US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

40th Anniversary of the Tylenol Murders: A Packaging Perspective

It is sometimes quite useful to look backward, even in this blog about looking forward.

This fall is the 40th anniversary of the Tylenol murders, when someone took Tylenol off the shelf, laced the capsules with cyanide, and returned them to the shelves in the Chicago area. Ultimately, 7 died, but the whole national was put on edge. Looking at it from a business perspective, not only is the tragedy an example of how fortunes can change quickly and suddenly for a market leader, it also shows how companies and whole industries can adapt quickly to change how they operate, sometimes permanently.

In this case, two industries – over-the-counter medications and packaging – changed quickly and forever.

OTC pharmaceutical companies developed a new product form (the solid “caplet”) that was designed to be harder to tamper with than the old capsule designs but just as easy to swallow compared to the leading alternative then – uncoated tablets.

The packaging industry quickly developed and added glued boxes, shrink wrap neckbands, and peel-back foil as an inner seal among other tamper evident measures. The FDA announced guidelines on November 5, 1982, and suppliers of capsule and liquid drugs were given three months to comply with new packaging, a nearly unheard of time frame for such a major repackaging effort. Although some packaging was a preliminary option meant to be functionally sufficient until the companies worked out a version that was optimal in terms of cost and appearance, all met the deadline. In fact, the first tamper-evident Tylenol packages were on the shelf by the fifth week after the deaths. All other types of drug products – presumably those less susceptible to poisonous tampering – and all imported drugs were given longer time lines, with all needing to meet tamper evident packaging guidelines by February 1984.

This is an example of rapid change that was permanent. We saw a lot of rapid shifts in the COVID-era and wonder how many are sticky trends. Changes that are most likely to become permanent include those where companies had to make significant investment in the change, where the need for the change remains high, and where there are other reasons to continue the change (e.g., consumer convenience).

Freedonia analyst will continue to watch for historical parallels, market disruptions, and the potential stickiness of industry and consumer change.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the packaging industry.Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Industry Studies      Packaging    

Sustainability in Power Tools: Improving Circularity With Materials

Sustainability, particularly via reducing use of virgin plastics, is a big part of many companies’ ESG (Environmental, Social, and Governance) plans and pledges.

Although many companies look at their packaging and processes and stop there, others like Stanley Black & Decker are considering the materials used to make their products. Stanley Black & Decker recently launched its reviva power tool brand, a product line that features tool housing that is made with 50% recycled material. The sustainability move is threefold and considers all stages of the product’s lifecycle:

  • Stanley Black & Decker partnered with Eastman to develop tools with housing made from Eastman’s TritanRenew
  • Each tool is sold in packaging that is designed to be recycled curbside or used as a storage box.
  • The company partnered with TerraCycle to allow its products to be returned for recycling at the end of their useful life.

As The Freedonia Group National Online Consumer Survey conducted in May 2022 found, these moves are incredibly important to consumers. 80% of respondents agreed it is important to recycled everything they can. Additionally, 66% of respondents noted that they actively seek to minimize the amount of unrecyclable waste their household generates. Sustainability actions taken by consumer goods companies can have major impacts as more consumers seek to reduce their household waste and encourage – with their buying patterns – companies to do better with eco-friendly products and measures.

Freedonia analysts continue to watch changes in consumer sentiment in sustainability areas and keep on the lookout for innovations and potential innovations where companies can seize opportunities.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially Power Tools, Global Power Tools, and Home Improvement Consumer Insights 2022. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Industry Studies    

Drought & Water System Allocations: More Cuts Ahead

Some of us have followed stories of boats, bodies, and other things that have been found as Lake Mead and other western lakes and rivers fall to historic low levels amid a long-running drought in the Colorado River Basin.  

Current projections show that Lake Mead’s water level will fall below 1,050 above sea level by January, triggering a Tier 2 shortage and dramatic cuts to water allocations. Especially hard hit will be Arizona, which faces cuts equivalent to 21% of the state’s annual allotment from the Colorado River.

States and municipalities have made uneven changes in water use regulations throughout the Colorado River Basin. Below is a brief discussion of what sorts of measures are needed, either more broadly or as a starting point where not yet implemented. Opportunities exist in the innovations and adaptations that make water use reductions measures such as these possible:

  • reductions in or the elimination of thirsty decorative landscaping like conventional lawns and non-native plants, in favor of hardscaping and drought-resistant native plants
  • appliances that reduce water requirements or make use of gray water in non-potable applications
  • plumbing that more efficiently disperses less water to a similar effect and upgrades that guard against leakage and unnecessary water loss
  • smart agriculture that plans crop placement and soil treatment to minimize water needs, along with more efficient irrigation and switching to less water-intensive farming either by changes in process or in types of crops planted
  • water treatment processes including advanced membrane separation processes that recycle waste water back into water basins, whether for non-potable or potable use or both, and make lower quality water sources available for use

Freedonia analysts continue to watch factors such as drought conditions, water treatment technologies, agriculture and landscaping innovations, and climate change trends.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in water treatment, landscaping, and plumbing products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Custom Research      Industry Studies    

Return to the Office?

Much was made this week of Elon Musk demanding Tesla workers to either return to the office at least 40 hours per week or resign.

While some companies are increasing the expectations that their workers be in the office more frequently, this isn’t a trend that holds everywhere. Especially in metropolitan areas famous for long commute times.

This week, the Wall Street Journal reported that there was a high correlation between long average commute times and reductions in office occupancy. “Eight of the 10 major cities with the biggest drop in office occupancy during the pandemic had an average one-way commute of more than 30 minutes in 2019. Meanwhile, six of the 10 cities with the smallest drop in office occupancy have average commutes of less than 30 minutes.”

But why are there long commutes in the first place?

First, there are the factors that drove workers to live further away from city centers, including:

  • lack of housing, especially affordable housing, close to where the jobs
  • seeking out better schools
  • desire for more green space
  • concerns about urban crime

But we can’t ignore the fact that transportation infrastructure hasn’t kept up with changes in demographics and commuting patterns.

As employees who could work from home during the pandemic did so, they learned that they could do their work just as well from home. Some even moved further away from city centers to get more space for a home office and/or more outdoor space.  While many missed the camaraderie of lunches with co-workers and chats around the coffee pot, they discovered that the absence of a long commute returned time to their day. The daily grind of the commute was more tradition than necessity.

What might come of this?

  • More companies may open satellite meeting or work spaces closer to where their employees live.
  • If more funding can be provided, transportation infrastructure – from roads to public transit – can be improved to shrink commute times.
  • Excess office space can be converted to residential space to allow more workers to live closer to urban work spaces.

These longer-term possible developments would allow the creation of more balanced neighborhoods.

Freedonia analysts will continue to watch these trends to see how remote-work, return-to-work, and urban and suburban office adjustments change not only construction activity, and where service business locate and how they operate, but also how we live in general.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in Construction & Building Products, Consumer Goods markets, and Automotive & Transport industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Custom Research      Industry Studies    

Urban Living Transitions: Tier 2 Cities, the Suburbs, & Rural Areas

A much discussed trend of the last few years is the pandemic era exodus from cities to the suburbs and rural areas…and potentially back again.

However, something to keep in mind: the Census figures being discussed in many of these articles are for the actual city boundaries, not metro areas. So when you see cities like Chicago and New York losing population, it includes people shifting to the suburbs just outside the city limits. In that way, it is still counted as the city losing population, even though people may not have moved that far away.

What makes those who move away from urban centers more likely to stick with their choice? It depends on their homeownership status and if they have kids. Homeowners are stickier in their location than renters are as the transaction costs to sell are much higher than moving at the end of a lease (or even breaking a lease, in many cases). Additionally, the move to the suburbs for the schools and larger yard when you have kids is an old story that repeats with each generation.

Still, for every article that has Millennials loving their new exurban lifestyle, there are ones about pandemic homebuyers who are miserable with the move to homeownership. They have maintenance responsibilities they didn’t have as renters and might be house-poor now, lacking the cash for the travel and events they would like to resume as the pandemic feelings ease.

But what are the effects of this movement – no matter the direction?

There are many implications to this trend. From building construction needs to the type of things consumers will be spending their money on. For instance, if you have that house now, are you investing in lawn and garden care equipment and supplies? Are you investing in a new deck? Are you buying paint and furniture? Or are you spending on travel and events and dining out?

Furthermore, this shift has implications also for infrastructure. Can investment in public transport and urban bike lanes be justified if city populations are falling and fewer people are commuting into the city?

This move to smaller cities, suburbs, and rural areas could also cause trends to spread differently. Classically, as people move, they take their tastes and preferences with them to their new homes. A primary example is the spread of international food trends along with immigration. While urban centers of Tier 1 cities are often the source of trends – from food to recreation to style and beyond – that might change. First, those leaving the urban centers will bring those tastes with them and businesses will form in smaller cities and suburban areas to give them what they want.

So not only will moving to the suburbs change the habits and preferences of the former urban dwellers, but their movement into the suburbs and rural areas will change these locations by their arrival. This could lead to trends spreading faster into smaller cities and rural areas.

What should we watch? Remote work trends are worth watching as it is a good part of seeing whether the exodus from urban centers holds. As more people no longer needed to consider commute times in selecting where to live, they could cast their real estate nets a little wider, sometimes even out of state. This opened up options to these people, and since they bought homes, they are now more sticky in their location compared to urban renters.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in Construction & Building Products, Consumer Goods markets, and Automotive & Transport industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Industry Studies