are optimistic about investment in new capabilities to meet growing demand. That's the summary of a new report on the Canadian packaging market by PMMI.
The Canadian economy is about 1/10th that of the US. Although growth has lagged that of the U.S, the most important markets for packaging machinery are healthy and less subject to the vagaries of the economy overall.
Manufacturing represents about 10% of Canada’s $1.7 trillion (US) GDP. Food is the second largest sector, after
transportation equipment, and chemicals (including pharmaceutical, health and beauty aids, and cleaning products) is the fourth largest manufacturing sector.
As Canada is highly dependent on trade, international economic and financial events have a large effect on the economy. The US accounts for more than three-fourths of Canada’s exports. Uncertainty about NAFTA certainly slowed business activity and investment in Canada. Other factors are also working to slow growth and business investment more than might otherwise be the case given the current global economy. Canada’s investment in machinery and equipment has been declining for years, especially as a share of GDP, and is among the lowest of its peers. At some point, though, this chronic under-investment will turn, as the need to increase capacity, and improve productivity becomes urgent.
The packaging market in Canada is about 10% of that in the US, about $25 billion (US), with the materials used
in packaging about two-thirds of that. Flexible packaging is the largest, about one-third the total, closely followed by paperboard. Canada imports more packaging materials than it exports, even with the large domestic paper products sector. Imports are particularly important for glass containers. Manufacture of packaging materials in Canada continues to grow at mid-single digits. Production of flexible-packaging materials grew both the most and the fastest, more than twice that of paperboard containers. Overall trends in packaging, such as increasing use of flexible, especially in food, and changes in size and lightweighting, are comparable to that in the US.
Similarly, the major end-use markets for packaging materials and machinery in Canada are similar to that found elsewhere. Food and food products are most important, followed by beverages, healthcare, cosmetics,
and other consumer and industrial products. Food manufacturing in Canada has grown steadily, particularly
meat and meat products. Capital equipment spending has been fairly steady at about US$1 billion a year.
Although important to packaging equipment and materials manufacturers, beverages is a relatively small sector, with less than C$13 billion in sales (about US$10 billion), with most growth coming from beer. With decent growth and changes in type and size of packaging, capital investment continues to be strong. Investment in machinery and equipment has grown by 5% each year since 2014. The pharmaceutical, health and beauty aids, and cleaning and household products sectors in Canada are somewhat smaller and more concentrated than food and beverage. Growth in each is also somewhat slower, but steady.
This implies the market for packaging machinery in Canada is about $800 million to $950 million (approximately C$1.25 billion). Canada imports approximately US$575 million of packaging machinery and equipment. As Canada also exports about US$450 million, it would appear that about $800 million (C$1 billion) is manufactured in Canada.
The type of equipment and machinery installed and purchased in Canada closely approximates that in the US. The major suppliers of packaging equipment and machinery are as one would expect. All the major US and
international companies sell into Canada; most Canadian companies sell into the U.S., even if they do not have a presence everywhere in Canada.
Top 10 countries account for more than 90% of all imports (and as much as 95% in 2013). The US is the primary
source of equipment, typically between 35% and 40% of the value of imports. Germany and Italy together export nearly as much as the US. They have a reputation as being very high quality, and priced accordingly.
Exports of packaging equipment by Canadian manufacturers have increased steadily since 2013 and surged by 13.6% in 2017, in U.S. dollar terms (and more in Canadian dollars.) Exports of each major category have bounced around, however, rising and falling in an uneven fashion. Most of the growth in the last five years in both filling, closing, sealing, and labeling machinery and also equipment for cleaning and drying bottles and other containers occurred in 2017. On the other hand, exports of packing and wrapping machinery have fallen in the last three years.