Business research firm Freedonia Group, of Cleveland, said in January that it projects global demand for packaging machinery to grow 5 percent per year from 2003 to 2008, up from 3.4 percent annually over the previous five-year period. The prediction is part of a new study, World Packaging Machinery, which says that demand is growing fastest in developing markets and Eastern Europe.

The most promising markets are those emerging in Latin America and the Asia-Pacific region, the company said in a news release. China will record some of the strongest increases, with packaging machinery demand rising over 8 percent annually. India will also post strong gains due to ongoing industrialization and impressive advances in fixed investment. Latin America, in particular Mexico and Argentina, will benefit from economic recovery.

Even in developed countries – which still account for most new equipment buys – the pace of investment is accelerating. Purchases in the United States, the worlds biggest packaging equipment market, are rising 4.3 percent per year, Freedonia said. Purchases in Japan, the second-biggest buyer, are increasing 3.1 percent, after eking out a growth rate of just 0.4 percent from 1998 to 2003.

R.A. Miller and Co., a packaging consultant based in Thornhill, Ontario, said its 2004 survey of the industry found North American packagers quite comfortable and focused on profitability and risk mitigation. But the firm surmised that most companies are probably too comfortable and have failed to adopt quality management practices. It found, for example, packagers generally do not have formal systems for evaluating their own performance.

With the exception of the pharmaceutical and chemical industries, formal quality management systems are lacking, and the status quo is deemed to be acceptable, President Roger Miller said. Without broadly based performance standards, companies and suppliers have evolved buyer-seller performance points in a local attempt to control quality issues, but adoption of recognized standards such as ISO, QS, or HACCP is minimal. ISO, QS and HACCP are all international programs for quality andprocess management.

Likewise, the survey found that the industry generally does not follow formal procedures for designing packages. It depends instead on customer feedback, an approach that Miller referred to as field-based trial and error that encourages incremental changes. Of the 300 people who responded to the survey, 35 percent said their own companies do an inadequate job of testing packages before bringing them to market.

Its a little disturbing that so many companies see their marketplace as the development laboratory, Miller said. Thats a recipe for big problems. But aside from that, if someone did an overall analysis of the cost of continually annoying their customers, they would see it makes sense financially to adopt standards for package development.

Miller said the survey showed lubricant and chemical packagers somewhat more likely than other industries to employ quality systems.

The lubes and chemicals industry is a little less confident in the state of the industry than are packagers in other industries, Miller said. This is probably due to the perceptions of their suppliers, a community that is heavily into ISO, audits and other tools designed to create hard data from which to develop opinions about how a company is performing.

But if the lubricants and chemicals segment is a little worried, I dont see that as a negative thing. I kind of wonder if the companies that are more comfortable may be flying their kite in the face of the wind.

Miller said he suspects that most packagers have not adopted quality systems because theyve survived just fine without them. But he added that he sees a number of potential threats that could strike and leave companies regretting that they did not shape up sooner. His list includes rapidly rising costs for liability insurance, needs for increased security measures, expenses of exporting and the possibility of new, progressive competition muscling into the market.

If they dont adopt a structured quality management process, the industry is at risk, Miller said. And that risk is somewhat analogous to what happened to the [U.S.] auto industry in the 60s and 70s, when the Japanese came in and ate their lunch.

Of course, it is in Millers interest to convince packagers to adopt quality systems; his company offers consulting services to help them do so. But the concept has pluses and minuses for companies to evaluate, according to an official at one packager and marketer of lubricants and chemicals. Amalie Oil Co., of Tampa, Fla., makes bottles for its own products and for those that it packages on behalf of other companies. Senior Vice President for Sales and Marketing Dennis J. Madden said the company has not adopted international quality standards, but has developed internal procedures to check the quality of bottles.

We have our own quality control people who check weight, neck finish, cap finish – things like that, Madden said. But if youre talking about industry-wide standards, my goodness, youd have to get an awful lot of people reading from the same hymnal to make that work.

Also, because the type of packages you use affects the type of equipment you use – both for filling and for making the containers – and because the equipment is expensive, I think this industry tends to be conservative about making changes.

Freedonias 286-page study, World Packaging Machinery, sells for $5,100. For further information contact Corinne Gangloff by phone at (440) 684-9600, or by e-mail at pr@freedoniagroup.com. For information about the survey by R.A. Miller and Co., phone (888) 847-9213 or e-mailcustomersupport@ramiller.on.ca.