55 / 76
43
BOX
SCORE
More Jobs = More Box Sales
By Dick Storat, President, Richard Storat & Associates, Inc.
continued on page 44
CORRUGATED INDUSTRY TRENDS
Economic growth
stimulates
new box demand. That’s straight-
forward. And there are only two
drivers for growing the nation’s
gross national product, the principal
measure of economic output: more
workers to produce more goods or
services, and more output from the
existing work force – productivity
gains.
Productivity gains are usually largest
as an economy initially recovers from
recession as firms strive harder for
efficiency gains, increasing the hours
worked by existing workers and
taking other measures to “do more
with less.”
Since the last recession in 2008,
labor productivity in the US
manufacturing sector has chalked
up substantial gains, averaging an
annualized increase of 3.7% since
hitting its recession low in the 1st
quarter of 2009. While independent
boxmakers supply boxes to the
entire spectrum of manufacturers,
some are more focused on the
producers of non-durable goods,
while others are more oriented to
customers producing durable goods
that are intended to last for three or
more years, like furniture or home
appliances. During this last economic
recovery, makers of durable goods
have achieved average annualized
productivity gains of 5.8% since
hitting bottom in the first quarter
of 2009. Box makers supplying
manufacturers of food products and
other non-durable goods have not
fared nearly as well. The average
annualized productivity gains for
manufacturers of non-durable goods
since hitting bottom have been a
much lower 2.1%.
However, this year productivity gains
have stalled in the manufacturing
sector, as manufacturers reach the
limits of what can be produced more
efficiently with the same work force.
Increasingly, it will now take new
jobs to create additional economic
growth.
By examining recent trends in
employment gains, box makers can
get clues as to where pockets of
future growth may be created. In
those growth sectors lies the potential
for additional box demand.
During 2012, the Bureau of Labor
Statistics reported that 1.464 million
net new jobs had been created in
the private sector of the US, an
annual growth rate of only 1.3%.
Only slightly more than one-fifth
of the added jobs were in the goods
producing sector. Of those 313,000
jobs, 171,000, or just over half, were
additions to manufacturing sector
employment, which experienced a
1.45% annual increase, marginally
better than the overall private sector
employment growth rate.
Within the manufacturing sector,
80% of the new jobs were in the
durable goods sector, concentrated
in the automotive and transportation
sectors. This was welcome news
for those independent boxmakers
supplying packaging throughout the
transportation equipment supply
chain.
Nondurable goods saw the creation of
only 34,000 jobs, concentrated in the
packaging-intensive food, beverage
and tobacco manufacturing sectors.
The paper and paper products
industries, into which independent
boxmakers are categorized, lost
6,000 workers in 2012, a 1.4% annual
decline.