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Future confidence is brittle

The UK packaging manufacturing sector is “doing more with less”, with productivity as a measure of sales per employee having risen by 10% between 2000 and 2002, but at the expense of lower employment and reduced margins.

The Packaging Federation’s third UK market report, ‘Doing even more with even less’, this year includes, for the first time, data from a recent Landell Mills Consulting business confidence survey of converters and machinery companies.

While the Federation is pleased the sector “continues to gain greater ministerial recognition ansd support”, it remains under pressure from declining UK manufacturing and the corresponding rise in imported packaged goods. Landell Mills’ figures show 59% of those surveyed no longer see the UK as a favoured investment location.

More positively, while some mature packaging end markets are declining, others, like convenience foods, are fast-growing. For example, a typical large retailer now stocks 10 000 own brand packaged lines.

However, Landell Mills’ findings on business optimism are contradictory. While nearly 80% of respondents feel positive about their own business prospects, closer to 20% are optimistic about UK packaging manufacturing overall. Many believe sufficient margins for r&d investment will only materialise in the next five years if the converters’ customers stop viewing the overall service package they receive on a cost-plus, rather than an added value basis.