Tag: India

Global Manufacturing Economic Update – February 14, 2014

Here is the summary for this month’s Global Manufacturing Economic Update:

Worldwide equity markets have grappled with struggles in emerging markets in recent weeks, with some countries forced to defend their currencies by raising interest rates. Turkey, for instance, raised its key interest rate to as much as 12 percent to stem significant declines in its lira. Argentina, India, South Africa and other countries have taken similar moves. While many of these nations have suggested that the Federal Reserve’s polices have contributed to their current plight, recent events have exposed larger structural weaknesses in these countries that the Federal Reserve’s quantitative easing program might have camouflaged. Realizing that these challenges might be more isolated, global stock markets have recovered mostly of late.

For manufacturers, the latest data continue to show improvements in most major economies, including emerging markets. Some measures indicated a pullback to begin the new year, with the JPMorgan Global Manufacturing PMI down slightly from 53.0 in December to 52.9 in January. Yet, the larger story is that manufacturer sentiment has increased globally for 15 straight months, and several of our largest trading partners are experiencing multiyear highs. The Markit Eurozone Manufacturing PMI, for example, reflected the fastest pace of growth since May 2011, buoyed by strong gains in new orders and output in countries such as Germany, Italy and Spain. Even Greece had positive manufacturing activity for the first time since August 2009. France remains one of the few European countries that continues to struggle.

In all, nine of the top 10 markets for U.S.-manufactured goods had manufacturing PMI values greater than 50—the threshold for expansion. The one country where the manufacturing sector contracted in January was China. The HSBC China Manufacturing PMI dropped from 50.5 to 49.5, its lowest level in six months. However, we should not make too much of this decline, particularly if February’s data rebound. The measure for output continued to show modest growth, albeit at a slower pace. Moreover, real GDP in China grew 7.7 percent in the fourth quarter and for all of 2013, higher than the 7.5 percent rate in the third quarter. While Chinese economic growth has decelerated from past years, the country has shown improvements from mid-2013 and still continues to grow strongly.

Meanwhile, the U.S. trade deficit narrowed in 2013 overall, but it rose somewhat in December. Spurred energy production in the United States has helped the overall trade balance, with petroleum exports up and imports down for the year. Still, one of the more frustrating storylines of 2013 was the sluggish growth of manufactured goods exports, up just 2.4 percent for the year. This was below the 5.7 percent pace of 2013, and the disappointing increase remained true even with overall improvements in the global economy. Exports of manufactured products to South America and Europe were down 2.0 percent and 0.1 percent, respectively, with an easing in the growth rate of exports to our two largest trading partners—Canada (0.7 percent) and Mexico (5.1 percent). One of the brighter spots was China—defying conventional wisdom—with U.S.-manufactured goods exports up 18.4 percent in 2013. To be fair, however, the manufactured goods trade deficit with China remains large.

From the President’s remarks on Trade Promotion Authority (TPA) in his State of the Union address to hearings on the reauthorization of the Export-Import (Ex-Im) Bank, trade legislation is a prominent part of the discussion in our nation’s capital. Globally, U.S. negotiators will be seeking to make progress in the next rounds of the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) this month and next. India garners substantial attention from the Office of the United States Trade Representative (USTR) and business groups, while the sanctions agreement with Iran takes effect.

Chad Moutray is the chief economist, National Association of Manufacturers.

manufactured exports growth - feb2014

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India takes the low road, dragging down the WTO and the developing world with it

The Economist appropriately dubbed it “The Indian Problem” to explain why the World Trade Organization (WTO) has been unable to reach a deal that would help the world’s poorest countries by cutting red tape at the border. In its Nov. 23rd issue, the Economist lays the blame squarely at India’s door:  “Opposition to a global trade deal risks hurting the very countries India claims it is trying to protect… [India’s] stubborn opposition could deliver a serious blow to the poorest countries in the emerging world.”

India’s machinations to seek yet another exemption from the international trading system  agricultural rules was a prime cause of the demise of the Trade Facilitation negotiations– negotiations that the Organization for Economic Cooperation and Development (OECD) estimates would reduce total trade costs by 10 percent annually in advanced economies and by 13 percent to 15.5 percent in developing countries, helping to boost worldwide income more than $40 billion – with most of the benefits going to developing countries.

Sadly, no one should be surprised by India’s approach.  It is the same approach India is using more broadly in its trade relations.  Flouting the basic rules of the global trading system it helped create more than sixty years ago, India’s manufacturing policy seeks to force Indian production of a wide range of products, from solar and power generation equipment to pharmaceutical and other medical equipment,  at the expense of global producers everywhere.  The United States has already filed a WTO cases against India’s requirement that Indian developers of solar photovoltaic projects use Indian-only solar cells.

And there is no end in sight as India’s Commerce Minister, Anand Sharma, emphasized just yesterday that his government is “committed . . . to protect Indian generics” and grow its own pharmaceutical industry.  He failed to mention that this policy, like Indian policies on manufacturing broadly, is based on forcing local production of as many products as possible, even as basic protections for intellectual property are broken again and again.

India’s actions are unfair and violate the basic rules of the global trading system. Not only are they hurting manufacturers in the United States, they are hurting India and as importantly developing countries that are trying to grow their economies through increased trade and investment. The Economist urges the Indian government to make the “hard choice” to embrace the global trading system which will “likely pay dividends over time.” We agree.

 

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Global Manufacturing Economic Update – September 13, 2013

Here is the summary for this month’s Global Manufacturing Economic Update:

The world economy appears to be stabilizing somewhat from weaknesses in the past few months, with the latest data indicating improvements in manufacturing activity in several countries. Europe, which had been in a recession for nearly two years, has now had two straight months of slow—but positive—growth. The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) increased from 50.3 in July to 51.4 in August, with growth in new orders, exports and output. Other macroeconomic variables reflecting gains include real GDP and retail sales. Nonetheless, hiring growth continues to lag behind, and from the U.S. perspective, manufactured goods exports to Europe have been lower year-to-date. Industrial production declined 1.5 percent in July, suggesting that significant weaknesses remain even with a more upbeat outlook.

Likewise, China’s economy has also rebounded from recent softness. The HSBC China Manufacturing PMI shifted from contraction (47.7) in July to very slight growth (50.1) in August. This marked the first expansionary figure since April. The Chinese economy has decelerated from past years, with year-over-year real GDP growth of 7.5 percent in the second quarter, down from double-digit rates of growth just a couple years ago. Production, fixed asset investments, and retail sales have also all picked up the pace in July from weaknesses in prior months.

The higher levels of activity in China have helped to boost much of the rest of Asia, as well. While several Asian countries continue to contract, they are also beginning to stabilize. There are some exceptions to this, of course. For instance, India’s economy is suffering from a sharp devaluation in the rupee (see the graphic above) and its own economic policies. The HSBC India Manufacturing PMI declined from 50.1 to 48.5, its first contraction since March 2009. The other outlier, Japan, increased from 50.7 to 52.2 and has been expanding each month since March, according to the Markit/JMMA Japan Manufacturing PMI. In general, these gains mirror improvements in the Japanese macroeconomy since the end of last year.

Despite some better data abroad, the U.S. trade deficit widened in July on higher goods imports and a slight decrease in goods exports. As we have been saying all year, growth in manufactured goods exports have been frustratingly slow in 2013, up just 1.6 percent through the first seven months of the year relative to the same time period last year. This compares to 15.9 percent and 5.7 percent growth in 2011 and 2012, respectively. Exports to China have been one of the bright spots, but other regions have seen some significant easing compared to last year’s pace. Hopefully, as the global economy continues to improve, manufacturers will see demand for their goods increase.

Along those lines, we will be closely watching the economic data coming out over the next couple weeks to see if more progress materializes for global manufacturers. A number of countries will be releasing their industrial production data next week, including the United States, which is expected to report a slight uptick in activity in August after being flat in July. Much of the other new data will focus on pricing pressures, both at the consumer and producer level. Overall, inflation has been modest, but with rising petroleum costs, crude costs have edged marginally higher in the most recent reports. The other key date to focus on will be September 23, when Markit releases its Flash estimates of PMI for China, the Eurozone and the United States.

On the policy front, following robust discussions on the Trans-Pacific Partnership (TPP) in August, negotiators are seeking to close gaps and push aggressively for progress in the lead-up to the Bali meeting of Asia–Pacific Economic Cooperation (APEC) forum. The World Trade Organization (WTO) has a new director general, who will be seeking to make progress on customs and trade facilitation talks and an expansion of the Information Technology Agreement (ITA) by the end of the year. U.S. bilateral economic relations with India will move to the leader level as President Barack Obama and Prime Minister Manmohan Singh meet in September. U.S.–E.U. negotiations head for the second round next month, while the National Association of Manufacturers (NAM) works to promote legislative action on Trade Promotion Authority (TPA) that is critical to expedite and implement major new trade agreements.

Chad Moutray is the chief economist, National Association of Manufacturers.

indian rupee exchange rate - sept2013

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Rep. Paulsen Discusses the Trade Challenges in India with Manufacturers

Today Congressman Erik Paulsen (R-MN) joined the NAM’s India Task Force meeting to discuss the ongoing challenges resulting from India’s recent discriminatory trade practices. Paulsen and Congressman John Larson (D-CT) are circulating a letter urging Secretary of State Kerry to press for an end to this discrimination during his visit to India at the end of this month.

Congressman Erik Paulsen discusses India's discriminatory trade practices with manufacturers.

Congressman Erik Paulsen discusses India's discriminatory trade practices with manufacturers.

Manufacturers are already facing significant barriers to trade and India’s recent actions threaten the trade relationship with our fourth largest trading partner worth $60 billion just last year. The courts and policymakers in India are engaged in a persistent pattern of discrimination designed to benefits India’s economy at the expense of American jobs. Last week the NAM joined 16 other business groups in sending a letter to President Obama asking his Administration to directly engage the Indian government to stop these practices and to keep it from happening again in the future.

From the letter:

“These actions and others constitute a disturbing trend that may continue and even expand to other products, sectors, and countries.  Already there are indications that other countries are considering similar measures.  Such actions are completely at odds with recognized global norms and raise troubling questions about India’s compliance with its international obligations to protect ideas, brands, and inventions and to treat imported goods no less favorably than domestic products.”

The discussion with Congressman Paulsen today was a great opportunity for manufacturers to discuss the concerns about India with a member of the Ways and Means Committee. We will continue to urge members of Congress to ask the Administration to engage India’s government so we can protect American jobs.

 

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Manufacturers Urge Action to Address India’s Unfair Trade Practices

Today the National Association of Manufacturers (NAM) joined 16 other business groups on a multi-industry CEO letter addressed to President Obama that calls on the President to address the unfair and discriminatory trade practices by the Government of India against U.S. exports and outlines proposed solutions to end these practices. The letter was signed by the leaders of 17 U.S. industry associations.  A full copy of the letter can be found at: U.S. Business Community Letter

The following groups signed the letter to President Obama

  • National Association of Manufacturers
  • U.S. Chamber of Commerce
  • CropLife America
  • BIO
  • Telecommunications Industry Association
  • PhRMA
  • United States Council for International Business
  • Emergency Committee for American Trade
  • American Business Conference
  • National Electrical Manufacturers Association
  • Air Conditioning, Heating and Refrigeration Institute
  • Association of Home Appliance Manufacturers
  • American Foundry Society
  • Semiconductor Industry Association
  • Dental Trade Alliance
  • National Foreign Trade Council
  • Solar Energy Industries Association
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In India, Secretary Locke Notes Trade Opportunities, Obstacles

Secretary of Commerce Gary Locke gave the keynote speech today at an event sponsored by the Confederation of Indian Industry (CII) in New Delhi, one of the events on a trade and business mission he is leading through India this week. Twenty-four U.S. businesses are represented on the trip, including several manufacturers.

The Commerce Department is blogging the trip. Key excerpt from the secretary’s speech:

Between 2004 and 2008, trade doubled between India and the United States. 

And ours is increasingly a partnership of equals. . .

. . . With major U.S. multinationals like Cisco, GE and IBM locating major research and development facilities here, and depending on Indian scientists and engineers to do growing amounts of higher value-added work.

I think the growing respect that U.S. businesses have for India can be summed up by the words of a Cisco executive who said:

We came to India for the costs, we stayed for the quality and we’re now investing for innovation.

Key caveat:

Even though India has made tremendous strides to open up its economy, there is much work left to be done. (continue reading…)

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Administration Continues the Progress on Export Controls

President Obama took steps forward this weekend to promote both U.S. trade and national security by announcing significant  export control reforms with India.  According to a Whitehouse Fact Sheet, “Indian Prime Minister Singh and President Obama committed to work together to strengthen the global non-proliferation and export control framework and further transform our bilateral export control cooperation to realize the full potential of the strategic partnership between the two countries.”

So what does this really mean?  For one, the United States is going to actively work with India to help the country gain membership in the four multilateral export control regimes.  This is significant not only because the National Association of Manufacturers specifically called for improved multilateral engagement in our Manufacturing Blueprint for a 21st Century Export Control Regime, but also because effective proliferation controls depend upon strong multilateral controls. India’s membership will promote greater harmonization of export control systems and help drive consistent implementation of standards across member countries. Given India’s ever increasing and growing role in global security and economic matters, this integration is important for U.S. national security and the manufacturing sector.

Second, the United States will “realign” India in its dual-use export control regulations to reflect India’s status as a strategic partner, effectively treating India similarly to other close allies and partners. India will no longer be listed as a “country of concern” and will establish re-export controls to prevent bad actors from trying to export U.S. technology in India to proscribed third countries. This realignment is significant given the President’s previously announced reforms.  Under the Administration’s proposed three-tiered control list, allies and partners will receive considerably more favorable treatment and exports to those countries will be subject to fewer restrictions.
(continue reading…)

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How Shellac Records were Produced and Manufactured

We thank the President for drawing attention to an important process in the history of sound recording and mass distribution. 

From an RCA Victor-sponsored film, “Command Performance,” produced by Ganz Co.

One ingredient is the finest shellac obtainable, which is brought from India. Another resin ingredient is from the East Indies, and like the shellac, is ground into fine powder before mixing.

Eighteen other ingredients gathered from distant places are carefully and accurately weighed in to ensure the most exact proportions to make a correct, final mixture. All ingredients are finely ground and put into the mixer to be carefully combined under heat with the powdered shellac, which is sucked into the machine through a vacuum pipe.

Now all is ready, and the Banbury Mixer rolls!

The entire 19-minute film is available at Archive.org, the Prelinger Archives, at “Command Performance.” The clip quoted above starts here.

Interesting that the manufacturing of 78s was such a globally integrated operation. Shellac from India! And where does the President first travel after admitting he took a “shellacking” on Election Day? India!

P.S. The Banbury Mixer – generations more advanced, of course — is still a valuable piece of manufacturing equipment, produced by the Farrel Corporation, headquartered in Ansonia, CT.

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Kirk Stands Ground at Paris Meetings

The National Association of Manufacturers (NAM) Vice President for International Economic Affairs Frank Vargo issued the following trade commentary regarding the Paris meeting of trade ministers this week to discuss the Doha Round:

The only way that a balanced Doha Round outcome that benefits all nations – including the United States, but especially including the least developed countries – can be obtained is if U.S. Trade Representative Ron Kirk and his negotiating team make it plain that the United States will settle for nothing less.  The U.S. has been the primary force for global liberalization in all previous rounds of global trade negotiations, and that role now falls to Ambassador Kirk in the Doha Round. In Paris this week, Ambassador Kirk stood firm, saying “The real question is whether India and Brazil and China are ready to assume a role and responsibility commensurate with their benefits that have been realized under global liberalization…We can talk around it, but that’s the only way this is going to happen.”  The NAM agrees, and believes this is the only way a successful Doha Round is possible.  We appreciate Ambassador Kirk’s clear and determined position, which has led to a growing number of WTO members beginning to support the U.S. view. 

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