When will recovery come?

Forty-eight of the most senior buyers and suppliers in the packaging industry provided their valuable expectations and opinions for this survey.

Of these, 28 were buyers with an average annual procurement budget of $75mn each. A further 20 respondents represented CEOs and MDs from supplier companies. The survey results have been analysed by SPG Media’s in-house analysts.

Uncertainty over economic recovery timing prevails. The majority of packaging C-level executives expect a late economic recovery, with Americans being the most optimistic and Europeans the least. However, uncertainty prevails with little consensus over timings as even senior executives struggle with predictions, given the unique characteristics of the financial crisis.

No quick fix

There is little short-term optimism that the economy will recover quickly, with many executives not expecting any recovery until the latter half of 2010. Clearly there is little confidence that governments will be able to quickly ease the downturn.

Buyers are only marginally more confident about quicker economic recovery than suppliers. Although a late recovery is the most common expectation, the survey also reveals a broad swathe of opinions, including some candid ‘don’t knows’.

Packaging executives say they are not in a ‘credit crisis’. While packaging buyers and suppliers see the business climate as difficult, with ‘managing costs’ and ‘falling demand’ as the most pressing business concerns for the industry, their companies are not in dire straits.

Biggest concerns

Buyers rate cost containment as a much greater business concern than suppliers do. This is particularly true of buyers with smaller procurement budgets. Furthermore, environmental and climate change challenges remain a core business concern despite the recession.

Buyers continue to seek out quality. The current financial crisis has not made price the top criteria in supplier selection for buyers; the primary issue remains quality. However, buyers place more weight on pricing relative to quality and innovation than suppliers believe they do.

Suppliers have an opportunity to align their capabilities better. Suppliers underestimate the importance buyers attach to price, the proximity of their operations, their corporate social responsibility and environmental records when selecting major packaging contracts. These discrepancies present opportunities for suppliers to refocus attention on their ethical practices while maintaining price competitiveness.

The next PACE/GSS (Europe) takes place 4-7 February 2010 in London, while PACE/GSS (US), in Miami, will be held from 25–28 February 2010. For sponsorship opportunities, please contact Maria Wallace at mwallace@progressivemediagroup.com.