SIC 2657
FOLDING PAPERBOARD BOXES, INCLUDING SANITARY



Establishments in this industry are primarily engaged in manufacturing folding paperboard boxes from purchased paperboard, including folding sanitary food boxes or cartons (except milk cartons). Products include folding paperboard boxes such as cereal boxes; folding cartons; frozen food containers; ice cream containers; folding sanitary food pails, such as those used for takeout food from restaurants; and paperboard backs for blister packages.

NAICS Code(s)

322212 (Folding Paperboard Box Manufacturing)

Industry Snapshot

The folding paperboard box industry encountered some difficulties in the late 1990s. The value of folding paperboard box shipments reached $9.22 billion in 1998 and then dropped to $8.7 billion in 1999 before recovering slightly to $$8.99 billion in 2000. Projections called for moderate growth throughout the early 2000s.

Food and beverage products represented some of the best markets for the folding paperboard box industry, with strong growth reported in packaging materials for both the bottled and canned beverages and dry food and produce industries. Together, those two categories accounted for 46 percent of the tonnage of folding paperboard boxes produced in the late 1990s. Some of the biggest beverage markets are for 6-, 12-, and 24-packs of canned soft drinks and beer.

Other important categories included frozen foods (10.3 percent); soaps and detergents (8.7 percent); carry-out boxes and trays (8.7 percent); paper goods (7.5 percent); and tobacco products (6.0 percent). Overall, about 62 percent of the volume of folding carton shipments went to food-related applications and 38 percent to non-food applications in the late 1990s.

Organization and Structure

In 1997, the U.S. folding paperboard box industry was made up of about 575 establishments. Shipments by the U.S. folding carton industry were concentrated in four main regions: North Central, Eastern, Southern, and Pacific. In the early 2000s, leading states in the industry included California, with 54 establishments; Illinois, with 51; Ohio, with 44; and Pennsylvania, with 42.

The growth of food-related packaging and other retail applications helped expand the retail market for folding paperboard boxes. The growing use of folding boxes as beverage carriers also helped fuel growth in folding paperboard box sales. Both beer and soda bottlers used 24-can "cases" as promotional vehicles in the mid-1990s. As a result, more of those products were sold in folding paperboard boxes and fewer in the traditional sixpacks held together by plastic carriers.

In the late 1990s, folding box manufacturers expanded production of high-quality, high-whiteness boxes suitable for four-color-process printing. Better visual appeal of such packaging often translated into higher impulse purchases by consumers, and folding boxboard customers often would pay a premium price for goods so boxed.

However, unlike its corrugated container cousins, the folding paperboard box has faced direct competition from alternative materials, principally the bewildering array of plastics. The growth of flexible bags, pouches, and wraps, as well as rigid carriers and containers made from plastics, has created a serious challenge to the dominance of the folding paperboard box in the packaging marketplace.

Folding paperboard boxes have also faced competition from some other paperboard products. In some retail applications, corrugated products and carded "blister packs" (paperboard backings that hold a molded plastic insert) have been used as a substitute for paperboard boxes.

Sales in the folding carton industry traditionally have been seasonal. The industry typically starts the year strongly after a slump in sales during December. Sales usually slow down slightly from April to July, and then they rebound from August to November before slowing down again in December.

Current Conditions

The U.S. folding paperboard box industry set records in 1998 in both the volume and value of product shipments. The strong U.S. economy led to increased domestic sales, and export sales were higher than expected. This allowed the folding paperboard box industry to have record sales in nearly all of its end use markets. However, shipments in both 1999 and 2000 fell below the benchmark set in 1998, due in part to formidable competition from alternative packaging.

Improved strength and lighter weight folding box-board helped to improve the competitive position of folding paperboard boxes in the packaging marketplace. Folding paperboard boxes also benefited from the fact that they were recyclable and contain recycled fiber. Both of these attributes were actively promoted on retail packages.

In the mid-1990s, the use of paperboard packaging (and other forms of packaging) was criticized as being inherently wasteful. Manufacturers were encouraged to reduce or eliminate packaging for their products. The folding boxboard industry and other sectors of the paper and paperboard industry responded by increasing the amount of recycled fiber used in their products. This successful campaign led to the paper industry recovering 47 percent of the paper and paperboard produced in the United States in the late 1990s, up from just 28 percent in the mid-1980s.

Production of the raw material for folding paperboard boxes—folding boxboard—was growing steadily in the late 1990s, when the United States produced 6.66 million tons of folding boxboard annually. There are three grades of U.S. folding boxboard: solid bleached sulfate (SBS), which is bleached white for high brightness; unbleached kraft, which retains the natural brown color of paperboard; and recycled. Of the 6.66 million tons of folding boxboard produced in the late 1990s, 2.86 million tons were recycled folding boxboard (43 percent); 2.14 million tons were SBS (32 percent) and 1.66 million tons were unbleached kraft (25 percent).

SBS is favored by manufacturers of folding paperboard boxes for the packaging of cigarettes, frozen and wet foods, meats, non-prescription drugs, bakery foods, and cosmetics. These manufacturers appreciate its superior visual and performance characteristics. After falling out of favor in the early 1990s, SBS staged something of a comeback later in the decade, when production of SBS grew to 2.14 million tons, while recycled boxboard was steady at about 2.85 million tons. Growing demand for SBS can be attributed to demands by domestic packagers for better graphics on their packages and growing export demand for SBS.

Recycled folding boxboard—the leading folding boxboard grade—was an environmental success story for the industry. The success of this grade was due to several factors, including the tremendous interest in recycling. But most industrial users were unwilling to accept an inferior product simply because it was more environmentally friendly. Better recycling procedures and improvements in strength, formation, and surface coating have allowed quality recycled clay-coated board to compete in several markets from which it was previously excluded.

The capacity to produce all three grades of folding boxboard was expected to increase throughout early 2000s. Unbleached kraft folding capacity increased from 2.07 million tons in 1997 to 2.25 million tons in 1999. By 2001, capacity was expected to reach 2.33 million tons. SBS folding boxboard capacity increased from 3.03 million tons in 1997 to 3.07 million tons in 1999. Capacity was expected to increase to 3.20 million tons in 2001. Capacity to produce recycled folding boxboard reached 3.00 million tons in 1997 and grew slightly to 3.05 million tons in 1999. Capacity was expected to remain virtually unchanged through 2001.

In the 1990s, folding paperboard box volume shipments tended to mirror the general economy, growing only as fast or slightly slower than gross domestic product (GDP). However, since these figures are based on tonnage, it must be taken into account that today's folding paperboard box manufacturers are producing lighter weight boxes that still meet existing strength tests and other industry standards. As a result, lighter boxes—which reduce industry tonnage—are replacing heavier products.

Product shipments of folding paperboard containers and boxes are expected to increase about 1.6 percent annually from 1999 to 2004 as the U.S. economy grows at a rate of 2.2 percent per year. On a volume basis, exports of folding cartons should increase about 6.0 percent and imports 7.0 percent annually during this period. Mexico and Canada should remain the main export markets, but the industry was expected to develop new markets as well, primarily in Latin America, Asia, and Eastern Europe.

Folding paperboard box plants employed 47,063 people in 2000. About 38,100 of those were production workers who earned on average $15.26 an hour.

Industry Leaders

The folding paperboard box industry is highly integrated. This means that the leading producers of folding paperboard boxes also produce the folding boxboard used to make the product. Leading producers of folding paperboard boxes include Georgia-Pacific Corporation, Fort James, Smurfit-Stone Container Corp., Westvaco Corp., Packaging Corporation of America, and Rock-Tenn Co. Other leading companies include Green Bay Packaging Inc., Waldorf Corp., and Gulf States Paper Corp.

America and the World

The folding paperboard box industry has traditionally imported more than it has exported—a trend that continued into the late 1990s. In 1998, U.S. exports of all folding cartons and related products amounted to 151,250 metric tons, an increase of 2 percent over 1997. In 1998, folding cartons represented about two-thirds of the total volume exported, while sanitary food and beverage containers made up one-third. The leading U.S. export markets by volume for finished folding cartons in 1998 were Canada, with 40 percent; Mexico, 30 percent; and China, 11 percent. In spite of the Asian financial crisis in 1997, export growth in this category was expected to continue growing throughout the late 1990s and into the 2000s.

In 1999, U.S. exports in this category were expected to be valued at $315 million, compared to $292 million in 1998 and $278 million in 1997. By comparison, imports of folding paperboard boxes were valued at $402 million in 1999, compared to $362 million in 1998 and $315 million in 1997.

While exports of folding paperboard boxes have continued to grow, they are still a relatively small portion of total production. In 1998, for example, exports accounted for just 3 percent of total folding paperboard box production. It usually makes the most economic sense to export folding boxboard in sheets or rolls and then convert them into boxes locally. Many U.S. folding paperboard box manufacturers possess sites for foreign conversion for this reason. As a result, exports of unconverted folding boxboard were roughly three-and-a-half times the size of finished folding paperboard box exports in the late 1990s.

Foreign trade was expected to continue to play a minor but growing role in total industry shipments through the end of the 1990s. With exports to Mexico, other Latin American countries, and Pacific Rim countries expected to increase, folding carton product shipments were anticipated to increase 11 percent in value in 1997 and 8 percent in 1998. The domestic market will likely remain the central focus of folding paperboard box manufacturers. The historically high U.S. per capita consumption of folding paperboard boxes—approaching 40 pounds per year—will help maintain that focus. By comparison, western European per capita consumption has been documented as only about half that of the United States.

Further Reading

Folding Paperboard Box Manufacturing, 1997 Economic Census, Manufacturing Industry Series Washington, D.C.: U.S. Census Bureau, August 1999.

Lazich, Robert S., ed. Market Share Reporter 2000. Farmington Hills, MI: Gale Group, 1999.

Paper, Paperboard, Pulp Capacity and Fiber Consumption. Washington, D.C.: American Forest & Paper Association, 1998.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

U.S. Trade and Industrial Outlook 1999. New York: McGraw-Hill, 1998.



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