Tis the Season – For Packaging Price Increases, That Is

by: Dennis Salazar

19 Jan

Anyone who’s been around the packaging industry for any length of time knows that the holiday season and New Year’s are traditionally followed by a price increase in basic packaging commodity products.

Price Increase Notifications and “Feelers”

Are Packaging Price Increases on the Way?

A few manufacturers were quick to put through their small increases immediately after the first of the year. Other manufacturers such as corrugated tend to do a lot of talking about it first, especially when a market is considered “soft”.

In other words, business is not as strong as the industry wants and the mills are torn between a need to increase profitability but of course they also can’t afford to lose any business in the process. Last year (2009) was one with in some cases, multiple price decreases and overall business down from the previous 2008, so it is understandable if the price increases being contemplated and discussed for 2010 are coming across as rather timid.

Are Price Increases Positive Economic Signs?

As much as I hate to admit it, I am quite sure they are. Even though some would love to see another year of multiple price decreases on commodity products, I believe that is called deflation and many economists agree long term that can be every bit as damaging to us and the economy as the opposite concern, inflation.

We all hate to spend more on the products we buy but a slightly different way of looking at this is the sheer fact that companies are considering price increases indicates they are optimistic and eager to grow and prosper. That is in all of our best interests and a true indicator that things are looking up. For example, a strong corrugated industry typically reflects an increase in manufacturing and consumer spending because in either case, a corrugated box is being made and used.

Don’t Shoot the Messenger

My best guess, and it is just a guess, is that we will indeed see small increases this first quarter from almost every product sector in the packaging industry. I think in most cases the increases are warranted and needed.

Whether or not we see another series of increases later this year will depend on how well the overall economy is doing. A strong rebound will likely result in additional price increases later this year. On the other hand, a price decrease of any size would probably indicate our problems are much bigger than we would like.

Here is to a prosperous 2010 to all, even if that means more price increases in the third or fourth quarters of the year!
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