Smaller Manufacturers Play Outsized Role in Exporting

By November 22, 2010Small Business, Trade

The U.S. International Trade Commissioner this month released a report requested by the U.S. Trade Representative,  “Small and Medium-Sized Enterprises:  Characteristics and Performance.” From the Executive Summary:

[Despite] facing trade barriers and other impediments, small and medium-sized enterprises (SMEs) in the United States that export goods and services are more productive than their nonexporting counterparts. SMEs (defined in this report as firms with less than 500 U.S.-based employees), through their role as suppliers to exporting firms, make a larger contribution to U.S. exports than standard trade statistics suggest, and SMEs in the services sector are more export-intensive (i.e., reliant on exports) than large exporters of services.

U.S. Ambassador Ron Kirk commented in a release, “Smaller Exporters Play Large Role in Trade“:

USTR is focused on making trade work to benefit small businesses. Under the Obama Administration, we are committed to helping small businesses increase their sales to foreign customers. In turn, that leads to the creation of new jobs here at home. We will use our enhanced understanding of SME challenges and opportunities, while negotiating with foreign governments to open their markets and reduce trade barriers, to benefit American workers and businesses of all sizes.

Some key findings:

  • U.S. manufacturing and services SMEs that export outperform their non-exporting SME counterparts according to several key measures, including greater revenue growth and labor productivity between 2005 and 2009.
  • While large multinational firms sell primarily to foreign customers through foreign affiliates, SMEs tend to export directly to foreign customers. An estimated 73 percent of foreign sales by SMEs were conducted through direct exports, while an estimated 85 percent of foreign sales by large firms were conducted through foreign affiliates.
  • In addition to their role as direct exporters, U.S. SMEs export indirectly through wholesalers and other intermediaries by selling intermediate goods and services to large and small firms that produce exports with these intermediate inputs.
    • In 2007, direct exports of goods and services by U.S. SMEs totaled $382 billion, or approximately 28 percent of total U.S. exports. However, if the value of intermediate inputs is considered, SME’s total contribution to exports would have been $480 billion, or 41 percent of the total value of U.S. exports of goods and services.
    • SMEs that exported goods and services directly supported an estimated 1.9 million U.S. jobs in 2007. However, when employment by SMEs supplying intermediate inputs to exporters is considered, an additional estimated 2.1 million U.S. jobs are supported, bringing the total to 4 million jobs supported by SME exports.

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