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Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 1

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Pack up: Foreign competition and environmental


concerns will constrain industry growth

IBISWorld Industry Report 32611CA

Plastic Film, Sheet & Bag


Manufacturing in Canada
May 2016

Rory Masterson

2 About this Industry

16 International Trade

28 Key Statistics

Industry Definition

18 Business Locations

28 Industry Data

Main Activities

Similar Industries

20 Competitive Landscape

Additional Resources

20 Market Share Concentration

28 Annual Change

20 Key Success Factors

4 Industry at a Glance

28 Key Ratios

29 Jargon & Glossary

20 Cost Structure Benchmarks


22 Basis of Competition

5 Industry Performance

22 Barriers to Entry

Executive Summary

23 Industry Globalization

Key External Drivers

Current Performance

Industry Outlook

11 Industry Life Cycle

24 Major Companies
25 Operating Conditions
25 Capital Intensity

13 Products & Markets

26 Technology & Systems

13 Supply Chains

26 Revenue Volatility

13 Products & Services

27 Regulation & Policy

14 Demand Determinants

27 Industry Assistance

15 Major Markets

www.ibisworld.ca | 1-800-330-3772 | info @ibisworld.ca

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About this Industry


Industry Definition

This industry converts plastic resins


into various films, sheets and bags.
Industry products are used by
manufacturers for packing and storing
products, by retailers for transporting

Main Activities

The primary activities of this industry are

merchandise, and by consumers for


household purposes. Industry operators
also form, coat or laminate plastic film
and sheets into single-wall or multiwall
plastic bags.

Manufacturing plastic film for food storage bags


Manufacturing plastic film for grocery bags
Manufacturing plastic film for merchandise bags
Manufacturing plastic film for trash bags
Manufacturing plastic film for packaging
Manufacturing plastic film (except for packaging)
Plastic film and unlaminated sheet (except packaging) manufacturing
Manufacturing unlaminated plastic sheets (except packaging)

The major products and services in this industry are


Plastic bags and pouches
Plastic film and sheets (excluding packaging)
Plastic packaging film and sheets

Similar Industries

32222CA Coated & Laminated Paper Manufacturing in Canada


This industry manufactures paper bags and other coated and treated paper.
32612CA Plastic Pipe & Parts Manufacturing in Canada
This industry manufactures plastic pipes, pipe fittings and plastic profile shapes, such as rods, tubes and
sausage casings.
32616CA Plastic Bottle Manufacturing in Canada
This industry manufactures plastic bottles and containers used for food and beverages, household products
and automotive and industrial products.
32619CA Plastic Products Miscellaneous Manufacturing in Canada
This industry produces miscellaneous plastic goods, such as plumbing fixtures, plastic utensils, automotive
parts, decorative trim and other fabricated plastic products.

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About this Industry

Additional Resources

For additional information on this industry


www.plastics.ca
Canadian Plastics Industry Association
www.ic.gc.ca
Industry Canada
www.statcan.gc.ca
Statistics Canada

IBISWorld

writes over 400 Canadian


industry reports to help you make
better business decisions, faster. To
see all reports, go to www.ibisworld.ca

WWW.IBISWORLD.CA

Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

Industry at a Glance
Plastic Film, Sheet & Bag Manufacturing in 2016

Key Statistics
Snapshot

Revenue

Annual Growth 11-16

Annual Growth 16-21

Profit

Exports

Businesses

$5.1bn

5.9%

0.1%
284

$241.2m $2.3bn

Consumer spending

Revenue vs. employment growth

% change

There are no major


players in this
industry

20

10

% change

Market Share

0
-10
-20

Year 08

2
1

10

12

Revenue

14

16

18

20

22

Year

09

11

13

15

17

19

21

Employment
SOURCE: IBISWORLD

p. 24

Products and services segmentation (2016)

Key External Drivers


Consumer spending

23.3%

Demand from food


manufacturing

Plastic bags and pouches

Canadian-dollar effective
exchange rate index

45.3%

Plastic film and sheets


(excluding packaging)

World price of natural gas


World price of crude oil

31.4%

Plastic packaging film and sheets


p. 5
SOURCE: IBISWORLD

Industry Structure

Life Cycle Stage


Revenue Volatility

Mature
High

Regulation Level

Light

Technology Change

Medium
Medium

Capital Intensity

Medium

Barriers to Entry

Industry Assistance

Medium

Industry Globalization

High

Concentration Level

Low

Competition Level

High

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 28

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Industry Performance

Executive Summary | Key External Drivers | Current Performance


Industry Outlook | Life Cycle Stage
Executive
Summary

The Plastic Film, Sheet and Bag


Manufacturing industry has been facing
improving domestic demand conditions
over the past five years as the Canadian
economy has recovered from the economic
downturn. Nevertheless, industry growth
has been limited, stifled by import
competition from US manufacturers who
enjoyed the cost advantages of a weak US
dollar. As a result, imports have increasingly
met domestic demand. IBISWorld expects
industry revenue to grow at an annualized
rate of 5.9% over the five years to 2016.
Revenue is projected to rise 3.6% to $5.1
billion in 2016.

Imports

will increasingly meet domestic


demand, and manufacturers will face
foreign competition
The United States continues to supply a
high level of Canadian demand for plastic
bags, sheets and films. In the five years to
2016, imports from the United States have
increased at an average annual rate of 7.5%,
accounting for nearly three-quarters of
industry imports. Additionally, imports have
met an increasing proportion of domestic
demand over the past five years, rising from
48.2% in 2011 to an estimated 49.6% in
2016. This trend has pressured domestic

Key External Drivers

Consumer spending
Consumer spending affects demand for a
wide range of goods, including groceries,
electronics, durable goods and other
products. An increase in consumer
spending will positively affect industry
revenue. Consumer spending is expected
to increase in 2016, representing a
potential opportunity for the industry.
Demand from food manufacturing
Food and beverage manufacturers use
plastic bags, films, sheets and other

manufacturers of plastic bags, sheets and


film and, as a result, profitability has been
relatively constrained for much of the
period, before increasing in 2014 due to
easing petrochemical feedstock costs, as the
world price of oil collapsed in light of high
levels of global supply.
In the five years to 2021, IBISWorld
expects industry revenue to grow at an
average annual rate of 0.1% to total $5.2
billion. Similar to the previous five years,
imports will increasingly meet domestic
demand, and domestic manufacturers will
face pressure from foreign competition.
Imports are anticipated to increase at an
annualized rate of 7.4% over the next five
years, and IBISWorld projects that they
will supply 66.9% of domestic demand in
2021. The United States will continue to
supply the vast majority of imports and, as
a result, domestic operators will likely
look to consolidate in order to compete
against US counterparts. Nevertheless, the
number of industry operators is projected
to rise slightly at an annualized rate of
0.7% over the five years to 2021, while the
number of establishments is due to
remain flat. In addition to foreign
competition, environmental pressures will
challenge industry operators, and
IBISWorld expects that plastic bag bans
have the potential to become more
common throughout the country.

industry goods to package and protect


their products. Therefore, an increase in
demand from these markets translates to
higher demand and increased revenue for
plastic film, sheet and bag manufacturers.
Demand from food manufacturing is
anticipated to increase in 2016.
Canadian-dollar effective
exchange rate index
Exported plastic film, sheets and bags
comprise just over half of industry
revenue. The Canadian-dollar effective

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Industry Performance

exchange rate index is projected to


decline in 2016, but due to this industrys
heavy reliance on US trade, exchange rate
fluctuation represents an ongoing
potential threat to the industry.
World price of natural gas
Plastic film, sheet and bag
manufacturers use a variety of plastic
materials and resin inputs to produce
their final products. Similar to oil, as the
price of natural gas increases, industry
operators have difficulty passing the full
cost increases on to downstream buyers.

The world price of natural gas is


projected to decline in 2016.
World price of crude oil
Plastic film, sheet and bag
manufacturers use a variety of plastic
materials and resin inputs to produce
their final products. As the price of oil
increases, industry manufacturers may
not be able to pass the full cost
increases on to downstream buyers,
which can hurt profit margins. The
world price of crude oil is expected to
decline in 2016.
Demand from food manufacturing

Consumer spending
4

8
6

% change

% change

Key External Drivers


continued

2
1
0

Year

4
2
0

09

11

13

15

17

19

21

-2

Year

09

11

13

15

17

19

21

SOURCE: IBISWORLD

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Industry Performance

Foreign competition
persists

The Plastic Film, Sheet and Bag


Manufacturing industry supplies a
range of plastic products that aid other
industries in the packaging and
distribution of goods. According to
Greener Footprints, a nonprofit
organization that focuses on waste
reduction in Canada, Canadians use an
estimated 9.0 to 15.0 billion plastic
shopping bags per year.
Environmental concerns
surrounding the use of plastic bags
have intensified over the past five
years, and this has also challenged
industry operators. In the five years to
2016, IBISWorld expects industry
revenue to grow steadily at an
annualized rate of 5.9% to $5.1 billion,

including projected growth of 3.6%


in 2016.

One of the greatest challenges for


industry operators is the presence of
strong US competitors. Since the
recession, the US economy has recovered
steadily, and as consumers have returned
to spending, plastic films, sheets and bags
have been in higher demand than they
were during the recession. Manufacturers
in the United States have a distinct
advantage in being located closer to
petrochemical suppliers, as petroleum
refineries are more prevalent in the
United States than in Canada.
Additionally, companies in the United
States tend to be larger than their
Canadian counterparts, and their
proximity to inputs enables them to
manufacture plastic products at
competitive rates.
In the five years to 2016, imports in
the industry have increased at an
annualized rate of 7.5% to $2.8 billion.
Accounting for an estimated 49.6% of
domestic demand, imports are
dominated by goods from the United
States, which accounts for nearly
three-quarters of total imports. Imports

from the United States have increased at


an annualized rate of 8.2% over the five
years to 2016, as US operators have
increased production as economic
conditions have improved. Similarly, the
United States commands the market for
exports in the industry, with exports of
Canadian goods almost entirely traded
to the United States. Exports have also
been boosted by the US recovery over
the past five years, increasing at an
average annual rate of 1.1% to total $2.0
billion to 2016. Exports were weak early
in the period due to the weak US dollar
at the time, which made Canadian
exports relatively expensive. However,
with the US dollar strengthening in 2013
and 2014, total exports jumped 7.9% in
2014 alone, contributing to an
annualized 5.4% growth over the five
years to 2016 to total $2.3 billion.
Exports account for a significant share
of industry revenue, estimated at 44.9%
in 2016. Nevertheless, US production of
plastic bags, films and sheets has been
increasing and will continue to be a
challenge for domestic producers.

Industry revenue
20
10

% change

Current
Performance

0
-10
-20

Year 08

10

12

14

16

18

20

22

SOURCE: IBISWORLD

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Industry Performance

Profit constraints

Profit is anticipated to account for 4.7%


of industry revenue in 2016, up from
4.1% in 2011, with industry operators
enjoying the benefits of a recovering
economy in the wake of earlier
recessionary shocks. Nevertheless,
margins are largely determined by
fluctuations in input costs, which are
highly dependent on fluctuations in
petroleum prices. Polyethylene is the
primary input for plastics production,
and plastic product producers use a wide
range of plastics in the production
process. In the five years to 2016, the
world price of crude oil has decreased at
an annualized rate of 20.1%. This fall
obscures a period of great commodity
price volatility, with the oil price soaring
to record highs between 2011 and 2013
before collapsing in late 2014. On the
other hand, natural gas prices also play
an important role in the plastics sector,
as the majority of polyethylene stems
from natural gas processing. In the five
years to 2016, the world price of natural

Industry structure

Over the five years to 2016, the number of


industry players has been steady, despite
many less profitable operators relocating
abroad or being acquired by larger
operators. The number of industry
operators has been increasing at an average
annual rate of 3.5% over the period to total
an estimated 284 companies in 2016.
Competition from abroad continues to
challenge domestic operators, especially
those that do not have strong relationships
with chemical suppliers.
Simultaneously, larger operators have
been rationalizing the production
process. Employment growth in the
industry has been limited, growing at an
annualized rate of 3.4% to 12,340
workers. Employment growth has been
limited to high-skilled workers who can
operate advanced machinery and

gas is anticipated to decrease at an


annualized rate of 10.2%.
The bulk of the industrys costs are
concentrated in raw material
purchases, and this contributes to the
United States competitive advantage
over the Canadian plastics sector.
Chemical manufacturers produce
plastic material by either steamcracking crude oil or extracting it from
natural gas liquids. Although Canadas
production of heavy crude oil products
in Albertas oil sands has increased over
the past five years, the rapid
development of natural gas resources in
the United States via hydraulic
fracturing and directional drilling
techniques has far outpaced this
production. Furthermore, the refining
and processing capacity of the United
States exceeds that of Canada. As a
result, the United States has been able
to more affordably supply plastic bags,
sheets and films to the Canadian
market than domestic producers.

Operators

have been
increasingly automating
production processes
innovative computer technology, as
industry operators choose to invest more
in automated machinery to increase
labour productivity. This has allowed
industry operators to suppress wage
costs over the five years, with wages
showing almost no change over the
period and totalling an estimated $701.3
million in 2016. As a share of revenue,
wages have thus declined from 15.7% to
13.7%, and IBISWorld expects
employment growth to slow as operators
increasingly rely on automated
production processes.

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Industry Performance

Industry
Outlook

The Plastic Film, Sheet and Bag


Manufacturing industry in Canada will
face challenges over the next five years,
posting only marginal growth. Rising
polyethylene prices, competition from
the United States and environmental
opposition to plastic bags, films and
sheets will stress industry performance.
In the five years to 2021, industry
revenue is projected to rise at an

Foreign competition
persists

Over the next five years, IBISWorld


expects that industry operators will face
strong competition from US companies.
As in the previous five-year period, US
companies are projected to supply the
vast majority of imported plastic bags,
films and sheets. Over the five years to
2021, IBISWorld expects imports to
increase at an annualized rate of 7.4% to
$4.0 billion. Supplying a projected 66.9%
of domestic demand by 2021, imports
will be the greatest competitive threat to
the industrys performance over the
outlook period. Nevertheless, with the US
dollar slated to appreciate, domestic
products will have the competitive

advantage of being relatively less


expensive. Similarly, exports, almost
three-quarters of which are to the United
States, will be boosted by the increase in
cost-competitiveness of Canadian goods.
Exports will also continue to supply the
bulk of industry revenue, rising to 61.9%
of industry revenue and growing at an
annualized rate of 6.8% to $3.2 billion
over the five years to 2021.

According to Greener Footprints, a


nonprofit organization that focuses on
waste reduction in Canada, Canadians
use 9.0 to 15.0 billion plastic shopping
bags per year. This number pales in
comparison to larger countries, such as
China and the United States, but still
reflects the wide use of the industrys
products in Canada. Plastic bags, films
and sheets provide both companies and
consumers with convenient means of
transporting goods. However, this
industrys products are typically not
biodegradable, and their environmental
impact will continue to be widely
debated over the next five years.
IBISWorld anticipates future bans on

plastic bags: Montreal is currently


considering a ban on plastic bags, after
Toronto unsuccessfully attempted to ban
their use in 2012, while some
municipalities have already successfully
implemented bans. This trend will
certainly have a negative impact on the
industry, though industrial uses will
likely persist at steady rates.
Plastic bag, film and sheet recycling
will likely play a more prominent role in
the industry in the next five years, as it
can alleviate the environmental impact
of plastic bag disposal. However, on a
wide scale, IBISWorld expects that the
shift away from industry products will
be very slow. Future taxes on plastic

Profit constraints

annualized rate of only 0.1% to $5.2


billion, despite an expected 0.9%
decline in 2017. Operators are
anticipated to slightly improve profit
margins, however, as appreciation of
the US dollar will allow operators to
retain cost advantages against US
competitors, with exports to the United
States making up a large portion of
industry sales.

Industry

operators will face


increasing competition
from US companies

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Industry Performance

Profit constraints
continued

bags, films and sheets are also potential


threats to the industry. However, the
ease of use that plastic bags provide
consumers will likely help sustain

Industry structure

Though Industry consolidation


appears likely in some sectors over the
next five years, IBISWorld expects the
number of industry operators to
increase at an annualized rate of 0.7%
to 294 in 2021, with the number of
establishments remaining steady at
376 locations. Industry companies can
benefit from consolidating operations
and workforces, especially as
manufacturing processes become
increasingly automated and require
less labour. A decline in enterprises
but not establishment numbers is
indicative of companies merging while
maintaining existing facilities.

demand for the industrys goods in the


short term. Nonetheless, environmental
pressures and concerns pose a serious
threat for domestic industry operators.

Manufacturers

will seek to
consolidate operations to
bolster profit margins
Furthermore, operators will seek to
automate operations to bolster profit
margins, especially in light of material price
increases that are anticipated to occur over
the next five years. IBISWorld expects wages
to decline an annualized 0.2% to $709.1
million, 13.7% of industry revenue in 2021.
Similarly, employment growth will be
limited, projected at an annual average rate
of 0.2% to 12,486 workers.

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Industry Performance
Life Cycle Stage

Industry value added is growing


at a slower pace than GDP
The industry is consolidating

% Growth in share of economy

The industry has well-established


products and markets

20

Maturity

Quality Growth

Company
consolidation;
level of economic
importance stable

High growth in economic


importance; weaker companies
close down; developed
technology and markets

15

Key Features of a Mature Industry


Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands

10

Quantity Growth

Many new companies;


minor growth in economic
importance; substantial
technology change

Plastic Film, Sheet &


Bag Manufacturing

Snack Food Production


Inorganic Chemical Manufacturing

Coated & Laminated Paper Manufacturing


Plastic Pipe & Parts Manufacturing
Soda Production

Decline

-5

Shrinking economic
importance

-10
-10

-5

10

15

20

% Growth in number of establishments


SOURCE: WWW.IBISWORLD.COM.AU

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Industry Performance

Industry Life Cycle


This

industry
is M
 ature

In the 10 years to 2021, industry value


added (IVA), which measures the
industrys contribution to the overall
economy, is expected to increase at an
annualized rate of 2.1%, while Canadas
GDP is anticipated to grow an average
1.9% per year over the same period.
Mature industries generally exhibit IVA
growth roughly in line with that of GDP.
Along with flagging decline in IVA for
this industry, the widespread market
acceptance of industry products and the
relatively few substitutes currently
available indicate a mature industry.
Also pointing toward this industrys
mature life cycle stage is the trend
towards industry consolidation and the
presence of merger and acquisition
activity. Even so, in the five years to
2016, the number of companies
operating in the industry has increased
at an annualized rate of 3.5% to 284
companies. While some participants

moved offshore or exited the industry


during the downturn, declining
enterprise numbers in this industry are
mostly the result of mergers and
acquisitions. Because the products
produced by industry operators are
low-value, high-volume goods, profit
margins are relatively low. As a result,
operators primarily increase profit by
lowering costs through vertical
integration and economies of scale.
This, along with the drive to increase
market share, fuels merger and
acquisition activity.
In addition to increasing
consolidation, the industrys products
and markets are well established.
Furthermore, technological
advancements within the industry tend to
be cosmetic in nature, or are focused on
improving existing product lines. These
factors are also indicative of an industry
in the mature stage of its life cycle.

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Products & Markets

Supply Chain | Products & Services | Demand Determinants


Major Markets | International Trade | Business Locations

Supply Chain

KEY BUYING INDUSTRIES


31191CA

Snack Food Production in Canada


This industry demands plastic bags and plastic sheet materials.

31211aCA Soda Production in Canada


This industry demands plastic sheets for labels.
31222CA

Cigarette & Tobacco Manufacturing in Canada


This industry demands plastic bags and sheets for product packaging.

44511CA

Supermarkets & Grocery Stores in Canada


This industry demands plastic bags and plastic materials for packaging.

45291CA

Warehouse Clubs & Supercentres in Canada


This industry demands plastic bags and plastic materials for packaging.

KEY SELLING INDUSTRIES

Products & Services

32518CA

Inorganic Chemical Manufacturing in Canada


This industry supplies synthetic resin used in the manufacture of plastic bag, film and sheet
products.

32521CA

Plastic & Resin Manufacturing in Canada


This industry supplies plastic resin used in the production of plastic bag, sheet and film
products.

Products and services segmentation (2016)

23.3%

Plastic bags and pouches

45.3%

Plastic film and sheets


(excluding packaging)

31.4%

Plastic packaging film and sheets

Total $5.1bn
Plastic film and sheets
Accounting for an estimated 45.3% of
industry revenue in 2016, nonpackaging
plastic film and sheets make up the
largest product segment in this industry.
End uses of plastic films and sheets
include a variety of applications, such as
wall construction, drop cloths, vapor
and moisture barriers for concrete,

SOURCE: IBISWORLD

painter drop sheets and weather


protection. In addition, plastic film is
used for electrical fabrication and to
label goods. Demand from this product
segment has been fairly stable over the
past five years, although it has been
boosted by the recovery of the
construction industry since the
recession. Additionally, this segment

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Products & Markets

Products & Services


continued

Demand
Determinants

includes packaging plastic films and


sheets. IBISWorld anticipates this
segment will remain relatively steady
over the next five years.

base will likely erode this product


segments share of industry revenue over
the next five years.

Plastic bags and pouches


Plastic bags are estimated to account for
23.3% of industry revenue in 2016.
Included within this segment are food
storage bags, plastic wraps, plastic
take-home grocery bags and garbage
bags. Over the past five years, the share
of industry revenue generated from
plastic bags has fallen as a growing
number of consumers shift to reusable,
eco-friendly bags. In June 2012, the
Toronto city council voted to ban plastic
bags beginning in 2013, though it
subsequently reversed its decision
Nonetheless, many retailers charge a
five-cent bag fee, and the threat of future
bans on plastic bags and an increasingly
environmentally conscious consumer

Plastic packaging film and sheets


The plastic packaging film and sheets
product segment is expected to account
for 31.4% of industry revenue. The
growth in this segments share of
industry revenue reflects an increase in
the use of plastic film by food processors
and ready-made food. Along with the
increase in demand for ready-made
food, plastic packaging has a wide range
of applications that include
preservation, tamper indication and
waste reduction. The introduction of
processes like cryovacing, which is a
method used to remove oxygen from a
package to make it airtight so that a
products shelf life increases, has
increased demand for plastic film in the
food-processing sector.

One of the largest factors affecting


demand for plastic film, sheets and bags
is consumer spending. Industry products
are commonly used as inputs in a variety
of essential and nonessential goods,
especially with regard to food and
beverage packaging and labelling. In
addition, another item produced by this
industry, plastic bags, are ubiquitous
throughout retail stores, especially
supermarkets and department stores.
These businesses typically hand out
plastic bags for customers to use in
transporting purchased items back to
their home. As such, increases in
consumer spending drive demand for
industry products.
Demand for industry products is
also tied to overall manufacturing
activity. The more goods that are
produced, the more plastic labelling

and packaging materials are required.


As a result, business activity among a
variety of other sectors beyond retail
and food and beverage manufacturing,
such as wholesale, construction and
agriculture sectors, shape demand for
industry goods.
The environmental impact of plastic
film, sheet and bag use has played an
increasingly prominent role in the
industry. Most plastic bags are not
biodegradable, and due to the large
quantity of bags that consumers use on
an annual basis, the environmental
impact of their disposal has led to some
cities, such as Toronto, to consider a ban
on their usage. Moving forward, these
concerns could continue influencing
demand, though their ultimate effect on
demand is anticipated to be marginal
over the next five year period.

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Products & Markets

Major Markets

Major market segmentation (2016)

6.9%

6.8%

Automotive

Other

16.1%

Construction

51.1%
Exports

19.1%

Retail packaging

Total $5.1bn
Exports
Accounting for 44.9% of industry revenue
in 2016, foreign buyers represent the
largest market for Canadian plastic film,
sheet and bag manufacturers. The foreign
market for this industrys goods has been
expanding over the past five years, and it
is anticipated to continue growth in the
next five years. In the five years to 2021,
the Canadian-dollar effective exchange
rate, which measures the relative strength
of the Canadian dollar against its trading
partners, is projected to increase at an
annual average rate of 1.2%, which will
make Canadian-produced goods relatively
more expensive to overseas buyers.
Retail packaging
Retail packaging applies to a whole range
of consumer goods that use product
packaging in the production process.
Firstly, this market segment includes a
variety of food, beverage, tobacco and
consumer goods manufacturers that use
plastic packaging and other industry
products to seal and extend the shelf life of
their products. Secondly, the retail
packaging segment covers suppliers of
goods, such as wholesalers, distributors
and retailers, as they use the plastic
packaging products produced by this
industry to distribute goods to

SOURCE: IBISWORLD

manufacturers, retailers and other


resellers. Thirdly, retailers purchase
plastic bags to give to customers who shop
at their stores. Supermarkets, which are
also included within this market, function
as a wholesaler and retailer, since they
offer plastic take-home bags for customers
and sell plastic garbage bags and other
industry products. Wholesalers,
distributors and retailers make up a large
domestic market for industry
manufacturers, accounting for an
estimated 20.7% of industry revenue in
2016. Over the past five years, the share of
industry revenue generated from this
market has held steady, and is expected to
remain stable through 2021.
Construction
Construction markets are expected to
account for 17.7% of industry revenue in
2016. Construction companies and
building material manufacturers also use
plastic film, sheets and bags to protect
concrete from moisture, and to package
building materials. Construction activity
has strongly increased since stalling
during the recession, and with a consistent
recovery in the construction sector, the
share of revenue generated from
construction markets has grown over the
past five years as a result. Demand from

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 16

WWW.IBISWORLD.CA

Products & Markets

this segment has increased in recent years


as economic conditions have improved,
and is expected to increase further.
Automotive
The automotive sector is expected to
account for 8.4% of industry revenue in
2016. The automotive market consists of
automobile manufacturers who use plastic
film, sheets and bags to package car parts
and materials. Similar to construction
companies, activity in this sector has
increased since struggling during the
recession, and as economic conditions
improve, it is expected to grow.

International Trade
Level & Trend
 xports in the
E

industry are H
 igh
and I ncreasing
Imports

in the
industry are H
 igh
and I ncreasing

Exports
Accounting for an estimated 44.9% of
revenue in 2016, exports represent a
major market and revenue source for
Canadian plastic film, sheet and bag
manufacturers. The overwhelming
majority of industry exports are
consumed by buyers in the United
States, which accounts for an estimated
95.2% of exported plastic film, sheet and
bags. Rounding out the remainder of the
top four export destinations for industry
products are China (1.3%), Chile (0.7%)
and France (0.6%). Over the five years to
2016, the total value of industry exports
has grown at an annualized rate of 5.4%
to $2.3 billion. Over the next five years,
exports are expected to continue growth,
with average annual growth of 6.8%
expected from 2016 to 2021.
Imports
Imported plastic film, sheet and bag
products are expected to account for
49.6% of domestic demand in 2016,
which is higher than 2011 levels of

Other
Other markets are expected to account for
8.5% of industry revenue in 2016, and
include agriculture companies, which use
industry products for irrigation, waste
containment, weed control, packaging and
storage purposes. Because of plastics
ability to protect from moisture, dust,
debris and severe temperatures, it
provides a cost-effective way for producers
in the agricultural industry to extend the
life of their perishable products. The share
of revenue generated from agriculture
buyers has been mostly steady over the
past five years.

Industry trade balance


4
2

$ billion

Major Markets
continued

0
-2
-4
-6

Year 08
Exports

10

12

Imports

14

16

18

20

22

Balance
SOURCE: IBISWORLD

48.2%. The United States is the largest


importer of plastic goods, accounting
for an estimated 71.6% of industryrelated imports. Rounding out the
remainder of the top four importing
countries for plastic film, sheet and bag
goods are China (11.0%), Mexico (2.2%)
and Germany (2.1%). In the five years
to 2016, the value of industry imports
has risen at an annualized rate of 7.5%

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 17

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Products & Markets

International Trade
continued

to $2.8 billion. This growth rate is


expected to remain over the next five
years to an average annual rate of 7.4%,

Exports To...

though imports share of domestic


demand is projected to increase to
61.9% in 2021.

Imports From...

2.1%

11.0%

3.0% 0.3%

China

0.4%

All other Chile

Germany

2.2%
Mexico

France

1.1%
China

13.1%
All other

95.2%

71.6%

United States

United States

Year: 2016

Total $2.3bn

SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA

Total $2.8bn
SOURCE: USITC

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Products & Markets


Business Locations 2016

Establishments (%)
Less than 5%

5% to less than 20%


20% to less than 40%
40% or more

NT

YT

NU

NORTHERN TERRITORIES
0.0

BC

14.6

AB

10.9

SK
0.0

MB
3.6

ON
50.0

NL

QC

0.0

20.0

NB
0.9

NS

PE
0.0

0.0

SOURCE: IBISWORLD

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 19

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Products & Markets

Distribution of establishments vs. population


60
50
40
30
20
10
Saskatchewan

Quebec

Ontario

Prince Edward Island

Nova Scotia

Newfoundland

Northern Territories

Establishments
Population

New Brunswick

Manitoba

Alberta

0
British Columbia

Industry establishments are concentrated


near raw material suppliers, as well as
downstream markets. Ontario and
Quebec house the overwhelming majority
of industry establishments, accounting
for 50.0% and 20.0% of plastic film,
sheet and bag manufacturing facilities,
respectively. Rounding out the remainder
of the top four regions for industry
activity is British Columbia, accounting
for 14.5% of establishments and Alberta,
with 10.9%. Not surprisingly, these
regions house the majority of the
population, as well as major domestic
buyers of industry products, such as
supermarkets, wholesalers and food and
beverage manufacturers.
A large number of industry facilities
are located near the US border, which
fosters easier trade between industry
manufacturers and US buyers. The
United States is the largest trading
partner with the industry, accounting for
over 94.0% of industry exports and over

Business Locations

SOURCE: IBISWORLD

71.6% of industry imports. Locating near


the border lowers transportation costs
and allows easier communication and
penetration into the US market.

WWW.IBISWORLD.CA

Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

20

Competitive Landscape

Market Share Concentration | Key Success Factors | Cost Structure Benchmarks


Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration

in
this industry is L ow

Key Success Factors


IBISWorld

identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:

Cost Structure
Benchmarks

The Plastic Film, Sheet and Bag


Manufacturing industry has a low level
of market share concentration, with no
operator expected to command a 5.0%
market share or higher. While the
industry consists of a large number of
small and medium-size operators,
several large-scale, multinational
companies do exist. For example, Bemis
Company Inc. has operations

throughout North America, Latin


America, Europe and Asia. Another big
industry manufacturer, Sealed Air
Corporation, has operations in 62
countries all over the world. Lastly,
AEP Industries Inc. operates in the
United States and Canada. These three
companies combined are still expected
to account for less than 10.0% of
industry revenue in 2016.

Undertaking technical research


and development
Industry operators regularly conduct
technical research and development to
improve production processes and
product quality. Improvements may
translate to increased market share.

expand profit, while also offering more


competitive prices.

Economies of scale
Vertically integrated companies can
maintain better control over their access
to raw materials, as well as the price
paid for raw material inputs. As such,
they can lower production costs and

Profit
Average industry profit, measured as
earnings before interest and taxes, is
expected to reach 4.7% of industry
revenue in 2016. This represents an
increase in profitability over the past five
years, with profit recorded at 4.1% in
2011. Increased profitability has been a
result of improved economic conditions,
a reduction in production expenses, and
increased labour productivity.
Specifically, recent declines in the price
of crude oil and natural gas have reduced
input costs for operators, while wage
costs have been suppressed by capital
investments in machinery and other
labour-saving technology. Improved
demand for exports as a result of the

Use of production techniques that


add value to base product(s)
Manufacturers add value by applying
artwork or design, maximizing print
quality or graphics, or by applying other
aspects of performance.
Supply contracts in place for key inputs
It is important to have reliable sources
for key inputs at competitive costs,
particularly plastic resins.

appreciating US dollar has allowed


Canadian operators to retain some
cost-savings by not passing on price
reductions to US consumers.
Purchases
The largest expense by far for industry
operators is the purchase of input items
used in the production process.
Operators must purchase raw materials,
most notably polyethylene, to produce
plastic bags, films and sheets. The price
of polyethylene is dependent on
petroleum prices, as petroleum refiners
and chemical manufacturers refine raw
materials to produce the chemical. With
the recent collapse of world commodity
prices, operators over the five years to

WWW.IBISWORLD.CA

Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

21

Competitive Landscape

2016 has seen a reduction in the world


prices of crude oil and natural gas. As
the prices of raw materials has
decreased, industry operators have
maintained sales prices in order to
widen profit margins, thus retaining the
savings in input costs. IBISWorld
anticipates that purchasing costs have
decreased over the past five years, but
with increasing industrial production in
emerging economies, the price of crude
oil and natural gas are both anticipated
to rise from recent declines in the next
five years, despite much price volatility.
Wages
Over the five years to 2016, industry
wages have declined slightly to $701.3
million. As a share of revenue, they have
declined from 15.7% in 2011 to 13.7% in
2016. Operators have been reducing their
wage costs because it is one of the few
cost components they can control to

bolster profitability. Industry


establishments have become
increasingly automated over the past
five years, with operators investing in
labour-saving machinery. This is a trend
that will likely continue in the next five
years. In the five years to 2021, wages
are projected to remain at 13.7% of
industry revenue, with operators
continuing to suppress wage growth.
Other costs
Plastic film, sheet and bag manufacturers
incur a variety of other expenses,
including depreciation costs, which are
estimated at 2.5% of industry revenue. In
addition to being capital intensive, plastic
film, sheet and bag manufacturing is also
energy intensive, as the equipment and
machinery used to heat and extrude raw
materials requires a substantial amount
of electricity. As a result, rent and utility
costs are expected to total 1.8% of

Sector vs. Industry Costs

100

Average Costs of
all Industries in
sector (2016)

Industry Costs
(2016)

8.0

4.7

12.2

13.7

59.3

64.4

n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other

80

Percentage of revenue

Cost Structure
Benchmarks
continued

60

40

20

2.5
3.7
12.9

1.4

2.5
1.8
12.3

0.6
SOURCE: IBISWORLD

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Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

22

Competitive Landscape

Cost Structure
Benchmarks
continued

revenue. Industry operators on average


also spend 0.6% of revenue for marketing
and advertising campaigns. All other

costs, including administrative, general


and legal, are expected to account for
12.3% of revenue in 2016.

Basis of Competition

Industry competition is based largely on


product quality, product selection,
reliability of delivery times and
technological innovation. With respect to
innovation, some industry manufacturers
spend a significant amount of revenue on
research and development initiatives, or
form joint ventures or partnerships with
competing companies to maintain
technological competitiveness.
Price is also a basis for competition,
as many industry products are
commoditized, and thus hard to
differentiate. Pricing is typically
determined by the total cost of
production (including raw materials)
plus profit. Larger companies have a
distinct advantage when it comes to

pricing, because these players are


typically vertically integrated companies
that can utilize economies of scale to
lower overall production costs. Lower
production costs allow large companies
to offer lower prices. In order to
compete, smaller operators typically
offer value-added services or focus on
providing superior customer service.
Substitute products represent a form
of external competition, and include
paper, foil and other materials
commonly used to make packaging
products. The level of substitute
competition varies depending on the
product weight, performance, safety,
presentation and environmental and
recycling costs.

Level & Trend


 ompetition
C

in this
industry is H
 ighand
the trend is S
 teady

Barriers to Entry
Level & Trend
 arriers to Entry
B

in this industry are


Mediumand S
 teady

Barriers to entry in the Plastic Film,


Sheet and Bag Manufacturing industry
are substantial, though not
insurmountable. The primary barrier to
entry is the high initial capital
investment required to begin operations.
The manufacture of industry plastic
products requires heavy-duty machines,
such as mixers and extruders. In
addition, entrants will have to invest a
substantial amount of money into a
production facility, which will need to be
staffed with highly skilled employees.
Although the industry has a low level
of market share concentration, the
presence of companies with vertically
integrated operations poses another
barrier to entry. These companies can
utilize economies of scale to lower per

Barriers to Entry checklist


Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance

High
Low
Mature
Medium
Medium
Light
Medium
SOURCE: IBISWORLD

unit production costs, allowing them to


offer products at a more competitive
price than smaller operators. New
entrants will therefore have to spend a
significant amount of time and money
building relationships with
downstream markets.

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Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

23

Competitive Landscape

in this
industry is H
 ighand
the trend is S
 teady
International trade is a
major determinant of
an industrys level of
globalisation.
Exports offer growth
opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.

Trade Globalisation
200

Going Global: Plastic Film, Sheet & Bag


Manufacturing 2005-2016
Global

Export

150
100
50

Plastic Film, Sheet & Bag


Manufacturing

0 Local
0

addition to the high level of import and


export activity, a number of companies
operating within this industry have
operations outside of Canada, primarily in
the United States. For example, Ontariobased Hood Packaging Corporation has
plant locations throughout the Southeast
and Midwest regions of the United States.

Import
40

80

120

Imports/Domestic Demand

160

200 Export

Exports/Revenue

Level & Trend


 lobalization
G

The Plastic Film, Sheet and Bag


Manufacturing industry has a high level of
globalization. In 2016, an estimated 44.9%
of industry revenue comes from exported
goods, primarily to the United States.
Imported plastic products into Canada are
also significant, accounting for an estimated
49.6% of domestic demand in 2016. In

Exports/Revenue

Industry
Globalization

Global

150
100
50

2005
2016

0 Local
0

Import
40

80

120

160

Imports/Domestic Demand
SOURCE: IBISWORLD

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 24

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Major Companies

There are no Major Players in this industry | Other Companies

Other Companies

Bemis Company Inc.

Estimated Market Share: 3.7%


Originally founded in 1885 as Bemis Bro.
Bag Company, the company eventually
changed its name to Bemis Company Inc.
in 1965. Based in Neenah, WI, Bemis has
grown to become a major manufacturer of
packaging products and pressure sensitive
materials. The company employs more
than 19,600 people throughout North
America, Latin America, Europe and Asia.
Bemis divides its business activities into
three reportable segments: US packaging,
global packaging and pressure sensitive
materials. The global packaging segment
is relevant to the Plastic Film, Sheet and
Bag Manufacturing industry and includes
the production of multilayer polymer,
blown and cast plastic film products,
which are used in the packaging of food,
personal care products, agribusiness,
minerals and other items. In 2016,
IBISWorld projects the companys
Canada-specific industry revenue will
total $191.0 million, with a profit margin
of 6.7%.

Sealed Air Corporation

Estimated Market Share: 3.3%


Founded in 1960, Sealed Air Corporation
is a manufacturer of protective

packaging products serving a variety


of applications, including food, facility
hygiene, product protection and
more. Some of the companys more
prominent brands include Bubble Wrap
cushioning and Cryovac food packaging.
The company employs about 25,000
people spread across 62 countries.
Sealed Air operates within the industry
through two business segments: food
and beverage and protective packaging.
In 2016, the companys industryspecific operations in Canada are
expected to yield $169.4 million.

AEP Industries Inc.

Estimated Market Share: 1.7%


AEP Industries was founded in 1970,
and is one of the largest manufacturers
of plastic packaging films in North
America. The company produces a wide
range of polyethylene and polyvinyl
chloride flexible packaging products
that serve consumer, industrial and
agricultural applications. AEP employs
2,600 employees and operates 13
manufacturing facilities in the United
States and one manufacturing plant
in Ontario. In 2016, IBISWorld
projects the company will generate
$85.8 million in industry revenue.

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 25

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Operating Conditions

Capital Intensity | Technology & Systems | Revenue Volatility


Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level

of capital
intensity is M
 edium

The Plastic Film, Sheet and Bag


Manufacturing industry has a medium level
of capital intensity. On average, for every
dollar spent on labour, operators allocate
$0.18 toward machinery, equipment and
other capital expenses. Industry products
are manufactured through a large-scale,
complex and capital-intensive process that
depends on heavy-duty mixers, extruders
and other equipment to mix, heat and
format finished plastic products. The
manufacturing process is somewhat
energy-intensive and requires the proper
disposal of hazardous waste, which also
contributes to significant capital costs.
In addition to the already capitalintensive production process, the
industry continues to shift toward more
automated production techniques, which

Capital intensity

Capital units per labour unit


0.5
0.4
0.3
0.2
0.1
0.0

Economy

Manufacturing
In Canada

Plastic Film,
Sheet & Bag
Manufacturing

Dotted line shows a high level of capital intensity


SOURCE: IBISWORLD

has decreased the industrys dependence


on labour while increasing its
dependence on machinery.

Tools of the Trade: Growth Strategies for Success


Investment Economy

Recreation, Personal Services,


Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labour skills are key to
product differentiation.

Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.

Traditional Service Economy


Wholesale and Retail. Reliant
on labour rather than capital
to sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.

Snack Food
Production
Soda
Production

Plastic Film,
Sheet & Bag
Manufacturing

Capital Intensive

Labour Intensive

New Age Economy

Plastic Pipe & Parts Manufacturing


Inorganic Chemical
Manufacturing
Old Economy
Coated & Laminated
Agriculture and Manufacturing.
Paper Manufacturing
Traded goods can be produced
using cheap labour abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.

Change in Share of the Economy

SOURCE: IBISWORLD

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 26

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Operating Conditions

Technology & Systems The manufacturing of plastic film, sheets


of
Technology Change
is M
 edium

Revenue Volatility
Level
The level

of
Volatility is H
 igh

permeability and more. Afterward, the


blended mixture is heated into a molten
state, and forced through a die.
One of the major technological
advancements for the industry in recent
years has been the advent of new
applications that reduce the amount of
headspace oxygen in packaged food
products. Specifically, more advanced
types of polypropylene films have
reduced the amount of oxygen that
makes its way into packaged food
products, which has bolstered the shelf
life and quality of many food and
beverage items.

The Plastic Film, Sheet and Bag


Manufacturing industry has displayed a
high level of revenue volatility over the
past five years, with average annual
change in revenue growth of 12.3%. The
industry saw its strongest growth of
18.5% in 2013, when the economy had
fully emerged from its postrecessionary slumber and consumer
spending was surging.
The other years in this period were
characterized by modest industry
contraction, with an increasing

proportion of plastic manufacturing


occurring abroad. The industry derives
more than half its revenue from
exports, nearly all of which are
consumed by buyers in the United
States, the industrys largest trading
partner. This makes the industry very
sensitive to changes in the strength of
the US dollar vis-a-vis the Canadian
dollar. Furthermore, opposition to
plastic bags has increased over the past
five years, and this could impact
volatility moving forward.

A higher level of revenue


volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.

Volatility vs Growth
1000

Revenue volatility* (%)

Level
The level

and bags requires a number of


technologically advanced processes,
including various types of extrusion,
printing, laminating and coating procedures.
Extrusion is a broad term that defines
the process creating objects of a fixed,
cross-sectional profile. Typically, a
material (in this case plastic) is pushed
through a die or mold of the desired
shape. Plastic pellets are first blended with
resins and other additives, which give the
finished product different product
characteristics, such as color, thickness,
tensile strength, clarity, transparency,

Hazardous

Rollercoaster

100

Plastic Film, Sheet &


Bag Manufacturing

10
1
0.1

Stagnant
30

10

Blue Chip
10

30

50

70

Five-year annualized revenue growth (%)


* Axis is in logarithmic scale
SOURCE: IBISWORLD

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 27

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Operating Conditions

Regulation & Policy


Level & Trend
 he level of
T

Regulation is
Lightand the
trend is S
 teady

Industry Assistance
Level & Trend
 he level of Industry
T

Assistance is
Mediumand the
trend is S
 teady

Canadian plastic film, sheet and bag


manufacturers are subject to a wide
range of laws and regulations concerning
the environment, worker health and
safety and international trade. As with
other manufacturing industries, industry
producers must adhere to environmental
regulations with respect to the release of
emissions and other pollutants into the
air and water. Furthermore, plastic film,
sheet and bag manufacturers must
adhere to standards regarding the
handling, storage, treatment and disposal
of hazardous waste. These and other
related laws are housed and enforced at
the federal level within Canadas
Department of the Environment. In
addition, city and provincial governments
also have authority concerning resource
management and waste discharge.

Cities and provinces also have the


authority to ban plastic products. For
example, in June 2012, the Toronto city
council voted to ban plastic bags effective
January 2013. While this ban was
overturned a few months later, cities and
provinces nonetheless have the power to
enact bans on plastic products produced
by this industry, which could adversely
affect revenue and profit.
Industry manufacturers are also
subject to laws and regulations governing
worker and workplace safety issues, such
as hours worked, collective bargaining,
holidays, minimum wage, procedures for
layoffs, severance, meal times and more.
The Canadian Centre for Occupational
Health and Safety, Canadas Ministry of
Health and other similar agencies enforce
these laws.

With exports, primarily exports to the


United States, accounting for over half of
industry revenue, the North American Free
Trade Agreement (NAFTA) represents a
major form of industry assistance. Under
NAFTA, many of the tariffs and other typical
restrictions the United States places on
goods coming in from other countries are
eliminated. On the import side, Canada has
some tariffs for imports originating from
non-NAFTA countries. For example,
polypropylene, one of the most commonly

used plastics among industry


manufacturers, carries a 2.0% tariff.
Assistance also comes in the form of
industry associations, such as the
Canadian Plastics Industry Association
(CPIA), which serves as the voice of
Canadas plastics manufacturers. In
addition to serving as the lobbying arm of
the industry, CPIA offers economic
information, technical support concerning
codes, standards, best practices and
research and statistical information.

WWW.IBISWORLD.CA

Plastic Film, Sheet & Bag Manufacturing in Canada May 2016

28

Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Industry
Value Added
($m)
1,019.2
847.2
867.8
784.2
862.9
892.3
951.5
965.7
1,039.1
1,071.0
1,056.2
1,056.1
1,056.2
1,056.9
1,066.3

Establishments
342
342
321
314
310
307
361
345
363
365
367
365
371
369
376

Enterprises Employment
267
11,793
272
10,826
251
10,204
243
10,091
239
10,439
240
10,600
282
11,837
270
11,300
283
12,130
284
12,340
286
12,288
284
12,238
290
12,344
288
12,315
294
12,486

Exports
($m)
1,974.5
1,930.2
1,868.3
1,816.7
1,772.3
1,781.1
1,781.8
1,923.0
2,215.6
2,304.0
2,456.5
2,671.4
2,848.9
3,004.3
3,194.9

Imports
($m)
2,025.2
2,073.7
1,906.7
1,924.3
1,938.7
1,967.5
2,106.9
2,344.9
2,618.4
2,781.4
3,016.8
3,269.6
3,496.9
3,727.6
3,970.2

Wages
($m)
721.7
637.7
602.8
584.1
607.6
615.6
627.7
626.8
684.4
701.3
697.0
695.1
700.4
699.9
709.1

Domestic
Demand
4,485.4
4,103.0
3,811.9
3,808.2
4,025.3
4,011.4
4,822.7
4,882.3
5,355.6
5,609.7
5,644.5
5,692.6
5,752.5
5,848.8
5,936.0

Revenue
(%)
-10.7
-4.7
-1.9
4.3
-0.9
17.6
-0.8
11.0
3.6
-0.9
0.2
0.2
0.4
0.7

Industry
Value Added
(%)
-16.9
2.4
-9.6
10.0
3.4
6.6
1.5
7.6
3.1
-1.4
0.0
0.0
0.1
0.9

Establishments
(%)
0.0
-6.1
-2.2
-1.3
-1.0
17.6
-4.4
5.2
0.6
0.5
-0.5
1.6
-0.5
1.9

Enterprises Employment
(%)
(%)
1.9
-8.2
-7.7
-5.7
-3.2
-1.1
-1.6
3.4
0.4
1.5
17.5
11.7
-4.3
-4.5
4.8
7.3
0.4
1.7
0.7
-0.4
-0.7
-0.4
2.1
0.9
-0.7
-0.2
2.1
1.4

Exports
(%)
-2.2
-3.2
-2.8
-2.4
0.5
0.0
7.9
15.2
4.0
6.6
8.7
6.6
5.5
6.3

Imports
(%)
2.4
-8.1
0.9
0.7
1.5
7.1
11.3
11.7
6.2
8.5
8.4
7.0
6.6
6.5

Wages
(%)
-11.6
-5.5
-3.1
4.0
1.3
2.0
-0.1
9.2
2.5
-0.6
-0.3
0.8
-0.1
1.3

Domestic
Demand
(%)
-8.5
-7.1
-0.1
5.7
-0.3
20.2
1.2
9.7
4.7
0.6
0.9
1.1
1.7
1.5

IVA/Revenue
(%)
22.98
21.40
23.00
21.19
22.36
23.33
21.16
21.65
20.98
20.87
20.77
20.73
20.69
20.62
20.66

Imports/
Demand
(%)
45.15
50.54
50.02
50.53
48.16
49.05
43.69
48.03
48.89
49.58
53.45
57.44
60.79
63.73
66.88

Revenue
($m)
4,434.7
3,959.5
3,773.5
3,700.6
3,858.9
3,825.0
4,497.6
4,460.4
4,952.8
5,132.3
5,084.2
5,094.4
5,104.5
5,125.5
5,160.7

Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021

Figures are in inflation-adjusted 2016 dollars.

Exports/
Revenue
(%)
44.52
48.75
49.51
49.09
45.93
46.56
39.62
43.11
44.73
44.89
48.32
52.44
55.81
58.61
61.91

Revenue per
Employee
($000)
376.05
365.74
369.81
366.72
369.66
360.85
379.96
394.73
408.31
415.91
413.75
416.28
413.52
416.20
413.32

Wages/Revenue
(%)
16.27
16.11
15.97
15.78
15.75
16.09
13.96
14.05
13.82
13.66
13.71
13.64
13.72
13.66
13.74

Employees
per Est.
34.48
31.65
31.79
32.14
33.67
34.53
32.79
32.75
33.42
33.81
33.48
33.53
33.27
33.37
33.21

Average Wage
($)
61,197.32
58,904.49
59,074.87
57,883.26
58,204.81
58,075.47
53,028.64
55,469.03
56,422.09
56,831.44
56,722.01
56,798.50
56,740.12
56,833.13
56,791.61

Consumer
spending
($b)
839.0
862.4
863.7
895.6
915.3
932.8
955.4
980.1.0
1,000.2
1,021.5
1,041.6
1,060.3
1,078.3
1,095.6
1,119.2

Consumer
spending
(%)
2.8
0.2
3.7
2.2
1.9
2.4
2.6
2.1
2.1
2.0
1.8
1.7
1.6
2.2

Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01

SOURCE: IBISWORLD

Plastic Film, Sheet & Bag Manufacturing in CanadaMay 2016 29

WWW.IBISWORLD.CA

Jargon & Glossary

Industry Jargon

EXTRUSIONA process of shaping melted plastic into a


single, undeviating form, such as a tube.

POLYMERA molecule made from joining together many


small molecules called monomers

POLYETHYLENEA tough, light, flexible synthetic resin


made by polymerizing ethylene, chiefly used for plastic
bags, food containers, and other packaging. It is one of
the most common plastics.

IBISWorld Glossary

BARRIERS TO ENTRYHigh barriers to entry mean that


new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labour; medium is $0.125 to $0.333 of capital to
$1 of labour; low is less than $0.125 of capital for every
$1 of labour.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using
Statistics Canadas implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within Canada, regardless of their country of
origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by Canadian companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in Canada.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.

INDUSTRY REVENUEThe total sales of industry goods


and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED The market value of goods
and services produced by the industry minus the cost of
goods and services used in production. IVA is also
described as the industrys contribution to GDP, or profit
plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%; medium is 5% to 20%; and high is more
than 20%. Imports/domestic demand: low is less than
5%; medium is 5% to 35%; and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all
employees in the industry. Benefits and on-costs are
included in this figure.

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