UK government policies toward manufacturing and retailer power are the major concerns of the UK packaging manufacturing and machniery sectors, according to the UK Packaging Business Confidence Survey from Landell Mills Consulting, the Packaging Ferderation and Total Processing and Packaging 2004.
However 46 per cent of those questioned reported increased sales volumes, predominantly in the flexible plastic, glass and paperboard sectors. But a clear indication of the pressures being exerted on the packaging industry came with just 20 per cent of respondents stating that margins had increased, while a decline in profit margins was reported by 40 per cent of those that replied.
Government policy towards the manufacturing sector, the power of retailers and the consequent inability to pass on price increases were among the most pressing concerns of those interviewed.
Major criticisms of the 93 per cent of respondents that stated the UK Government was not doing enough for industry cited a lack of understanding about the real impact of the ever increasing rules, regulations, taxes, costs and bureaucracy emanating both from the UK Government and the European Union.
Ian Dent, the Packaging Federation's chief executive, said: "If packaging manufacture is to remain a viable part of the UK economy, it is vital that some constructive dialogue takes place with the DTI on the issues identified in this survey and the earlier competitiveness study on the sector. We need a strong champion within the DTI to work with the industry, not against it, as we so often feel is the case."
Dominic Cakebread, managing director of Landell Mills Consulting said: "The results of our 2003 survey were not entirely a surprise, confirming the findings of much of the work we have carried out for The Packaging Federation over the last few years.
"There are many severe and diverse pressures on the sector at present and the survey results point to the longer-term need for UK packaging suppliers to focus more upon investment in R&D, getting closer to and improving their services to their UK clients and expanding overseas to offset the competition in their home market."
The strength of the British Pound against the Euro was considered to have been detrimental to business by 52 per cent of the sample. But answers were not clear cut on the thorny question of when the UK should join the single European Currency. There was an almost equal split between those that felt Britain should join immediately - 31 per cent and those that said it should never join - 35 per cent.
However, this was offset by the 22 per cent that felt that joining within a time span of three years would be beneficial. The major concerns about joining the single currency were the impact this could have on EU legislation, taxation and interest rates.
Questioned about consolidation in user markets 63 per cent felt that this would continue with 64 per cent expecting further merger and acquisition activity in the packaging sector.
Overseas investment opportunities were felt to be strongest within Poland, Czech Republic and Russia, closely followed by Asian countries such as China, Malaysia, Thailand and Korea. However, Japan was singled out for exclusion among Asian countries.
The investment opportunities and bullish nature of the Eastern European countries was being reflected in the interest being expressed by these markets in both visitor and exhibitor attendance at Total Processing & Packaging 2004, said show director Barbara Jackson. The proximity of Eastern European countries to western European markets and EU accession were the major reasons for this interest.
Summing up the survey Ian Dent said: "Packaging is a barometer of the economy, and this survey reflects that by echoing comments voiced by manufacturing in general over its lack of attention by Government, the impact of the two-speed economy as reflected by the retail sector here, and the important issue of inward investment.
"I hope that we may continue with this dynamic exercise to supplement the usual annual historical market data."
The UK Packaging Business Confidence Survey interviewed 100 senior managers and directors within the UK packaging industry. Over 80 per cent of those interviewed were involved in packaging materials and containers, while 18 per cent were involved in machinery.
The interviews were conducted by telephone using a structured questionnaire and lists compiled by The Packaging Federation, Landell Mills Consulting, Total Processing & Packaging 2004, and MMAssociates.