Packaging industry faces labor shortages and pandemic impact after a decade of workforce growth

Despite some headline-grabbing plant closures and layoffs, the overall employment picture in the packaging industry remains more optimistic than it was a decade ago.

A flurry of M&A activity, persistent labor shortage challenges, and the impact of the COVID-19 pandemic have all left their mark on packaging manufacturers' workforce sizes. Even so, the total number of employees at the industry's largest companies has increased over the past decade, according to 2023 calendar and fiscal year reports.

"In the long run, employment in certain areas has been growing," said Perc Pineda, chief economist at the Plastics Industry Association, noting that labor trends vary across different packaging substrates. "But the entire manufacturing sector (currently) is shrinking."

Securities filings data from 12 publicly traded U.S. packaging manufacturers with annual revenues of at least $5 billion shows that their combined full-time employee count grew from 2014 to 2023.

Among these, the 10 companies that existed in 2014 employed over 212,100 people that year, a figure that grew to 244,800 by the end of 2023. WestRock and Pactiv Evergreen did not exist in 2014; including them in the 2023 tally brings the total to 315,900.

Company-reported data covers only full-time employees and does not include temporary or contract workers.

Although the U.S. Census Bureau also publishes employment figures by industry, its North American Industry Classification System (NAICS) codes do not fully cover all packaging categories. For example, NAICS 326140 covers polystyrene foam product manufacturing, a category that includes packaging and food service ware but also foam products for non-packaging uses, such as insulation.

A decade ago, the packaging industry was still recovering and adjusting from manufacturing job losses during the Great Recession of 2007 to 2009. Although there are claims that the packaging industry fared better than others during that downturn, packaging companies still reduced capacity and implemented hiring freezes and layoffs. After the recession, demand for products recovered, and hiring increased accordingly.

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"The pace of job growth after the pandemic was pretty crazy."

Ian Wyatt

Director of Commercial Economics and Market Strategist at Huntington National Bank

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However, the steady upward trend in employee numbers at leading packaging companies shifted in 2020. That year, headcounts declined as the COVID-19 pandemic caused widespread global economic shutdowns and triggered layoffs.

But soon after, the stay-at-home culture fueled an e-commerce boom. Packaging industry employment rebounded quickly as companies scrambled to hire enough workers to meet surging demand. In fact, the combined workforce of these 12 top companies peaked during the demand surge in 2021, then declined over the following two years and stabilized near 2019 levels.

After the pandemic, more companies reported investing in technology and automation, often as a response to labor shortages.

Trend tracking

While macro trends influence much of the packaging manufacturing sector, distinct micro trends also exist within specific industries, sometimes appearing to diverge from one another.

For example, according to Pineda, overall manufacturing employment has declined in recent years, but plastic packaging has generally seen growth.

The plastics industry itself can be broken down into sub-sectors such as film and sheet, bottles, and others, and some of these sub-sectors have seen diverging trends. Pineda said that between 2014 and 2023, employment in film and sheet had a compound annual growth rate of zero; over the same period, bottle production employment grew at a compound annual rate of about 1.2%, and unsupported plastic shopping bags at 2.7%.

Additionally, individual companies' workforce trends do not all align with the overall upward trajectory. International Paper, for example, saw its employee count fall from 58,000 in 2014 to 39,000 in 2023. Some companies remained relatively flat, with no significant growth or reduction. Packaging Corporation of America's workforce stayed steady throughout the period, with a difference of only 900 people between the start and end points. Sonoco and O-I Glass were also largely flat.

Many of the increases in employee numbers coincide with business acquisitions over the past decade.

For example, Berry Global's workforce doubled between 2018 and 2019, following its acquisition of RPC Group; Silgan added more than 3,000 employees between 2016 and 2017, after acquiring WestRock's closures and dispensing systems business. Graphic Packaging International saw its workforce jump by 5,000 between 2017 and 2018, following a series of acquisitions including Carton Craft Corp., PFP, and International Paper's North American consumer packaging business.

Divestitures have also played a role, correlating with workforce reductions. For instance, Berry Global's headcount decreased by 2,000 between 2022 and 2023, following a series of divestitures. Berry's partial divestitures in 2022 included selling its plastic rotomolding business to Rotavia and selling Synergy Packaging to PACT Group.

"Berry Global divested some of those businesses in 2022... and had to close some plants. So you see sharp changes in employee numbers, even though they had grown in prior years due to acquiring other companies," Pineda said.

Additionally, some companies were formed entirely through mergers and acquisitions, such as the 2015 merger of MeadWestvaco and RockTenn to create WestRock, and the 2020 merger of Evergreen Packaging and Pactiv (both subsidiaries of Reynolds Group Holdings) to form Pactiv Evergreen. WestRock later merged with Smurfit Kappa to create Smurfit Westrock earlier this year.

The pandemic's massive impact

Industry observers emphasize that the COVID-19 pandemic and its aftermath had a significant effect on the overall packaging industry workforce.

"The pace of job growth after the pandemic was pretty crazy," said Ian Wyatt, director of commercial economics and market strategist at Huntington National Bank, speaking at the Paper & Plastics Recycling Conference on October 23.

For the packaging industry, this period coincided with a post-pandemic demand boom, with some companies posting record sales. This was followed by a demand downturn as customers destocked.

Layoffs increased during that downturn—in 2023 alone, the packaging industry (including both public and private companies) saw at least 9,000 layoffs, with similar numbers so far in 2024. The post-pandemic shift in consumer spending from goods to experiences also contributed to declining employment figures, Pineda said.

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"If you still expect everything to go back to the way it was before the pandemic, you're in trouble."

Doug Larsen

Corrugated market analyst at Bloomberg's Green Markets

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Several packaging company executives, including Ball Corporation CEO Dan Fisher, referenced a demand "trough" in 2023 during earnings calls. In October of that year, when asked about unexpected plant closures and layoffs, International Paper's then-CEO Mark Sutton said on an earnings call, "What's changed is the depth and duration of this downturn. We haven't seen anything like this since we built our industrial packaging business in the mid-2000s."

In February 2024, Sutton elaborated further on workforce changes and reflected that, given the opportunity, he would have reallocated resources earlier.

"During 2021 and 2022, the labor force began to attrition," Sutton said on the earnings call. "If I could do it over again, I would have invested more in physical plant equipment in 2018, 2019, and 2020... We were somewhat caught off guard by the labor force changes."

Changing accompanying conditions

Other labor conditions have also evolved rapidly in recent years, including the emergence of labor shortages and a surge in wage growth.

"Since 2015, the lowest-paid 25% of Americans have received the largest pay increases... and after the pandemic, even the lowest-paid half have as well," said Huntington's Wyatt, noting that post-pandemic growth has since slowed. "This is not what we've been accustomed to in our history. We're not used to white-collar workers feeling pain while blue-collar workers don't."

As workers gained more leverage (partly thanks to a wave of labor movements in manufacturing and services), employees felt empowered to weigh their options and seek positions at other companies they deemed better. This gave rise to the "Great Resignation." Wyatt said turnover rates were "ridiculously high" between 2020 and 2022, explaining that "in most areas, those days are over."

During this period, "the traditional manufacturing workforce suddenly had options they didn't have before," such as more lucrative jobs in fast food or warehousing in some states, said Doug Larsen, corrugated market analyst at Bloomberg's Green Markets.

E-commerce giants that experienced pandemic-driven demand surges raised wages and often added signing bonuses to attract warehouse and driver applicants. This prompted some employees working in less desirable manufacturing facilities—such as hot box plants without air conditioning—to leave. Instead, these workers "could go to an Amazon or Walmart fulfillment center, make $20 an hour, and have air conditioning," he said.

During the pandemic, when Amazon was building new warehouses and hiring forklift operators at $35 an hour, "we saw people get lured away from box plants because of that," said Ryan Fox, corrugated packaging market analyst at Bloomberg Intelligence.

Add to that the post-pandemic surge in packaging demand, when "we were running people ragged to make up for excess demand," Larsen said. "A lot of people said, 'I've had enough.'... People left because we were burning out our good people."

The turnover levels caused by these factors particularly affected manufacturers that were already running lean operations, Larsen said.

"Training, onboarding—those programs have evolved over the last three or four years. People tell us they're constantly onboarding, constantly training," he said. "If you still expect everything to go back to the way it was before the pandemic, you're in trouble."

Seeking alternatives

U.S. Census Bureau data shows the overall labor pool is shrinking. Given this, packaging manufacturers have turned to various alternative methods to keep their workforces staffed—from different hiring practices to equipment investments.

Many employers are exploring underutilized employment pools.

"Maybe five years ago, (some companies) wouldn't hire anyone with a felony record," Larsen said, but now more packaging manufacturers are hiring people with criminal records to fill labor gaps.

Berry Global is one of the companies investing in refugee hiring programs. Additionally, there are efforts to encourage more women to apply for manufacturing positions, Larsen added.

Furthermore, the use of automation is increasing, particularly among the large companies driving industry consolidation. Sources say this relates to workforce numbers, but not necessarily in the way many might think. In fact, manufacturers often increase their use of automation to fill labor gaps.

"Every manufacturing labor statistic is getting worse," Jorge Izquierdo, vice president of market development at PMMI, said at a Pack Expo International media event on November 4. The difficulty of finding workers—especially those with the necessary skills—is prompting more companies to fill those gaps through technology investments, he said.

Additionally, as technology continues to advance, automation is being integrated into more manufacturing spaces. The number of tasks that can be automated "has changed dramatically in certain categories, driven by advances in AI and robotics," Wyatt said.

He explained that certain areas may experience short-term pain as workers are indeed replaced by machines. But in the long run, more automation creates new opportunities for workers to upskill and operate modern equipment, taking on higher-value roles while machines perform repetitive tasks.

"Historically, we've had periods where people panicked about innovation," he said. However, historical data shows that automation "often creates jobs. People get redeployed."

For example, box plant managers may now invest in reskilling workers rather than necessarily laying them off as they increase automation, said Bloomberg Intelligence's Fox.

"They upskill some of them and say, 'We don't need you to do stacking anymore. We need you to know how to operate the robot and make sure the robot is running properly,'" he said. "So that person gets a better job without losing any of the workforce."

Larsen agreed that the corrugated industry has "invested heavily" in areas such as "new high-speed corrugators, new high-speed finishing equipment, more conveyors, and more robotics."

The Plastics Industry Association's Pineda also believes that, in the long run, innovation can have a positive impact on workforce numbers. "In areas where you see more R&D spending, you might see employment growth," he said.

At least in the short term, the trend of packaging companies investing in technology to supplement their workforce is expected to continue.

"Don't expect labor conditions to improve significantly in the near term, so you need to plan for that," Izquierdo said, noting "a significant push and investment in new technologies to mitigate all these issues."