the ranking were flat year over year.
Higher prices and product mix seem to be the biggest contributor to gains, aside from expansion, of course.
Resin pricing pass-through was a mixed bag, with polypropylene prices down and polystyrene up, canceling each other out in the aggregate.
Let's talk about the gains. The packaging end market did best, up an average 21 percent, while the industrial market was up 9.5 percent on average. To even out big jumpers, we look at the median.
Now here is my obligatory explanation why you should pay attention to the median: Two thermoformers walk into a trade show, one has been in operation for 75 years, the other three years. From a statistical standpoint, the average is 39 years. How helpful is that?
The median shows at what point half the companies exceed and half are below. For this ranking, that tipping point is 15 percent for packaging and 8 percent for industrial processors.
For the top five in each category, that amounted to $974 million and $28 million, respectively. As a comparison, the current Powerball jackpot is nearly 75 percent of that total. Just thinking about $747-plus million as an equivalent to this ranking's sales growth is wrecking my head.
Let's look at that packaging sector, serving primarily food or medical end markets: There were 136 companies (65 percent of our total) with some sales from packaging. All things being equal, each company would have 1/136th of that pie. For industrial it's a bigger slice at 1/73rd.
I spoke with Bill Wood, our resident economics editor, about jumping into a market with so many players in a down-trending economy. My takeaway: High volume, low margin product lines rely heavily on cash flow. In a down cycle there is margin compression. So some companies may see trouble. I will be keeping an eye on closures and consolidation in 2023.
Considering the current mood on single-use food packaging, now might be the best time to revolutionize the packaging market. For my 2 cents as a consumer: Is paper making inroads as the replacement material for foodservice? Let me know how it has affected your business at [email protected].
I'm left speechless by paper substitutes for straws and cups. Wet paper straws are so unpalatable, I have to ask how on earth did this idea make it into production?
Don't get me started on what items my local recycler won't forward back into the material stream, I don't have that much time. I would guess 95 percent of my take home containers can't go into our curbside bin. Those could be an ever-growing tower coming out of the dishwasher. I'm still not clear on the environmental score card on washing vs. trashing. In either case, it is still more cost effective to truck them out of here, rather than build a warehouse in my backyard to store them for reuse, but ask me again next year.