Germany remains a world giant in the packaging material and machine sector, with a high demand, especially for plastics, about to reach record levels according to a new report.
The report, completed ahead of the FachPack+PrintPack+LogIntern exhibition in Nuremberg, underlines the importance of German suppliers for the food industry, especially for those looking to introduce more automation into their plants.
About two per cent of Germany's manufacturing production value is attributed to the country's consumer packaging sector according to the report.
The worldwide production volume of packaging supplies and machinery is estimated at some €400bn.
With a production volume of around €4.1bn a year, Germany's packaging machine segment is number two in the world, behind the US, and ahead of Japan and Italy.
The US packaging machinery sector has an annual turnover of about €5bn annually, according to figures from the Confederation of Packaging Machinery Associations (COPAMA). Total world turnover is about €21.2bn.
"One competitive advantage of the German machinery manufacturers is the high degree of automation, which is particularly demanded by brand article manufacturers in the Western countries," the survey found.
The trend is especially important for food, pharmaceutical and cosmetic manufacturers, who need flexible filling and packing plants for smaller batches, report author Ellen Rascher stated. Guidelines on automating machines for the packaging industry are set out by Open Modular Architecture Controls, (OMAC), an international standards association .
The OMAC Packaging Guidelines contribute to more efficiency in the packaging industry, she said.
"The trend is to design individual machines of a plant as modules, so that they can be combined differently if required," she wrote.
The Verband Deutscher Maschinen- und Anlagenbauer (VDMA), the German engineering federation, currently reports full order books for packaging machinery, she noted.
"The investment backlog in Germany appears to be clearing slowly," analyses Richard Clemens, VDMA's general manager.
After slight growth to €4.2bn in 2005, he thinks the €4.5bn mark could be reached this year.
The some 300 German manufacturers of packaging machinery will then have stepped up their production output by almost a third since 2000, he noted.
Product piracy is a growing source of concern for German machinery manufacturers. According to a VDMA study, two thirds of the companies interviewed suffer from this problem.
Spare parts are counterfeited and whole machines, which are often only the same as the original in design terms. About 30 per cent of the companies interviewed estimate the annual loss of turnover due to product pirates at five per cent or more.
Rascher noted that in the past decade plastics have developed into the most important packaging material. Plastic materials account for about 43 per cent of Germany's packaging supplies market.
Last year, the 700 manufacturers in the industry increased their turnover by 5.8 per cent to €10.5bn, according to recent studies.
A new record quantity of some 3.8 million tons was also achieved. However, the plastics sector is being hit by rising prices for raw materials. Costs for supplies rose by up to 60 per cent in 2004, the report stated.
The cost of packaging plastics increased by between five to to 10 per cent in 2005.
"It was possible to pass on some of these increases to the customers, as the demand for plastic packages is growing constantly, especially in the food sector and for large containers for transport and storage," the report noted. "Innovative packages, particularly for convenience foods, prepacked sausages and cheese, give the industry impetus, so that processing and printing capacities are fully utilised."
The VDMA expects the extension of Germany's compulsory deposit scheme to create another boost for PET bottles. PET plastic bottles are more suitable for recycling than many other container materials.
Meanwhile Germany's container glass industry is under pressure from the compulsory deposit scheme and high energy prices.
The 32 companies in the German container glass industry sell 67.5 per cent of their production to the drink sector. Another 27.2 per cent is sold for use by preserved food manufacturers. The rest is bought by the pharmaceutical and cosmetic industry.
Container glass production dropped by 2.5 per cent to 4.1 million tonnes in 2004 and sales revenue by 3.5 per cent to €1.5bn in 2005.
Dramatically increased energy prices put the segment under extra cost pressure in 2005.
"The energy-intensive container glass industry has had more than it can take," says Johann Overath, general manager of the Bundesverband Glasindustrie, an industry assocation. "Production capacities were therefore distinctly cut back last year by shutting down four large glass melting furnaces."
Meanwhile tinplate manufacturers are also suffering according to the report. The demand for tinplate packages declined heavily in 2004 with a drop of eight per cent, according to recent studies.
Preserved food cans and drink cans are being replaced with cooled products in bags or folding cartons.
Germany's only tinplate manufacturer, Rasselstein GmbH of Andernach, produced about 1.24 million tonness of tinplate in 2004, with a turnover volume of €863m.
About 70 per cent of production is exported to around 400 packaging manufacturers in more than 80 countries. This makes Rasselstein one of the top three European tinplate manufacturers.
The Andernach company is to expand this year to become the world's biggest tinplate production location, the report stated.
"We are increasing our production capacities by 20 per cent to meet the growing demand for high-quality tinplate on the international markets," the report quotes Gerhard Lohscheidt, a Rasselstein spokesperson.
The company will then have an annual capacity of 1.5 million tonnes. About 17per cent of the company's tinplate production is used for drink cans in Germany.
Food and luxury foodstuffs have a share of 40 per cent, with chemical-technical packages accounting for 16 per cent, closures 13 per cent, aerosols eight per cent, and "miscellaneous" products such as cake tins six per cent.
The rising energy costs are also straining the profitability of paper and cardboard packaging manufacturers, which will lead to higher selling prices, Rascher said.
Paper and cardboard are among the most popular and most used packaging materials. The German corrugated cardboard industry is made up of 30 companies, owning about 100 factories.
The industry's sales rose by 3.2 per cent to a production of 7.6 billion square metres in 2005.
Turnover stagnated, with growth of 0.3 per cent to €3.309bn.
"Structural changes in the trade contributed partly to the growth in quantity," Rascher wrote. "Discounters use transport packages strategically in their outlets and therefore demand high-quality printed corrugated cardboard. Internet and mail order trade needs more transport packages. Around one fifth of all private customer packages handed in to Deutsche Post World Net are attributed to Internet transactions."
The carton manufacturers also expect strains on profitability this year. The 170 manufacturers of folding cartons produce some €2bn worth of cartons a year, of which almost 60 per cent go to the food industry.
The manufacturers use processing technologies such as metallization, embossing and relief printing creatively to achieve value creation potential, she reported.
The FachPack+PrintPack+LogIntern exhibition in Nuremberg runs from 26 to 28 September.