Thermoforming Report

Thermoforming: Top, Trends, Future, & More!

It’s that time of year again! Time to collect all the data from the previous year, do the analyses, make assessments, and generate the findings. 

There are a few publications and companies that stay on top of the thermoforming world relative to trends, polymer pricing, mergers and acquisitions, and more. One that does it well is Plastics News, and their ‘2024 Top Thermoformers’ list is out.   

No, I’m not stumping for Plastics News, but it is a valuable resource to leverage and one that I utilize. (Hopefully, we are providing a level of industry insights in the thermoforming world for you as well!) That said, I wanted to offer up some thoughts on what we are seeing at Siena Group, interpret the list a bit, and discuss another recent article about 2023 thermoforming manufacturing. 

Top Thermoformers

First, a recent Top Performers article by Hollee Keller at Plastics News on the updated rankings distinguished the obvious differences between industrial and packaging thermoformers. These individual markets are dramatically different and are influenced by a much different set of parameters. The total sales numbers are not all-inclusive of the various companies listed, just the portions that align with their definition of ‘industrial’ and ‘packaging.’ 

That said, there is a dramatic difference in overall annual revenue between the packaging companies and the industrial companies – essentially the thin and heavy gauge manufacturers. In 2023, for example, the difference in total annual sales from the #1 company to the #10 company was $3.26B. The difference between #10 and #50 is about $500M – still a big number but nowhere near the first comparison. As we all know, the big numbers are on the packaging side. 

Second, as we’ve worked in the thermoforming space for a while now, the reported numbers are not reflective of the actual totals. No, the report isn’t wrong or inaccurate. It is just that companies have the right to report what they will, and it may not be all-inclusive. Even so, it is a great report and provides insights into the industry and companies that we work with and for. I’m guessing you are all well-versed in the rankings, but if not, you should take a look.

Trends

In a parallel article, Plastics News – and Hollee again – also found that the packaging formers were down year over year over year, to the tune of a 4% decrease from 2022 to 2023. The chart in the article isn’t pretty. 

In my conversations with a variety of thermoforming packaging companies, I would concur with the sentiment – some softening but nothing to warrant major yellow flags, much less any red flags. Because of the typical diversity of product mix, that article states, “Many processors handle a mix of products, so it’s notable that 48 percent of our companies had no reportable year-over-year change.” 

I’m hearing the same. Investments are still being made (capital equipment, people, etc.), but it isn’t a crazed, got-to-have-it-yesterday type of mindset. 

On the flip side, the heavy gauge companies ticked up 1.7%, according to the same article. With a much smaller base, 1.7%, though positive, is not a lot. 

My assessment? Get ready! Absolutely every heavy gauge former I work with is or has turned away business due to a lack of capacity in the last couple of years. So, if I’m hearing this correctly, there are a lot of opportunities out there for heavy gauge companies! Several of the larger companies have acquired new equipment and are getting it up the curve and ready to fill up. Nimble companies have already made some shifts to enable supporting a different mix of products. The percentage of hiring needs for people with heavy gauge experience certainly supports this trend. My guess is the industrial number for 2024 will be more like 3-4% as compared to 2023.

All of this is positive and points to a strong 2024… and beyond! 

What’s Ahead

Does anyone have a working crystal ball we can borrow?!? 

The reality is that forecasting the next year is always tough. Add in an election year, and it makes things even tougher! We highlighted a Plastics Today article titled, “State of the Plastics Industry: Navigating Through Uncertainty Toward a Resilient Future” in last month’s Thermoforming Report that said, “2024 offers evidence for cautious optimism.” The summary certainly provides a positive – but metered – outlook: 

“While challenges persist, the [plastics] industry is poised for a gradual recovery, driven by stabilization in macroeconomic indicators and a potential resurgence in M&A activities. Businesses that adeptly navigate these turbulent waters, balancing operational efficiency with strategic market timing, are likely to emerge stronger in the evolving landscape.”

Plastics Today, 2/1/24 article

Likewise, we highlighted a Forbes article that spoke directly to the potential impacts of the election year on the market and specifically on manufacturing.   

“While it may not be feasible to become the largest producer of goods in the world [comparing directly to China], it is feasible to lead in the areas that matter the most—that is, the sophistication of our manufacturing operations and the innovation those operations produce.  As we move forward, we should define success as leading in manufacturing innovation.” 

Forbes article

Wrapping Up

So, what are we seeing at Siena Group?  In short, a very robust start to the year! 

The needs are varied, but the thing that is a strong indicator of the potential for an overall solid year is the need for Sales – be it front-line Business Development Managers up through Directors and Vice Presidents. There are even a couple of clients discussing adding a C-suite leader to their team to help drive overall sales strategy for their organizations… which points to an even longer positive trend! 

With an expected strong heavy gauge business outlook and a likely continued investment in thin gauge (a couple of companies leaning heavily into medical device packaging), we believe it will be a strong 2024.   

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