Growth Trend (Pre-Made Bagging Machinery) 2008 Results

Transcription

1 PRE-MADE BAG HANGING, OPENING, WEIGHING, FILLING, AND CLOSING/SEALING MACHINERY 2008 Results Shipments: $164M Versus 2007 Total: +7.9% Total Units Shipped: Total Export Shipments: $38M Order-Backlog (12/31/2008) $37M By Machinery Sub-Category Bag Hanging, Weighing, Filling <10# Shipments: $54M Versus 2007 Total: +10.2% Total Units Shipped: 1,547 Total Export Shipments: $7M Order-Backlog (12/31/2008) $18M $Millions $175 $165 $155 $145 $135 $125 Growth Trend (Pre-Made Bagging Machinery) $134 $139 $144 $152 $ Bag Hanging, Weighing, Filling 10# and Larger Shipments: $40M Versus 2007 Total: +11.1% Total Units Shipped: Total Export Shipments: $3M Order-Backlog (12/31/2008) $14M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Pre-Made Bagging Machinery) Total Category 25% 75% Bag Closing, Sealing Machinery Less than 10# Bagging 22% 78% Shipments: $70M Versus 2007 Total: +4.5% Total Units Shipped: 11,475 Total Export Shipments: $28M Order-Backlog (12/31/2008) $5M 10# and Larger Bagging Bag Closing, Sealing 17% 25% 75% 83% Reported No Change Reported Decrease Reported Increase 16

2 PRE-MADE BAGGING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Pre-Made Bagging Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $126M +4.1% Export Shipments $38M +22.6% 2008 Pre-Made Bagging Machinery Shipments by End-Use Market Segment Foods 6 Hardware/Industrial/Automotive Products 18% Pharmaceutical/Medical 1 Consumer Durables - Miscellaneous 6% Personal Care Products 3% All Other 3% 2008 Pre-Made Bagging Machinery Shipments By Type of Customer Direct Sales to End-Users 52% Sales to Distributors and/or Dealers 46% Sales to Other Machinery Manufacturers 2% Respondents Comments In an effort to reduce labor costs, companies shifted expenditures to capital goods. Manufacturer of Pre-Made Baggers 10# Capacity and Larger We benefited from new product introductions and we also concentrated more on export markets Latin America. Manufacturer of Bag Closing, Sealing Machinery New products developed in 2007 led to growth for us in Manufacturer of Pre-Made Baggers Less than 10# Capacity We were able to capitalize on the trends toward quick delivery and fast changeover. Manufacturer of Pre-Made Baggers Less than 10# Capacity We added a new technology and we ve become more familiar to our customers. More companies know of us. Manufacturer of Bag Closing, Sealing Machinery Our lead times increased and we lost some business as a result. Manufacturer of Pre- Made Baggers 10# and Larger Capacity There were spending freezes put in place among many customers. Manufacturer of Bag Closing, Sealing Machinery Participant Data PMMI Member Participants 17 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 16 Total Companies 33 Average Shipments ($) Per Company $4.95M Less than 10# Bagging $3.85M 10# and Larger Bagging $2.56M Bag Closing, Sealing $7.31M 17

3 PRE-MADE BAGGING MACHINERY (Continued) Key Trends and Developments* Exports climbed sharply again. Following an enormous percent increase in 2007, the category s manufacturers continued to push into foreign markets in 2008 with a solid percent increase. Manufacturers of bag closing and sealing machinery were responsible for most of the increase, but manufacturers of baggers for less than 10# capacity bags made significant inroads as well. New technologies created further demand. Several of the category s manufacturers reported sales growth as a result of technological advances and/or new bagging machinery features that were added to address specific market needs and requirements. Examples include options for medical customers to validate seal integrity, higher speed sealing capabilities for bulk products, and features designed to improve changeover capabilities on bulk bag filling lines. Bagging machinery manufacturers improved delivery times. End-users increasingly sought quick delivery for bagging machinery during the year, providing opportunities for several of the category s manufacturers that were able to speed-up their order-to-delivery times. Flexible packaging remained popular among end-users across all major market segments. Packagers of foods, hardware, pharmaceuticals, and various other markets continued to look to flexible bags and pouches as an effective, low-cost packaging option. Bagging machinery manufacturers capitalized on the enduring trend by marketing a host of low-cost baggers and bag sealers capable of efficiently handling a wide variety of products. Domestic demand remained positive despite the eroding economic conditions. U.S. customers clearly pulled-back on capital spending in the latter part of 2008; however, the category s manufacturers managed to secure a +4.1 percent increase in shipments to the domestic market during the year. It is likely that U.S. bagging machinery manufacturers benefited as some end-users in markets such as hardware, industrial and other durable products in an effort to reduce labor costs in the face of the economic downturn sought to add low-cost automation solutions to their packaging lines during the year. Certain manufacturers reported longer lead times. Just as several bagging machinery manufacturers reported benefiting from being able to deliver new machinery to customers faster in 2008, others reported sales declines stemming from internal issues that caused their lead times to suffer. Project delays were caused by spending freezes. As the economy began to deteriorate in 2008, many end-users cut spending for capital equipment, leaving many projects delayed or cancelled. *Also see key market trends and developments presented in Executive Summary 18

4 BOTTLING LINE MACHINERY (Excluding Associated Filling, Capping, and Sealing Machinery) 2008 Results $320 Growth Trend (Bottling Line Machinery) Shipments: $286M Versus 2007 Total: -4.* Total Units Shipped: 2,643 Total Export Shipments: $113M Order-Backlog (12/31/2008) $71M $Millions $300 $280 $260 $240 $277 $289 $298 $286 $220 $221 By Machinery Sub-Category Bottling Line Conveyors and Accumulators Shipments: $209M Versus 2007 Total: -7.1%* Total Units Shipped: 1,742 Total Export Shipments: $86M Order-Backlog (12/31/2008) $45M $ Bottle Placing, Feeding, Rinsing, Washing, Collating, Unscrambling, and All Other Related Machinery Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Bottling Line Machinery) Shipments: $77M Versus 2007 Total: +5.5%* Total Units Shipped: 901 Total Export Shipments: $27M Order-Backlog (12/31/2008) $26M Total Category 43% 57% *The 2007 dollar shipment values for the two sub-categories were restated to reflect updated information obtained after the release of last year s report. The percent-change figures for the sub-categories and for the category as a whole are based on the restated 2007 values ($225 million for bottling line conveyors and accumulators and $73 million for bottle placing, feeding, rinsing, washing, collating, unscrambling, and all other related machinery). Bottling Line Conveyors Bottle Placing, Feeding 4 36% 6 64% Reported No Change Reported Decrease Reported Increase 19

5 A Closer Look at the 2008 Data BOTTLING LINE MACHINERY (Continued) 2008 Domestic Shipments Versus Exports (Bottling Line Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $173M -9.4%* Export Shipments $113M +5.6%* *The 2007 domestic and export shipment dollar values were revised to reflect updated information obtained after the release of last year s study. The percent change figures are based on the restated 2007 values (Domestic $191 million; Exports $107 million) Bottling Line Machinery Shipments by End-Use Market Segment Beverages 75% Pharmaceuticals 11% Foods 5% Personal Care Products 5% Chemicals 3% Non-Durables/All Other 1% 2008 Bottling Line Machinery Shipments By Type of Customer Direct Sales to End-Users 79% Sales to Distributors and/or Dealers 4% Sales to Other Machinery Manufacturers 17% Respondents Comments There was an overall market decline in the second half of the year. Manufacturer of Bottling Line Conveyors and Accumulators Slowdown in demand for new beverage bottling lines no need for additional capacity. Manufacturer of Bottling Line Conveyors and Accumulators Food industry customers weren t buying. Spending in the food industry fell off. Manufacturer of Bottling Line Conveyors and Accumulators Declining economic situation caused a hold on machinery purchases. Manufacturer of Bottling Line Conveyors and Accumulators International sales increased due to growth of generic drugs. Manufacturer of Bottle Placing, Feeding, Rinsing, etc. We received more projects from contract packagers. Manufacturer of Bottling Line Conveyors and Accumulators Increased demand for more efficient rinsing technology. Manufacturer of Bottle Placing, Feeding, Rinsing, etc. Participant Data PMMI Member Participants 28 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 17 Total Companies 45 Average Shipments ($) Per Company $6.18M Conveyors/Accumulators $6.19M Placing, Feeding, etc. $3.28M 20

6 BOTTLING LINE MACHINERY (Continued) Key Trends and Developments* Domestic shipments were down. Following a nearly -14% decline in 2007, domestic shipments of bottling line machinery contracted again in 2008 by more than -9%. U.S. demand for new bottling lines shrank, in large part because many domestic end-users were forced to scale-back production amid the falling U.S. and global economies. Shipments to the beverage industry fell. Roughly 75 percent of 2008 bottling line machinery shipments were generated by sales to the beverage industry, down from 77 percent in The U.S. market for non-alcoholic beverages including sodas, bottled water, sports drinks, fruit drinks, energy drinks, and others fell -2 percent in 2008 according to Beverage Marketing Corp., the segment s first volume downturn on record. Consumer demand for bottled water was restrained by environmental and economic concerns. The increasing trend toward environmental awareness led some consumers to refrain from buying water packaged in plastic bottles. At the same time, financial hardship brought on by the economic downturn forced others to opt for tap water as a less expensive alternative to bottled water. Total liquor sales rose just +1.3% by volume in According to Impact Databank, the +1.3% increase was the slowest growth rate in a decade. Further, major liquor producers such as Constellation Brands and Diageo have reported that consumers have trimmed their spending on alcoholic beverages amid the economic recession and stores have been keeping fewer products in stock to guard against bloated inventories. Exports climbed moderately. Coming off a +59 percent surge in 2007, exports of U.S. bottling line machinery grew by a more subdued +5.5 percent in Nonetheless, the increase was a bright spot for the category, as the still weak U.S. Dollar offered a useful advantage for U.S. manufacturers in foreign markets. However, the building global economic downturn in the latter part of the year prevented a more substantial gain. Shipments to the pharmaceutical industry were higher. Customers from the pharmaceutical market were responsible for approximately 11 percent of U.S. bottling line shipments in 2008, up from eight percent in In particular, manufacturers of lower-cost generic drugs contributed solidly to the increase. *Also see key market trends and developments presented in Executive Summary 21

7 CAPPING, OVERCAPPING, LIDDING, AND RELATED SEALING MACHINERY 2008 Results $200 Growth Trend (Capping Machinery) Shipments: $175M Versus 2007 Total: -6.4%* Total Units Shipped: 1,166 Total Export Shipments: $51M Order-Backlog (12/31/2008) $41M $Millions $185 $170 $155 $162 $187 $175 $140 $142 $146 By Machinery Sub-Category $ Capping, Lidding, Sealing Machinery for Bottles Shipments: $65M Versus 2007 Total: -9.7% Total Units Shipped: 191 Total Export Shipments: $7M Order-Backlog (12/31/2008) $18M Capping, Lidding, Sealing Machinery for All Other Containers Shipments: $110M Versus 2007 Total: -4.3%* Total Units Shipped: 975 Total Export Shipments: $44M Order-Backlog (12/31/2008) $23M *The 2007 dollar shipment values for the sub-category capping, lidding, sealing machinery for all other containers was restated to reflect updated information obtained after the release of last year s report. The percent-change figures for the sub-category and for the category as a whole are based on the restated 2007 value of $115 for all other container cappers. Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Capping Machinery) Total Category Capping for Bottles Capping for All Other Containers 5% 9% 3 27% 33% 65% 67% 64% Reported No Change Reported Decrease Reported Increase 22

8 CAPPING, OVERCAPPING, LIDDING, AND SEALING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Capping Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $124M -11.4%* Export Shipments $51M +8.5%* *The 2007 domestic and export shipment dollar values were revised to reflect updated information obtained after the release of last year s study. The percent change figures are based on the restated 2007 values (Domestic $140 million; Exports $47 million) Capping Machinery Shipments by End-Use Market Segment Beverages 39% Foods 32% Personal Care Products 12% Pharmaceuticals 1 Chemicals 6% All Other 1% 2008 Capping Machinery Shipments by Type of Customer Direct Sales to End-Users 95% Sales to Distributors and/or Dealers 4% Sales to Other Machinery Manufacturers 1% Respondents Comments Customers postponed investments due to economic conditions. Manufacturer of Capping Machinery for Bottles The economy impacted 4 th quarter sales. We saw an overall market decline in the 2 nd half of the year. Manufacturer of Capping Machinery for Bottles There is an overcapacity of machines in the marketplace. Manufacturer of Capping Machinery for All Other Containers We just had fewer projects because of the economic slowdown. Manufacturer of Capping Machinery for Bottles We gained market share by increasing our sales coverage and our marketing effort. Manufacturer of Capping Machinery for Bottles We improved our sales management and customer service. Manufacturer of Capping Machinery for Bottles We got business from some start-up companies new hot-fill beverage lines. Manufacturer of Capping Machinery for Bottles Participant Data PMMI Member Participants 25 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 16 Total Companies 41 Average Shipments ($) Per Company Capping for Bottles Capping for All Other Containers $6.91M $3.29M $9.87M 23

9 CAPPING, OVERCAPPING, LIDDING, AND SEALING MACHINERY (Continued) Key Trends and Developments* Domestic demand dropped sharply. Domestic shipments were off by -11.4% from 2007, mostly due to the progressive deterioration of the U.S. economy during the year. Nearly all of the category s manufacturers who reported lower shipments in 2008 attributed the decline to project cancellations and generally lower capital spending associated with the recession. U.S. capping machinery manufacturers generated double-digit shipments growth in 2006 and 2007, creating a base dollar volume that proved difficult to match in An overcapacity of capping machines in the marketplace caused demand to fall. While the excess of machinery was to some extent caused by recent major investments by end-users (2006 and 2007), the overcapacity was mostly created by widespread production cuts associated with the economic decline. Demand from the chemical industry slowed. Manufacturers of chemical products impacted deeply by the economic recession accounted for just eight percent of U.S. capping machinery shipments in 2008, down from 11 percent in Larger, more established capping machinery manufacturers were affected most severely by the economic downturn. While all capping machinery manufacturers were certainly impacted by the economic decline in 2008, those with already established global sales operations and widespread visibility had fewer places to turn to increase sales as their customers cut spending. Exports were up in Following a dramatic +120 percent gain in 2007, U.S. exports of capping machinery climbed by +8.5 percent in The U.S. Dollar remained weak for the majority of the year and the category s manufacturers continued to expand their sales reach to foreign markets. Smaller, less established capping machinery manufacturers sought growth in new markets. Several smaller capping machinery manufacturers were able to find growth during the year by expanding their sales and marketing operations to foreign markets, and in some cases within the domestic market. The trend is evident in the category s increase-decrease ratio. Despite the category s overall negative growth rate for the year, roughly two-thirds of the individual manufacturers reported higher shipments compared with The majority of the increases, however, are from smaller manufacturers whose shipment volumes have considerably less influence on the overall result than those of their larger counterparts. *Also see key market trends and developments presented in Executive Summary 24

10 CARTONING AND MULTIPACKING MACHINERY AND ASSOCIATED LEAFLET/COUPON PLACING EQUIPMENT 2008 Results Shipments: $214M Versus 2007 Total: +1.4% Total Units Shipped: 1,286 Total Export Shipments: $44M Order-Backlog (12/31/2008) $106M $Millions $220 $210 $200 $190 Growth Trend (Cartoning Machinery) $194 $184 $211 $214 By Machinery Sub-Category Horizontal End/Side Load Cartoners Shipments: $120M Versus 2007 Total: +0. Total Units Shipped: 389 Total Export Shipments: $25M Order-Backlog (12/31/2008) $69M Top Load, Wraparound, Sleeve Cartoners Shipments: $65M Versus 2007 Total: +1.6% Total Units Shipped: 336 Total Export Shipments: $15M Order-Backlog (12/31/2008) $29M Robotic Cartoners Shipments: $12M Versus 2007 Total: +20. Total Units Shipped: 30 Total Export Shipments: $2M Order-Backlog (12/31/2008) $3M Leaflet/Coupon Placing Equipment Shipments: $17M Versus 2007 Total: +0. Total Units Shipped: 531 Total Export Shipments: $2M Order-Backlog (12/31/2008) $5M $180 $170 $ Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Cartoning Machinery) Total Category Horiz. End/Side Load Top Load, Wrap., Sleeve Robotic Leaflet/Coupon Placing 9% % 47% 53% 42% 58% 55% Reported No Change Reported Decrease Reported Increase 25

11 CARTONING AND MULTIPACKING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Cartoning Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $170M -2. Export Shipments $44M +17.3% 2008 Cartoning Machinery Shipments by End-Use Market Segment Foods 47% Pharmaceuticals/Medical 2 Beverages 15% Chemicals 7% Paper/Non-Durables 4% Personal Care 4% All Other Miscellaneous 3% Respondents Comments There was an increase in exports of horizontal end- and side-load units due to favorable foreign exchange rates. Manufacturer of Horizontal End/Side Load Cartoning Machinery Generated strong demand for our new endload product Manufacturer of Horizontal End/Side Load Cartoners We re steadily growing; getting more name recognition and more repeat customers. Manufacturer of Top-Load, Wraparound, Sleeve Cartoners There was good demand from the pharmaceutical market. Manufacturer of Horizontal End/Side Load Cartoners 2008 Cartoning Machinery Shipments by Type of Customer Direct Sales to End-Users 96% Sales to Distributors and/or Dealers 3% Sales to Other Machinery Manufacturers 1% Bad economy a lot of our potential clients outsourced overseas. Manufacturer of Horizontal End/Side Load Cartoners We saw a significant slowdown from June on. Manufacturer of Horizontal End/Side Load Cartoners Participant Data PMMI Member Participants 22 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 19 Total Companies Average Shipments ($) Per Company $6.76M Horiz. End and Side Load $6.76M Top Load, Wraparound, Sleeve $2.06M Robotic Cartoners $2.52M Leaflet/Coupon Placing $2.61M

12 CARTONING AND MULTIPACKING MACHINERY (Continued) Key Trends and Developments* Exports were up sharply again. Following a nearly +60 percent gain in 2007, U.S. cartoning machinery exports rose by another percent in The continued climb which boosted export shipments to over 20 percent of the category s total in 2008 was largely precipitated by the weak U.S. Dollar. Demand from the pharmaceutical market was strong. Pharmaceutical market customers were responsible for roughly 20 percent of the category s total shipments in 2008, up from 16 percent the year before. Much of the demand involved horizontal end/side load cartoners, as end-users looked to upgrade automated cartoning lines with machines that were able to handle a larger range of secondary package sizes, and were able to meet strict safety and procedural requirements set forth by the FDA and various other organizations. Demand for robotic cartoning technology strengthened. Robotic cartoning was the category s fastest growing sub-category in Manufacturers of robotic cartoners reported shipments growth of +20 percent for the year, with most of the increase attributed to demand from the food segment. More endusers sought robotic technology to gain flexibility and overall efficiency on their packaging lines. Strong demand from the food segment remained a key driver of growth. Nearly half (47%) of U.S. cartoning machinery shipments were generated by sales to food industry customers in 2008, up from 42 percent in As in recent years, applications such as wraparound sleeves for prepared meals and bagin-box packaging, drove demand for cartoning machinery. Domestic demand slowed. Following an +8.1 percent increase in 2007, U.S. shipments of cartoning machinery to U.S. customers declined by -2.0 percent in Obviously, the key driver of the retreat was the weakening U.S. economy. Several of the category s manufacturers noted that much of the falloff occurred in the second half of the year as the severe depth of the economic downturn became more apparent. Solid gains for horizontal end/side-load cartoners in 2007 proved difficult to beat. In 2007, horizontal end/side-load cartoner shipments increased by percent, bringing the sub-category s total shipments to a lofty $120 million. While the sub-category s manufacturers were able to make some further gains in export markets in 2008, weakness in the domestic market negated any chance for an overall increase. *Also see key market trends and developments presented in Executive Summary 27

13 CASE AND TRAY FORMING, PACKING, UNPACKING, CLOSING AND SEALING MACHINERY 2008 Results $480 Growth Trend (Case and Tray Machinery) Shipments: $448M Versus 2007 Total: +2.8% Total Units Shipped: 13,598 Total Export Shipments: $52M Order-Backlog (12/31/2008) $126M $Millions $460 $440 $420 $400 $401 $424 $436 $448 By Machinery Sub-Category $380 $360 $365 Case Erectors Shipments: $74M Versus 2007 Total: -1.3% Total Units Shipped: 1,345 Total Export Shipments: $9M Order-Backlog (12/31/2008) $15M Tray Formers Shipments: $31M Versus 2007 Total: -6.1% Total Units Shipped: 200 Total Export Shipments: $4M Order-Backlog (12/31/2008) $8M Conventional Case and Tray Packing and Unpacking Machinery (Including Integral Erectors) Shipments: $210M Versus 2007 Total: +5. Total Units Shipped: 962 Total Export Shipments: $26M Order-Backlog (12/31/2008) $81M Case Sealing Machinery Shipments: $70M Versus 2007 Total: -1.4% Total Units Shipped: 10,864 Total Export Shipments: $9M Order-Backlog (12/31/2008) $5M Robotic Case and Tray Machinery Shipments: $63M Versus 2007 Total: +10.5% Total Units Shipped: 227 Total Export Shipments: $4M Order-Backlog (12/31/2008) $17M $ Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Case and Tray Machinery) Total Category Case Erectors Tray Formers Conventional Case and Tray Packers Case Sealers Robotic Case and Tray 6% 9% 17% 19% 18% 29% 27% 33% 36% 42% 46% 52% % 64% Reported No Change Reported Decrease Reported Increase 28

14 CASE AND TRAY MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Case and Tray Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $396M -0.3% Export Shipments $52M +33.3% 2008 Case and Tray Machinery Shipments by End-Use Market Segment Foods 43% Beverages 26% Personal Care Products 6% Hardware/Automotive/Industrial Products 5% Paper and Other Misc. Non-Durables 5% Consumer Durables 4% Chemicals 4% Pharmaceuticals/Medical Devices 3% Converters/Printers 2% All Other 2% 2008 Case and Tray Machinery Shipments by Type of Customer Direct Sales to End-Users 78% Sales to Distributors and/or Dealers 21% Sales to Other Machinery Manufacturers 1% Respondents Comments We got a boost from the beverage industry from vitamin waters. Manufacturer of Conventional Case/Tray Packing Machinery There was a need for more automation in the bakery, frozen foods, and confectionery markets. Manufacturer of Robotic Case/Tray Packing Machinery New products that we developed in 2007 led to growth in Manufacturer of Conventional Case/Tray Packing Machinery New product releases generated a good deal of demand. Manufacturer Case Sealers Lack of credit caused $2.8 million in cancellations. Manufacturer of Conventional Case/Tray Packing Machinery We had to cut back on selling to some markets in order to increase profitability at a few target markets. Manufacturer of Conventional Case/Tray Packing Machinery We didn t get as much repeat business as we have in past years. Manufacturer of Case Erectors and Sealers Participant Data PMMI Member Participants 37 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 25 Total Companies Average Shipments ($) Per Company Case Erectors Tray Formers Conventional Case and Tray Packers Case Sealers Robotic Case and Tray Machinery $8.40M $3.30M $2.36M $6.75M $4.46M $2.64M

15 CASE AND TRAY MACHINERY (Continued) Key Trends and Developments* Demand for robotic technology continued to expand. More end-users sought the benefits of robotic case and tray packing machinery in 2008 as they demanded greater flexibility to handle their packaging requirements. Shipments of robotic machines were up by percent to roughly $63 million for the year. Exports were up sharply. While exports traditionally have represented a relatively small portion of the category s total annual shipments, a percent gain in 2008 pushed the share from roughly nine percent in 2007 to more than 11.5 percent. Much of the increase was made possible by the continued weak U.S. Dollar, but it can also be attributed in part to a coinciding effort on the part of case and tray packaging machinery manufacturers to expand their sales and marketing operations further into foreign markets. Secondary packaging remained a key area for end-users to target packaging sustainability improvements. Certain customers sought to achieve greater packaging sustainability by investing in case and tray packing equipment capable of handling more innovative packaging styles, designs, and configurations. Shipments to beverage customers were up. The beverage industry was responsible for approximately 26 percent of the category s total shipments in 2008, up from 22 percent the year before. This occurred despite weaker sales volume for much of the beverage industry during the year (the U.S. market for nonalcoholic drinks was down -2 percent in 2008 according to the Beverage Marketing Corporation). Still, many beverage companies continued to introduce new products and seek greater production efficiencies on their production lines in an attempt to maximize sales and profits. New machinery introductions led to increased demand. Several manufacturers reported successful introductions of new machinery lines that led to increased shipments for the year. Many of the new introductions appear to have been designed to add value for specific applications. Domestic demand was stagnant. The deteriorating U.S. economy caused U.S. customers to scale-back or completely halt their spending, particularly late in the year. As a result, domestic shipments of case and tray packaging machinery ticked downward by three-tenths of a percent. The decline would likely have been more severe if not for the category s heavy concentration in non-discretionary markets such as food and beverages. *Also see key market trends and developments presented in Executive Summary 30

16 CODING, DATING, MARKING, STAMPING, AND IMPRINTING MACHINERY 2008 Results Growth Trend (Coding Machinery) $580 Shipments: $546M Versus 2007 Total: -2.8% Total Units Shipped: Total Export Shipments: $260M Order-Backlog (12/31/2008) $54M $Millions $560 $540 $520 $500 $480 $485 $521 $544 $562 $546 By Machinery Sub-Category $ Contact Printing Machinery Shipments: $116M Versus 2007 Total: +1.8% Total Units Shipped: 7,837 Total Export Shipments: $45M Order-Backlog (12/31/2008) $34M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Coding Machinery) Non-Contact Printing Machinery Shipments: $430M Versus 2007 Total: -4. Total Units Shipped: Total Export Shipments: $215M Order-Backlog (12/31/2008) $20M Total Category 6% 44% 5 55% Contact Printing 27% 18% Non-Contact Printing Reported No Change Reported Decrease Reported Increase 31

17 CODING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Coding Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $286M -2.1% Export Shipments $260M -3.7% 2008 Coding Machinery Shipments by End-Use Market Segment Foods 3 Pharmaceuticals/Medical Products 15% Beverages 13% Personal Care Products 11% Converters/Printers 11% Hardware/Industrial/Automotive Products 6% Paper/Non-Durables 5% Chemicals 4% Consumer Durables (N.E.C.) 3% All Other Miscellaneous 2% 2008 Coding Machinery Shipments by Type of Customer Direct Sales to End-Users 7 Sales to Distributors and/or Dealers 26% Sales to Other Machinery Manufacturers 4% Respondents Comments Customers cut back on capital spending projects and it hurt our ink-jet business. Manufacturer of Non-Contact Printing Machinery Changes in our product mix caused temporarily lower sales. Manufacturer of Non-Contact Printing Machinery At the end of the year, things just slowed down a lot. Manufacturer of Contact Printing Machinery The prior year was exceptional for us, so this was actually a more normal year. Manufacturer of Contact Printing Machinery We increased our distribution network and we gained more acceptance within the industry. Manufacturer of Non-Contact Printing Machinery We did more advertising, which seems to have increased sales. Manufacturer of Contact Printing Machinery Our new product created some buzz for us. Manufacturer of Non-Contact Printing Machinery Participant Data PMMI Member Participants 17 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 20 Total Companies 37 Average Shipments ($) Per Company Contact Printing Machinery Non-Contact Printing Machinery $4.10M $2.96M $4.13M 32

18 CODING MACHINERY (Continued) Key Trends and Developments* Exports were down. Following a robust percent gain in 2007, U.S. coding machinery exports dropped -3.7 percent in While the weak U.S. Dollar remained in place, the deteriorating global economy and the recent growth spurt were too much to overcome for the category s manufacturers. Measurable exposure to customers in discretionary markets put downward pressure on shipments as the economy worsened. U.S. coding machinery manufacturers have traditionally been exposed to a wide-ranging customer base, including a strong representation from packagers of economically-sensitive discretionary products such as hardware, durables, personal care products, and a variety of other miscellaneous consumer products. The weakening economy caused many of those customers to pull back on spending plans. End-users spent heavily on coding machinery in recent years. In an effort to boost product traceability and to meet product identification requirements set forth by major retailers, packagers have invested fairly heavily in coding machinery during the past several years. In conjunction with the downward-moving economy, end-users retreated from their heavy spending pattern in Non-Contact printing machinery shipments slipped by -4.0 percent. For the second consecutive year, growth of the non-contact printing machinery sub-category lagged that of the smaller contact printing machinery sub-category. This follows several years of consistently faster growth for non-contact machines. In large part, the recent pattern simply reflects the cyclical impact of end-users recent heavy spending for popular ink-jet and laser printer machines. Contact printing machinery shipments were up moderately. The category s contact printing machinery manufacturers recorded a +1.8 percent increase in shipments for 2008, as end-users in the food, pharmaceutical, beverage, and converting segments sought new thermal-transfer printers, particularly for use in flexible packaging applications. Sales and marketing improvements were made. Certain of the category s manufacturers reported sales gains as a result of more advertising and expanded distribution networks. Notably, more than a quarter of U.S. coding machinery shipments in 2008 were the result of sales through distributors roughly the same as in 2007, but higher than in previous years. Demand from the pharmaceutical industry remained stable. Pharmaceutical companies continued to invest in coding equipment in an effort to efficiently meet FDA product tracking requirements. *Also see key market trends and developments presented in Executive Summary 33

19 CONVERTING MACHINERY PAPER, MULTIWALL, AND PLASTIC BAG-MAKING, AND BLISTER/CLAMSHELL THERMOFORMING 2008 Results Growth Trend (Converting Machinery) Shipments: $154M Versus 2007 Total: -3.1% Total Units Shipped: 820 Total Export Shipments: $23M Order-Backlog (12/31/2008) $50M $Millions $165 $155 $145 $153 $152 $159 $154 $135 $137 By Machinery Sub-Category $ Paper and Multiwall Bag-Making Machinery Shipments: Versus 2007 Total: Total Units Shipped: Total Export Shipments: Order-Backlog (12/31/2008) * Plastic Bag-Making Machinery Shipments: $94M Versus 2007 Total: +4.4% Total Units Shipped: 615 Total Export Shipments: $20M Order-Backlog (12/31/2008) $23M Blister and Clamshell Thermoforming Machinery Shipments: $60M Versus 2007 Total: -13. Total Units Shipped: 205 Total Export Shipments: $3M Order-Backlog (12/31/2008) $27M *Due to insufficient data, shipments of paper and multi-wall bagmaking machinery are not presented. The percent-change for the overall category reflects a comparison against 2007 shipments from the plastic bag-making machinery category and the blister and clamshell thermoforming machinery category only. Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Converting Machinery) Total Category Bag-Making - Plastic Thermoforming - Blister, Clamshell 25% % Reported No Change Reported Decrease Reported Increase 34

20 CONVERTING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Converting Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $131M +8.3%* Export Shipments $23M -39.5%* *Due to insufficient data, shipments of paper and multi-wall bagmaking machinery are not included. The percent-change for the overall category reflects a comparison against 2007 shipments from the plastic bag-making machinery category and the blister and clamshell thermoforming machinery category only Converting Machinery Shipments by End-Use Market Segment Converters 76% Pharmaceuticals 14% Hardware/Industrial/Automotive 5% Foods 3% Paper, Non-Durables 1% All Other 1% 2008 Converting Machinery Shipments By Type of Customer Direct Sales to End-Users 99% Sales to Distributors and/or Dealers 1% Sales to Other Machinery Manufacturers Respondents Comments A lot of companies are moving away from our style of packaging due to environmental issues. They are looking for a greener alternative. Manufacturer of Blister/Clamshell Thermoformers One major customer order in 2007 did not repeat in Manufacturer of Blister/Clamshell Thermoformers We had delays in shipping a number of machines on the backlog at 12/31/08. Manufacturer of Blister/Clamshell Thermoformers Foreign competition was more aggressive especially in pricing and quick delivery. Manufacturer of Bag-Making Machinery We came out with new innovations that led to sales. Manufacturer of Blister/Clamshell Thermoformers We did a custom project with a large customer. Manufacturer of Plastic Bag- Making Machinery We received a good deal of interest in our new products. Manufacturer of Plastic Bag- Making Machinery Participant Data PMMI Member Participants 12 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 7 Total Companies 19 Average Shipments ($) Per Company Bag-Making Plastic Thermoforming Blister, Clamshell $7.01M $12.02M $2.22M 35

21 CONVERTING MACHINERY (Continued) Key Trends and Developments* Exports declined substantially. Following a double-digit gain in 2007, the category s manufacturers reported a sharp percent decline in While a weak U.S. Dollar played a significant role in the 2007 upswing, the still favorable exchange rate conditions were not enough to overcome the deteriorating economic conditions around the world. Overseas competition continued to intensify. Several of the category s manufacturers reported strong competition from foreign competitors. Suppliers from China and other emerging markets gained market share primarily through aggressive pricing. Packaging sustainability issues created lower demand for some of the category s manufacturers. Customers ongoing search for more environmentally-friendly packaging alternatives led some away from their current thermoformed plastic packaging to alternatives such as lighter gauge material, pouches, paper, etc. Consequently, some plastic converting machinery manufacturers reported less demand for their equipment. Blister/clamshell thermoformer shipments cycled lower following 2007 growth. Owing to the subcategory s typically large project sizes and often long order-to-delivery timelines, a cyclical pattern of shipment growth and decline has emerged in recent years, whereby a year of growth is followed by a year of decline, etc. In 2005, shipments were up by double-digits followed by a substantial decline in In 2007, shipments increased by +6.2 percent, leading to the sharp decline in Plastic bag-making machinery shipments rose for a fifth consecutive year. The ongoing trend reflects the continued popularity of the flexible plastic pouch/bag as a packaging format for a host of consumer product manufacturers. A strong order-backlog carried over into At the close of business on 12/31/2007, there were roughly $64 million in packaging-related converting machinery orders that had not yet been shipped. The majority, $41 million, was for plastic bag-making machinery. *Also see key market trends and developments presented in Executive Summary 36

22 CONVEYING, FEEDING, ORIENTING, PLACING, AND RELATED MACHINERY 2008 Results $1,150 Growth Trend (Conveying Machinery) Shipments: $1,115M Versus 2007 Total: +0.2%* Total Units Shipped: Total Export Shipments: $113M Order-Backlog (12/31/2008) $252M $Millions $1,100 $1,050 $1,000 $1,031 $1,113 $1,100 $1,115 By Machinery Sub-Category $950 $943 Mat and Table Top Conveyors Shipments: $353M Versus 2007 Total: -6.6% Total Units Shipped: Total Export Shipments: $48M Order-Backlog (12/31/2008) $79M Roller and Belt Conveyors Shipments: $378M Versus 2007 Total: +1.1%* Total Units Shipped: Total Export Shipments: $25M Order-Backlog (12/31/2008) $102M Air, Vacuum, and All Other Conveyors Shipments: $223M Versus 2007 Total: +12.6%* Total Units Shipped: Total Export Shipments: $16M Order-Backlog (12/31/2008) $38M Accumulators, Buffers Shipments: $34M Versus 2007 Total: -5.6% Total Units Shipped: Total Export Shipments: $2M Order-Backlog (12/31/2008) $7M Feeding, Placing, Orienting, Collating, Unscrambling, and Related Machinery Shipments: $127M Versus 2007 Total: +0. Total Units Shipped: Total Export Shipments: $22M Order-Backlog (12/31/2008) $26M *Please see bottom of following page $ Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Conveying Machinery) Total Category Table Top and Mat Top Roller and Belt Air, Vacuum, All Other Accumulators, Buffers Feeding, Placing 1 8% 14% 14% 18% 18% 44% 46% 38% 44% 43% 43% 43% 43% 42% 5 82% Reported No Change Reported Decrease Reported Increase 37

23 CONVEYING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Conveying Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $1,002M -1.4%** Export Shipments $113M +16.5%** **The 2007 domestic and export shipment dollar values were revised to reflect updated information obtained after the release of last year s study. The percent change figures are based on the restated 2007 values (Domestic $1,016 million; Exports $97 million) Conveying Machinery Shipments by End-Use Market Segment Foods 45% Beverages 12% Converters, Printers 7% Hardware, Industrial, Automotive 7% Pharmaceuticals, Medical Products 6% Personal Care Products 6% Consumer Durable Goods 5% Paper, Non-Durables 4% Chemicals 4% All Other 4% 2008 Conveying Machinery Shipments By Type of Customer Direct Sales to End-Users 78% Sales to Distributors and/or Dealers 17% Sales to Other Machinery Manufacturers 5% Respondents Comments Our international shipments were up. Manufacturer of Table Top/Mat Top Conveyors We added more sales reps and were able to cover more area. Manufacturer of Air, Vacuum, All Other Conveyors We increased our focus on Latin American sales. Manufacturer of Table Top/Mat Top Conveyors We increased our presence in Europe and we began actively pursuing sales there. Manufacturer of Feeding, Placing, Orienting, and Related Machinery Our customer base declined due to many buyouts, mergers, and consolidations in recent years. Manufacturer of Table Top/Mat Top Conveyors We gave more quotes but when it came down to it there was no money for the projects. Manufacturer of Roller and Belt Conveyors Our biggest customer was bought out and the new company cut spending dramatically. Manufacturer of Table Top/Mat Top Conveyors Participant Data PMMI Member Participants 50 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 40 Total Companies 90 *The 2007 dollar shipment values for two sub-categories were restated to reflect updated information obtained after the release of last year s report. The percentchange figures for the sub-categories and for the category as a whole are based on the restated 2007 values ($374 million for roller and belt conveyors and $198 million for air, vacuum and all other conveyors. 38 Average Shipments ($) Per Company Table Top, Mat Top Conveyors Roller and Belt Conveyors Air, Vacuum, All Other Conveyors Accumulators, Buffers Feeding, Placing, Orienting, etc. $6.84M $7.13M $3.61M $2.51M $0.81M $4.59M

24 CONVEYING MACHINERY (Continued) Key Trends and Developments* Exports increased by double-digits. Several U.S. conveying equipment manufacturers pushed further into foreign markets in 2008, due in part to worsening conditions in the U.S. market. Moreover, the U.S. Dollar remained weak against most currencies for the majority of the year, putting U.S. manufacturers at a pricing advantage. As a result, exports of conveyors and related equipment increased by percent. End-users looked to further bolster the efficiency of their packaging lines. Customers invested in new conveyors and associated equipment to add modularity, durability, and general flexibility to their packaging lines. Shipments to the food industry were up. Food industry customers were responsible for roughly 45 percent of U.S. conveying equipment shipments in 2008, up from 40 percent the year before. The increase amounted to a nearly +13% growth rate in terms of dollars. Demand for air/vacuum conveyor shipments was robust. Shipments for the sub-category increased by percent in Much of the growth stemmed from food and pharmaceutical industry customers looking to meet increasingly strict FDA sanitation and safety requirements. Budget cutbacks caused major project delays and cancellations. Conveying equipment manufacturers were impacted significantly by budget reductions during the year, as many of their outstanding quotes were associated with major projects that were either cancelled or delayed indefinitely due to the onset of the economic downturn. Plant closings and consolidations reduced customer bases. Several of the category s manufacturers attributed their weaker sales to the growing impact of mergers, consolidations, and plant closings. In addition to fewer customers, an abundance of used equipment is available to cost-conscious end-users. *Also see key market trends and developments presented in Executive Summary 39

25 FILLING MACHINERY FOR DRY PRODUCTS 2008 Results Shipments: $192M Versus 2007 Total: +3.8%* Total Units Shipped: 2,321 Total Export Shipments: $35M Order-Backlog (12/31/2008) $53M By Machinery Sub-Category $Millions $210 $200 $190 $180 $170 $160 $150 $140 $130 Growth Trend (Dry-Product Filling Machinery) $149 $163 $174 $185 $ Combination Net Weigh Scales Shipments: $87M Versus 2007 Total: -3.3% Total Units Shipped: 1,143 Total Export Shipments: $14M Order-Backlog (12/31/2008) $20M Auger Fillers Shipments: $29M Versus 2007 Total: +7.4%* Total Units Shipped: 840 Total Export Shipments: $6M Order-Backlog (12/31/2008) $6M All Other Filling Machinery** Shipments: $76M Versus 2007 Total: +11.8% Total Units Shipped: 338 Total Export Shipments: $15M Order-Backlog (12/31/2008) $27M *The 2007 dollar shipment values for auger fillers was restated to reflect updated information obtained after the release of last year s report. The percent-change figures for the sub-category and for the category as a whole are based on the restated 2007 value for the auger filler sub-category ($27 million). **Due to insufficient data, the formally separate sub-category All Other Weigh Filling Machinery has been combined with the All Other Filling Machinery sub-category. Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Dry-Product Filling Machinery) Total Category Combination Net Weigh Auger Fillers All Other Fillers 5% 21% 2 25% 33.3% 33.3% 33.3% 74% 75% % Reported No Change Reported Decrease Reported Increase 40

26 FILLING MACHINERY FOR DRY PRODUCTS (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Dry-Product Filling Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $157M +6.1% Export Shipments $35M -5.4% 2008 Dry-Product Filling Machinery Shipments By End-Use Market Segment Foods 56% Pharmaceuticals/Medical Devices 35% Hardware/Industrial/Automotive 4% Chemicals 3% Personal Care Products 2% 2008 Dry-Product Filling Machinery Shipments By Type of Customer Direct Sales to End-Users 94% Sales to Distributors and/or Dealers 4% Sales to Other Machinery Manufacturers 2% Respondents Comments We increased our sales force by adding more reps. We were able to cover more area. Manufacturer of Auger Fillers We saw more spending toward the end of the year. We think it s because some companies turned to automated machinery as a replacement for manual labor to reduce labor costs. Manufacturer of Filling Machinery Our sales were up because of one major customer order from the pharmaceutical industry. Manufacturer of Filling Machinery We introduced new technology that created strong market demand. Manufacturer of Filling Machinery We improved our sales management and customer service. Manufacturer of Filling Machinery There was a general slowdown. We had no large filler order like we did in Manufacturer of Filling Machinery There was softened demand in the middle of the year. Manufacturer of Combination Net Weigh Scales Participant Data PMMI Member Participants 21 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 21 Total Companies 42 Average Shipments ($) Per Company $4.77M Combination Net Weigh Scales $1.45M Auger Fillers $1.60M All Other Filling Machinery $4.67M 41

27 FILLING MACHINERY FOR DRY PRODUCTS (Continued) Key Trends and Developments* Demand from pharmaceutical customers increased. Packagers of pharmaceutical products were responsible for roughly 35 percent of U.S. dry-product filling machinery shipments in 2008, up from 16 percent the year before. While the increase is in part due to the cyclical impact of just a few major investments by pharmaceutical customers that occurred during the year, the overall growth also reflects the market s increased demand for tablet and capsule counters/fillers with higher speeds, easier maintenance, and the capability to meet FDA cgmp guidelines. Domestic shipments increased moderately. Despite the deteriorating economy, U.S. dry-product filling machinery manufacturers managed to record domestic shipments growth of +6.1 percent in While many of the category s manufacturers still mentioned the flagging U.S. economy as a key negative factor that prevented further shipments growth, their overall heavy reliance on manufacturers of nondiscretionary products for sales (food and pharmaceutical markets were responsible for a combined 91% of total shipments in 2008) helped deflect the full impact of the economic downturn. Major projects made a positive impact. A handful of the category s manufacturers attributed their 2008 growth to just one or two major orders that came through. Sales and marketing improvements helped to boost sales. Several respondents indicated that their companies shipments growth was in part a result of internal enhancements, such as sales force expansion, management and customer service improvements, and increased marketing in the U.S. and abroad. Exports were lower. Foreign shipments of U.S. dry-product filling machinery were down by -5.4% in The moderate decline was concentrated in the sub-category of All Other Filling Machinery, while exports of Combination Net Weigh Scales and Auger Fillers were essentially flat. Combination net weigh scale shipments declined slightly. Following a solid +8.4 percent gain in 2007, U.S. shipments of combination net weigh scales declined by -3.3 percent in A sharp rise in the sub-category s exports in 2007 was not repeated in 2008, while the weak economy and recent heavy investment restrained domestic demand as well. *Also see key market trends and developments presented in Executive Summary 42

28 FILLING MACHINERY FOR LIQUID PRODUCTS 2008 Results $320 Growth Trend (Liquid-Product Filling Machinery) Shipments: $284M Versus 2007 Total: -1.4% Total Units Shipped: 1,570 Total Export Shipments: $55M Order-Backlog (12/31/2008) $82M $Millions $300 $280 $260 $265 $287 $288 $284 By Machinery Sub-Category $240 $220 $ Still-Liquid Filling Machinery Shipments: $47M Versus 2007 Total: -13. Total Units Shipped: 193 Total Export Shipments: $7M Order-Backlog (12/31/2008) $16M Viscous-Liquid Filling Machinery Shipments: $65M Versus 2007 Total: -4.4% Total Units Shipped: 989 Total Export Shipments: $9M Order-Backlog (12/31/2008) $8M Monobloc Fillers and Related Close-Coupled Filling Machinery Shipments: $172M Versus 2007 Total: +3.6% Total Units Shipped: 388 Total Export Shipments: $39M Order-Backlog (12/31/2008) $58M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Liquid-Product Filling Machinery) Total Category Still-Liquid Fillers Viscous-Liquid Fillers Monobloc Liquid-Fillers 9% 11% 22% 14% 29% 33% % 62% 64% Reported No Change Reported Decrease Reported Increase 43

29 FILLING MACHINERY FOR LIQUID PRODUCTS (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Liquid-Product Filling Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $229M -5.8% Export Shipments $55M +22.2%* *The 2007 domestic and export shipment dollar values were revised to reflect a $7 million overstatement of exports and a coinciding $7 million understatement of domestic shipments for the still-liquid filling machinery sub-category. This updated information was obtained after the release of last year s study. The percent change figures are based on the restated 2007 values (Domestic $243 million; Exports $45 million) Liquid-Product Filling Machinery Shipments by End-Use Market Segment Beverages 49% Foods 21% Pharmaceuticals 1 Personal Care Products 9% Chemicals 8% All Other 3% 2008 Liquid-Product Filling Machinery Shipments By Type of Customer Direct Sales to End-Users 97% Sales to Distributors and/or Dealers 2% Sales to Other Machinery Manufacturers 1% Respondents Comments We saw overall market declines in the second half of Manufacturer of Still-Liquid Fillers In 2007 we had high sales because of two major orders and that was not repeated in Manufacturer of Still-Liquid Fillers Our customers were hurt by the housing and construction market decline. Manufacturer of Viscous and Monobloc Liquid-Fillers The declining economic situation caused a hold on many machinery purchases. Manufacturer of Viscous Liquid-Fillers We had an increase in demand for still-liquid monoblocs for a single customer in the Middle East. Manufacturer of Monobloc Fillers We had strong sales to Mexico and Europe. Manufacturer of Monobloc Fillers We were helped by our new technology offerings that are relevant to a niche market. Manufacturer of Monobloc Fillers We gained market share as a result of increased sales coverage and greater marketing effort. Manufacturer of Still-Liquid Fillers and Monoblocs Participant Data PMMI Member Participants 25 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 26 Total Companies 51 Average Shipments ($) Per Company $8.32M Still-Liquid Fillers $7.29M Viscous-Liquid Fillers $2.01M Monobloc Fillers $6.90M 44

30 FILLING MACHINERY FOR LIQUID PRODUCTS (Continued) Key Trends and Developments* Domestic demand slowed. U.S. liquid-product filling machinery manufacturers reported a -5.8 percent drop in shipments to the domestic market in 2008, as the economic downturn caused end-users to cut production and reduce spending. Food packagers reigned in spending on U.S. liquid-filling machinery. In 2007, food manufacturers were responsible for 27 percent of U.S. liquid-product filling machinery shipments, which represented a strong increase from the 20 percent share they recorded in However, food processors took a step back in 2008, accounting for just 21 percent of the total. Much of the decline was felt by manufacturers of liquid-fillers designed to handle viscous liquids, who as a group, reported a -4.4 percent decline in shipments for the year. Spending from the chemical industry was lower. In tandem with the decline of the housing and construction markets, manufacturers of liquid chemical products such as paints, caulks, sealants, etc. have pulled-back on spending. As a result, the chemical market was responsible for just eight percent of the category s shipments in 2008, down from 13 percent in Stand-alone still-liquid filler demand declined sharply. Following two consecutive years of modest declines, shipments of stand-alone still-liquid fillers were down by -13 percent in The now threeyear negative trend is in part a reflection of the recent weakness in the U.S. carbonated beverage and beer industries. However, the sharper decline in 2008 is clearly also largely a result of the overall economic decline. Exports of monobloc fillers surged higher. Essentially all of the category s percent gain in exports was generated by the monobloc filler sub-category. The weak U.S. Dollar combined with slowing domestic demand encouraged several liquid-filling machinery manufacturers to expand their sales operations into foreign markets from Latin America to the Middle East to Europe and Asia. Further demand emerged from the pharmaceutical industry. While many pharmaceutical companies have been negatively affected by a lack of new branded drugs in their pipelines and an increasingly difficult FDA approval process, many generic drug manufacturers continued to flourish in Further, many of the branded drug companies continued to look to gain production efficiencies and to meet FDA production requirements by bolstering their packaging lines. As a result, the pharmaceutical industry was responsible for roughly 10 percent of U.S. liquid-filling machinery shipments during the year, up from just four percent in *Also see key market trends and developments presented in Executive Summary 45

31 FORM/FILL/SEAL MACHINERY (BAG/POUCH) 2008 Results Shipments: $212M Versus 2007 Total: -0.5% Total Units Shipped: 932 Total Export Shipments: $43M Order-Backlog (12/31/2008) $70M By Machinery Sub-Category $Millions $230 $225 $220 $215 $210 $205 $200 $195 $190 Growth Trend (Form/Fill/Seal Machinery) $220 $213 $200 $213 $ Horizontal F/F/S Machinery Shipments: $66M Versus 2007 Total: -4.3% Total Units Shipped: 87 Total Export Shipments: $13M Order-Backlog (12/31/2008) $28M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Form/Fill/Seal Machinery) Vertical F/F/S Machinery Shipments: $146M Versus 2007 Total: +1.4% Total Units Shipped: 845 Total Export Shipments: $30M Order-Backlog (12/31/2008) $42M Total Category Horizontal F/F/S 9% 43% 48% 56% 44% Vertical F/F/S 14% 36% Reported No Change Reported Decrease Reported Increase 46

32 FORM/FILL/SEAL MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Form/Fill/Seal Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $169M -6.1% Export Shipments $43M +30.3% 2008 Form/Fill/Seal Machinery Shipments by End-Use Market Segment Foods 81% Pharmaceuticals/Medical Devices 5% Chemicals 4% Beverages 3% Personal Care Products 3% Paper and Non-Durable Products 3% Consumer Durables and All Other 1% 2008 Form/Fill/Seal Machinery Shipments By Type of Customer Direct Sales to End-Users 92% Sales to Distributors and/or Dealers 7% Sales to Other Machinery Manufacturers 1% Respondents Comments There was softened demand from the middle of the year through the end. Manufacturer of Horizontal F/F/S Machinery Financing was easy to get early in the year, but it got tough later and it really slowed things down for us. Manufacturer of Vertical F/F/S Machinery It was all about the economy no credit, no cash, no money. Manufacturer of Horizontal F/F/S Machinery Our older technology and lack of new products was a problem for us. Manufacturer Vertical F/F/S Machinery Three sizable customers decided to automate in 2008 in order to cut their own labor costs. Manufacturer of Vertical F/F/S Machinery New innovations and technology made our machines faster and more accurate. Manufacturer of Vertical F/F/S Machinery Our products fit the market need, especially internationally. Manufacturer of Vertical F/F/S Machinery Participant Data PMMI Member Participants 24 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 15 Total Companies 39 Average Shipments ($) Per Company $9.69M Horizontal F/F/S $9.72M Vertical F/F/S $8.29M 47

33 FORM/FILL/SEAL MACHINERY (Continued) Key Trends and Developments* Investments in higher-cost horizontal f/f/s machines were put on hold. As economic prospects worsened in 2008, end-users were quick to delay and cancel larger investment projects. On average, prices for horizontal f/f/s machines are significant, ranging from several hundred thousand dollars to more than a million. Shipments of horizontal f/f/s machines were down by -4.3 percent for the year. Domestic market shipments declined. Following zero growth in 2007, U.S. form/fill/seal machinery manufacturers found the domestic market to be even weaker in 2008, as shipments were down by -6.1 percent. End-users opted for less-costly alternatives, such as pre-made baggers. Again stemming from the economic slowdown, packagers looked to cut costs by exploring lower-priced alternatives to form/fill/seal units, such as pre-made bagging machines. Notably, shipments of pre-made baggers were up by nearly eight percent for the year. Competition from foreign manufacturers (i.e. China) remained aggressive. Exports shot higher. After three consecutive years of stagnant growth, exports of U.S. form/fill/seal machinery rose by more than +30 percent in 2008 to roughly $43 million. The increase was concentrated primarily in shipments of vertical form/fill/seal machines, whose exports climbed from $21 million in 2007 to $30 million in It appears that a significant portion of the growth came from the Latin American market. Demand for pouches/bags remained strong. The use of flexible pouches/bags continued to flourish as a packaging medium among consumer product companies during the year. The ongoing popularity of stand-up pouches and various portion-control bags/pouches remained a positive influence on f/f/s machinery demand. Shipments to the food segment were up. Food packagers were responsible for roughly 81 percent of the category s 2008 shipments, up from 73 percent in In dollar terms, shipments to the food market were up by approximately +10 percent. The non-discretionary nature of the food industry making it more resistant than most other market segments to economic downturns was likely a key influence in the growth. *Also see key market trends and developments presented in Executive Summary 48

34 INSPECTING, DETECTING, AND CHECKWEIGHING MACHINERY 2008 Results Growth Trend (Inspection Machinery) $330 Shipments: $313M Versus 2007 Total: +2.6% Total Units Shipped: Total Export Shipments: $103M Order-Backlog (12/31/2008) $32M $Millions $310 $290 $270 $275 $290 $305 $313 By Machinery Sub-Category $250 $230 $ Container/Package Inspection Machinery Shipments: $115M Versus 2007 Total: +2.7% Total Units Shipped: Total Export Shipments: $48M Order-Backlog (12/31/2008) $14M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Inspection Machinery) Product Detection Machinery Shipments: $132M Versus 2007 Total: +1.5% Total Units Shipped: Total Export Shipments: $43M Order-Backlog (12/31/2008) $7M Checkweighers Shipments: $66M Versus 2007 Total: +4.8% Total Units Shipped: Total Export Shipments: $12M Order-Backlog (12/31/2008) $11M Total Category Package Inspection Product Detection 27% 13% % % Checkweighers 15% 85% % 49

35 INSPECTION/DETECTION MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Inspection Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $210M +0.5% Export Shipments $103M +7.3% 2008 Inspection Machinery Shipments by End-Use Market Segment Foods 61% Pharmaceuticals/Medical Devices 15% Beverages 11% Personal Care Products 5% Other Miscellaneous 4% Paper and Other Non-Durable Products 3% Hardware/Industrial/Automotive 1% Respondents Comments We increased our focus on Latin American sales. Manufacturer of Checkweighers We increased market awareness of our product offering, our competitive technical advantages, and our financial stability as a company. Manufacturer of Container/Package Inspection Machinery The weak U.S. Dollar early in the year, helped exports. Manufacturer of Product Detection Machinery There was an increased awareness of our technology. Manufacturer of Container/Package Inspection Machinery Our sales to China increased over Manufacturer of Container/Package Inspection Machinery 2008 Inspection Machinery Shipments by Type of Customer Direct Sales to End-Users 84% Sales to Distributors and/or Dealers 12% Sales to Other Machinery Manufacturers 4% There was a lack of capital and a lack of plant expansions. Manufacturer of Product Detection Machinery There was a scarcity of capital and also heightened competition. Manufacturer of Container/Package Inspection Machinery Our sales to Europe declined. Manufacturer of Container/Package Inspection Machinery Participant Data PMMI Member Participants 17 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 18 Total Companies 35 Average Shipments ($) Per Company $6.72M Container/Package Inspection $3.81M Product Detection $9.49M Checkweighers $4.89M 50

36 INSPECTION/DETECTION MACHINERY (Continued) Key Trends and Developments* Product and package security initiatives continued to spark demand. Strict FDA production and packaging requirements continued to influence end-users in markets such as foods, beverages, and pharmaceuticals to seek more advanced inspection/detection solutions to ensure product and/or package safety. Export demand was strong. Exports of U.S. inspection/detection machinery climbed +7.3 percent in 2008, improving on the more modest +2.1 percent gain a year earlier. Many of the category s manufacturers placed more emphasis on sales to foreign markets, such as Latin America and Asia, while the weak U.S. Dollar obviously played an important role in the growth as well. Demand from food industry customers remained robust. Customers from the food segment were responsible for 61 percent of the category s total shipments in 2008, up slightly from the year before. The impact of high-profile food contamination cases in recent years continued to lead food processors to invest in more accurate and precise inspection equipment. End-users sought more advanced product tracking capabilities. In particular, pharmaceutical industry customers looked to implement vision systems capable of verifying product codes for track-and-trace programs. Domestic demand was essentially flat. Owing largely to the economic downturn, domestic demand for U.S. inspection/detection machinery inched up just +0.5 percent. If not for the category s strong reliance on non-discretionary end-use markets, such as foods and pharmaceuticals, the result would likely have been worse. Competition remained intense. Manufacturers reported strong competition from suppliers in the U.S. and abroad. Demand from the pharmaceutical industry albeit still solid did not measure up to the level of Following several years of increasingly higher shipments to the pharmaceutical industry, the category s manufacturers were unable to sustain the positive growth pattern in the weak economic environment. *Also see key market trends and developments presented in Executive Summary 51

37 LABELING MACHINERY 2008 Results $420 Growth Trend (Labeling Machinery) Shipments: $395M Versus 2007 Total: -0.8% Total Units Shipped: 15,651 Total Export Shipments: $56M Order-Backlog (12/31/2008) $41M $Millions $400 $380 $380 $396 $398 $395 $360 $366 By Machinery Sub-Category $ Pressure-Sensitive Apply Only Shipments: $154M Versus 2007 Total: -3.1% Total Units Shipped: 7,918 Total Export Shipments: $20M Order-Backlog (12/31/2008) $18M Pressure-Sensitive Print-and-Apply Shipments: $135M Versus 2007 Total: +6.3% Total Units Shipped: 6,572 Total Export Shipments: $19M Order-Backlog (12/31/2008) $10M Sleeve Labelers Shipments: $31M Versus 2007 Total: +10.7% Total Units Shipped: 182 Total Export Shipments: $3M Order-Backlog (12/31/2008) $2M Hot Melt, Cold Glue, and All Other Shipments: $75M Versus 2007 Total: -10.7% Total Units Shipped: 979 Total Export Shipments: $14M Order-Backlog (12/31/2008) $11M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Labeling Machinery) Total Category P-S Apply Only P-S Print-and- Apply Sleeve Labelers Hot Melt, Cold Glue, Other 7% 25% 25% 4 43% % 57% 75% 75% Reported No Change Reported Decrease Reported Increase 52

38 LABELING MACHINERY (Continued) A Closer Look at the 2008 Data 2008 Domestic Shipments Versus Exports (Labeling Machinery) Percent Total Dollars Change from 2007 Domestic Shipments $339M -0.3% Export Shipments $56M -3.4% 2008 Labeling Machinery Shipments by End-Use Market Segment Foods 23% Pharmaceuticals 23% Beverages 21% Personal Care Products 13% Converters 9% Chemicals 5% Consumer Durables 3% Hardware/Industrial/Automotive 2% All Other 1% 2008 Labeling Machinery Shipments By Type of Customer Direct Sales to End-Users 77% Sales to Distributors and/or Dealers 22% Sales to Other Machinery Manufacturers 1% Respondents Comments The economy is bad for us, especially in Europe. Manufacturer of P-S Apply-Only Labelers Requests dropped off for apply-only labelers. Manufacturer of P-S Print-and-Apply and Apply-Only Labelers Our equipment is slow speed and most people want higher speeds. Manufacturer of Sleeve Labelers We were doing well through the fall but things dropped off significantly after that. Manufacturer of P-S Apply-Only Labelers We improved because of our product line expansion, refreshed marketing materials, and organizational change. Manufacturer of P-S Apply-Only Labelers We sold more print-and-apply labelers than apply-only. They were more expensive, which resulted in more money. Manufacturer of P-S Print-and-Apply and Apply-Only Labelers There is a trend toward high graphics and unique bottle shapes for sleevers. Manufacturer of Sleeve Labelers Participant Data PMMI Member Participants 26 Other Company Shipment Estimates Developed Through Phone Interviews and Secondary Research 30 Total Companies 56 Average Shipments ($) Per Company $6.53M P-S Apply Only $3.87M P-S Print-And-Apply $3.03M Sleeve Labelers $3.60M Hot Melt, Cold Glue, All Other $7.18M 53

39 LABELING MACHINERY (Continued) Key Trends and Developments* Hot melt, cold glue labeler shipments declined further. After a -7.7 percent decline in 2007, U.S. shipments of hot melt/cold glue/heat transfer labelers fell by another percent in Much of the decline is traceable to weaker demand from the beverage industry. According to Beverage Digest, U.S. soft drink sales slid for the fourth year in a row in 2008, while volume fell by -3%. Export demand faded. Despite the weak U.S. Dollar, exports of U.S. labeling machinery declined by just over three percent in 2008, following a flat growth rate in Slower demand from customers in developed markets, such as Europe, is thought to have played a significant role in the modest decline. Beverage industry demand slowed. Customers from the beverage industry were responsible for approximately 21 percent of U.S. labeling machinery shipments in 2008, down from 29 percent the year before. As reported above, U.S. soft drink sales have been weak in recent years, as consumers have cutback on consumption of carbonated beverages, bottled water, fruit drinks, and even energy drinks. Additionally, rapid consolidation has been prevalent in the beer industry, while sales of liquor grew just +1.3 percent in 2008, the slowest rate in a decade, according to Impact Databank. Domestic demand was stagnant. As the economic slowdown took hold in the latter half of the year, several of the category s respondents reported a significant drop-off in business. Consequently, domestic shipments declined by -0.3 percent. Sleeve labeler shipments climbed sharply again. The continued popularity of sleeve labels across many market segments, including beverages, foods, personal care, and various other consumer products, has propelled the sub-category s shipment volume to double-digit growth rates in each of the past two years. Print-and-apply labeler shipment growth rebounded higher. Following a two-year stretch of declining shipment volumes, manufacturers of pressure-sensitive print-and-apply labelers staged a comeback in 2008 with solid +6.3 percent gain. Notably, exports of print-and-apply labelers increased slightly for the year, whereas exports were down or flat in each of the other labeling machinery sub-categories. *Also see key market trends and developments presented in Executive Summary 54

40 PALLETIZING, DEPALLETIZING, AND PALLET UNITIZING MACHINERY 2008 Results Shipments: $503M Versus 2007 Total: +3.3% Total Units Shipped: Total Export Shipments: $55M Order-Backlog (12/31/2008) $115M By Machinery Sub-Category Conventional Palletizers/Depalletizers Case Shipments: $150M Versus 2007 Total: +2. Total Units Shipped: 637 Total Export Shipments: $22M Order-Backlog (12/31/2008) $42M $Millions $520 $500 $480 $460 $440 $420 $400 Growth Trend (Palletizing Machinery) $410 $452 $469 $487 $ Conventional Palletizers/Depalletizers Non-Case Shipments: $68M Versus 2007 Total: +15.3% Total Units Shipped: 185 Total Export Shipments: $8M Order-Backlog (12/31/2008) $8M Percent of Companies Reporting an Increase, Decrease, and No Change in Shipments (2008 Versus 2007 Palletizing Machinery) Pallet Unitizers Stretch Wrap and All Other* Shipments: $132M Versus 2007 Total: -3.6% Total Units Shipped: Total Export Shipments: $21M Order-Backlog (12/31/2008) $17M Total Category Conv. Pallet. - Case 9% 3 37% 61% 63% Robotic Palletizers/Depalletizers Case Shipments: $113M Versus 2007 Total: +11.9% Total Units Shipped: 350 Total Export Shipments: $4M Order-Backlog (12/31/2008) $40M Conv. Pallet. - Non-Case Pallet Unitizers 12% 25% 25% 5 88% Robotic Palletizers/Depalletizers Non-Case Shipments: $40M Versus 2007 Total: -7. Total Units Shipped: 107 Total Export Shipments: Negl. Order-Backlog (12/31/2008) $8M Robotic Pallet. - Case Robotic Pallet. - Non-Case 22% 11% % *Due to insufficient data, the formerly separate Pallet Unitizer All Other and Pallet Unitizer Stretch Wrap sub-categories have been combined to form one all encompassing Pallet Unitizers subcategory. Notably, stretch-wrap pallet unitizers were responsible for nearly all of the $132 million shipments in Reported No Change Reported Decrease Reported Increase 55