Yesterday, Under Secretary of Commerce for International Trade, Francisco Sanchez spoke at the NAM’s Council of Manufacturing Associations (CMA) winter meeting.

Under Secretary Sanchez reiterated calls that we are at the beginning of a “manufacturing renaissance” and talked about the number of quality jobs created in the industry over the course of the last two years. He highlighted a Department of Commerce report which said that in 2009 alone, manufacturing made up more than 11 percent of GDP.

In order to build off the successes of manufacturing, and to really enter into a manufacturing renaissance, we have released our own four-point plan to guide the process. A Manufacturing Renaissance: Four Goals for Economic Growth addresses both the areas where we are thriving and the areas that need more attention.

Among those issues are exports. The NAM has been a strong supporter of the president’s goal to double exports by 2015. Manufacturers play an imperative role in that effort and Under Secretary Sanchez says “the correlation between jobs, exports and manufacturing is clear.” We agree.

Under Secretary Sanchez also spoke about the New Market Exporter Initiative. This initiative helps U.S. businesses find new markets, opportunities for export training and new contacts with distributors and representatives to expand their business.

The topic of manufacturing has been at the forefront of the Republican presidential debates and recent remarks by President Obama. It is encouraging to see so much attention on the industry that has led our economic recovery and continues to do so.

“U.S. manufacturers are vital to our economy and future growth.  It’s work that I’ve always valued.  My father ran a candy factory.  He had to make payroll.  He had to monitor inventory.  He had to sell and market products.  From his experience, I know how a strong manufacturing sector benefits workers, communities and our nation.” – Under Secretary Sanchez

The April U.S. foreign trade data released by the Department of Commerce today show some positive news for manufacturers. U.S. manufactured goods trade in April recorded a second favorable month in a row, with a strong increase in exports and a decline in the manufactured goods deficit. The important category of capital goods showed particularly strong export growth.

Manufactured goods exports in April stood at a seasonally-adjusted $97.2 billion, up 1.2 percent over March – an annual rate of increase of 16 percent.  This continues the generally strong pattern of the last year, and April manufactured goods exports were 15 percent larger than in April 2010. Fifteen percent a year is what is needed to meet the goal of doubling exports in five years, so manufactured goods are still on that path.

Manufactured goods imports in April were $134 billion, down one percent from March. Part of the reason for the drop was a 19 percent one-month drop in imports from Japan, reflecting the results of the disruption caused by the tsunami and nuclear disasters that affected Japan.

The U.S. balance of trade in manufactured goods declined in April as a result of the stronger export growth and slight decline in imports. The seasonally-adjusted deficit of $36.8 billion was the lowest so far this year, but that deficit implies an annual rate of $442 billion. (continue reading…)

February manufactured goods exports grew only 2.4 percent at an annual rate from January, while manufactured goods imports increased at an annual rate of 18.9 percent.  As a result, the manufactured goods deficit seasonally adjusted, grew to $41.9 billion from January’s rate of $40.7 billion.

On a year over year basis, comparing February 2011 with February 2010, manufactured exports were up 11.6 percent, marking the third month in a row of growth lower than the 15 percent annual rate of increase needed to achieve the goal of doubling exports in five years. The graph below illustrates this point. 

Imports of manufactured goods were up over 17 percent from February 2010, contributing to a growing deficit. Autos, capital goods, and consumer goods imports all showed rapid growth.

Manufactured goods exports under-performed the overall growth of goods and services, which were up 14.2 percent, driven largely by the blistering growth of agricultural exports, up 30 percent over February 2010.

U.S. exports of capital goods, the largest category of manufactured goods exports, showed particular lack of energy. February capital goods exports stood at $39 billion, down slightly from January’s $39.3 billion, and hardly changed from $38.8 billion exported in July 2010. Nineteen categories of capital goods exports declined in February, while 11 categories grew. The only significant growth, was in civilian aircraft and aircraft engines.

February’s figures underscore the need for an effective program to double exports, and should prompt the Administration to move quickly on reducing barriers to U.S. exports, particularly by sending the three pending trade agreements – Colombia, Panama, and Korea – to Congress for quick passage and implementation. The Administration then needs to move rapidly to conclude other export-enhancing trade agreements to open more foreign markets to U.S. exports.

The existing U.S. bilateral trade agreements, continued to be the brightest spot in the manufactured goods trade picture. The latest data for 2011 show a continuation of the manufactured goods trade surplus with U.S. trade agreement partners, a surplus that has accumulated to about $70 billion over the past three years. 

Frank Vargo is vice president of international economic affairs at the National Association of Manufacturers.

The United States is seriously under-performing as an exporter of manufactured goods. It exports only 45 percent as much of its manufacturing output as the world average, according to a National Association of Manufacturers (NAM) benchmarking analysis based on recently-released 2009 data from the United Nations Statistics Division. 

 The United States is the world’s largest manufacturer, producing one in every five dollars of manufactured goods in the entire world. But it is lacking in export orientation and among the 15 largest manufacturing economies, the United States ranks 13^th in terms of the proportion of its manufacturing output that it exports (export intensity).  Only Brazil and the Russian Federation have lower export intensity, as is seen in the graph below. 

 The 15 major producers together accounted for approximately 80 percent of the world’s manufacturing in 2009. Taiwan led the major economies in export intensity, followed by Germany and Korea.    

At 45 percent of the world average, the United States is exporting less than half as much of its manufacturing output.  If the United States were to export only at the average, manufactured goods exports in 2009 would have been more than $700 billion larger than they were, and the United States would not have had a deficit in its merchandise trade – including oil imports.

The NAM also benchmarked “import intensity,” comparing imports of manufactured goods relative to the size of domestic manufacturing industries around the world. The analysis shows that while in absolute terms our imports of manufactured goods are very large, relative to the size of the U.S. manufacturing industry, they are only 75 percent of what they could have been had we imported at the average rate for the world.

Importing at 75 percent of the world average and exporting at 45 percent of the world average explains why the United States has a large manufactured goods trade deficit. These data show that relative to the size of the U.S. manufacturing industry, the United States is exporting considerably less than it is importing.

The Administration’s National Export Initiative to double exports in five years is badly needed and deserves the most serious attention by both the Administration and Congress.

The mature domestic market for manufactured goods is unlikely to grow rapidly enough to outpace productivity increases and create jobs.  A major source of job creation is going to depend on faster export growth – with the United States joining the major league of “power exporters,” and the time to start achieving that goal is now.

 One of the key imperatives if U.S. exports are to grow more rapidly and elevate the U.S. export performance is greater access to foreign markets.  This can only come from trade agreements such as the three pending agreements with Colombia, Korea, and Panama – and then an expansion in the negotiation of trade agreements with all significant markets.  U.S. trade agreements have proven their worth, as newly-released trade data show that 2010 marked the third year in a row of a U.S. manufactured goods trade surplus with U.S. free trade partners – a surplus cumulating to $70 billion.

Frank Vargo is the NAM vice president for international economic affairs.

Jay Timmons, executive vice president of the National Association of Manufacturers, joined Commerce Secretary Locke, U.S. Trade Representative Ron Kirk, SBA Administrator Karen Mills and Tom Donohue of the U.S. Chamber of Commerce on Thursday in support of a new Export-Import Bank program that will provide market and financial support for smaller manufacturers, the Global Access for Small Business initiative. From the news release:

WASHINGTON, Jan. 13, 2011 /PRNewswire-USNewswire/ — Today, the Export-Import Bank of the United States (Ex-Im Bank) announced its Global Access for Small Business (Global Access) initiative, which will help more than 5,000 small companies export goods and services produced by U.S. workers. As an integral part of President Obama’s National Export Initiative (NEI) mission to double U.S. exports by 2015, Global Access is being supported by a wide variety of business, financial and government partners.

“For our economy to grow, we need more American small businesses to become exporters,” stated Ex-Im Bank Chairman and President Fred P. Hochberg. “The demand exists for their products and services, but many companies are wary of international sales. Global Access provides financing tools to minimize the risk of exporting so more American small businesses can grow their companies and create new jobs.”…

The other leading private-sector partner for Global Access is the National Association of Manufacturers (NAM), the nation’s largest manufacturing association. NAM has been a stalwart champion of increased U.S. exports and has built a strong relationship with Ex-Im Bank. “Exports are critical to the ability of manufacturers in America to succeed in a competitive world marketplace, grow and create jobs,” said Jay Timmons, executive vice president and incoming president of NAM. “Manufacturers account for two-thirds of U.S. exports of goods and services. The Global Access initiative provides the type of trade finance called for in the NAM’s ‘Blueprint to Double Exports in Five Years.’ It will enable more small and medium-sized manufacturers to begin or expand foreign sales – and lead to more jobs here at home.”

We’ve put a transcript of our soon-to-be NAM President Timmons’ remarks in the extended entry. Here’s the news coverage:

• The Hill, “Export bank unveils new small business initiative“
• National Public Radio, “Small Businesses Urged To Help U.S. Double Exports“
• Dow Jones, “US Export-Import Bank To Increase Small-Business Loans To $6 Billion“

Jay Timmons remarks below: (continue reading…)

The Washington Post profiles Secretary of Commerce Gary Locke and his role in promoting President Obama’s National Export Initiative, “A hands-on leader pushes Commerce“:

Since Locke took office in March 2009, he has earned a reputation as the type of manager eager to know details and wring out new efficiencies. He has pushed the Patent and Trademark Office to shorten the time it takes to get a patent, from 34 months to 20 months. He cajoled the Economic Development Administration, which makes business-development grants to distressed communities, to streamline its approval process. And he brought the 2010 Census in 25 percent under budget, saving taxpayers $1.9 billion.

But those management feats pale next to the challenge he faces as one of the key figures in implementing President Obama’s pledge to double U.S. exports within five years.

It’s down to about four years now, since President Obama announced the export initiative in his 2010 State of the Union Address on Jan. 27, 2010.

The Post piece does a good job of explaining the Obama Administration’s approach toward expanding exports and Secretary Locke’s leadership in the initiative. Unfortunately, the story omits — we hope the Secretary did not — the critical importance of enacting the pending free trade agreements with South Korea, Panama and Colombia in achieving the export goal. (continue reading…)

In speaking to the President’s Export Council on Thursday, President Obama provided a solid review of his National Export Initiative, announced early this year with the goal of doubling U.S. exports within five years. The President said:

What we all agree on is that we’ve got to rebuild our economy on a new and stronger foundation for growth. And part of that means getting back to doing what America has always been known for doing -– what our workers and our businesses have always done best –- and that’s making great products and selling them around the world.

The modernizing of the U.S. system of export controls the President announced Thursday will certainly help achieve that goal.

President Obama also highlighted his Administration’s recent, notable accomplishment, completion of the renegotiated free trade agreement with South Korea.

Alas, the President failed to mention two other pending FTAs, both less controversial than Korea: Colombia and Panama. The NAM’s trade mavens have long believed the votes have been there in Congress to enact the two free trade pacts, which would lower tariffs on U.S. exports to those countries. Big Labor’s dead enders will reflexively oppose enactment, but with Korea, the Administration has (finally) shown itself willing to tell the unions no.

If the President wants to elevate the goal of U.S. companies making great products and selling them around the world, then he should make a public pronouncement: “I call on the new Congress to quickly enact the free trade agreements with Colombia and Panama.”

Editors at National Review Online muster good arguments for enactment of the two agreements, “One Down, Two to Go“: (continue reading…)

The week got off to a good start this morning, exportwise, at the Department of Commerce.  Secretary Gary Locke joined John Engler, president of the National Association of Manufacturers, and Russ Fleming, FedEx’s vice president for international marketing, to announce the NAM’s participation in the New Market Exporter Initiative.

The New Market Exporter Initiative (NMEI) is one of Commerce’s many tools for helping small- and medium-sized enterprises take advantage of exporting opportunities these companies may not be aware of, providing the market research and technical advice necessary to expand their reach abroad. As Secretary Locke explained (news release):

From left: FedEx's Russell Fleming, Secretary Gary Locke, John Engler

We know that American businesses produce world-class goods and services. What we can improve is connecting those businesses to the 95 percent of the world’s consumers living outside our borders. This partnership with the National Association of Manufacturers will do just that – helping to link manufacturers, especially small- and medium-sized firms, with new markets abroad.

Engler commented:

More than 90 percent of exporters are small and medium size manufacturers – and they account for about 30 percent of exports, roughly $300 billion.  Today, however, the overwhelming majority of these companies export to just one or two countries.  If we could just double the number of countries they ship to, we could make significant gains in U.S. exports.

Fleming spoke about FedEx’s ability to bring both logistical expertise and marketing strategies to bear for manufacturers.

The NAM has established a webpage with information about participating in the New Market Exporter Initiative. It’s www.nam.org/nmei.

More…

• NAM release, “NAM Partners with Commerce Department to Boost Exports“
• Bloomberg, “FedEx, Trade Group Will Help US Identify Exporters“

John Engler, president of the National Association of Manufacturers, addressed the Economic Club of Memphis Thursday, providing a broad overview of competitiveness issues. The Commercial Appeal reported. “Engler applauds emphasis on exports“:

Engler told members of the Economic Club of Memphis on Thursday that his organization hasn’t seen enough push by the administration to remove trade barriers, rein in regulatory overkill and create incentives to expand the manufacturing base.

“We applaud the goal of doubling exports,” he said.

“FedEx has outbound planes as well as inbound planes, and we want to see all those outbound planes full.”

The NAM has state-by-state data on trade, foreign investment and export-related manufacturing at the NAM website, here. For Tennessee:

Manufactured Exports Drive Tennessee’s Economy
• Manufacturing accounts for 93 percent of Tennessee’s exports (2009).
• Since 2003, Tennessee manufacturing exports grew 62 percent—2.4 times faster than the 26 percent rise in Tennessee’s overall economy.

Global Engagement Supports Tennessee Jobs
• Manufactured exports support 20 percent of Tennessee’s manufacturing jobs (U.S. average is 22 percent).
• Since 2003, Tennessee employment related to manufacturing exports grew 26 percent, while other private sector employment in the state fell by 0.3 percent.

Tennessee Manufacturers Are Engaged in Exporting around the World
• Top five U.S. export markets: 57 percent of Tennessee exports (2009).
• NAFTA (40%), China (5%), Japan (5%), UK (4%) and Germany (3%).

As I reported from Seoul, Korea last week, there are multiple reasons why passing the U.S.-Korea Free Trade Agreement (KORUS) (as soon as possible) is exactly what the U.S. manufacturing economy needs to jump-start domestic growth, employment and expansion. I’m beginning to feel a bit like Paul Revere, trying to warn Congress and the Administration that as far as our exports are concerned in Korea, “The British are coming, the British are coming!”

Except it’s not just the British but an entire European Union’s worth of manufacturing that is coming, duty free, to Korea next year. We’re not the only ones sounding an alarm, of course. It was good to see Ambassador Han Duk-soo, Korea’s plenipotentiary to the United States, make the same point in San Francisco earlier this week. What Ambassador Han is essentially saying is: America, it is within your power to remove all the barriers in my country and increase your exports and grow your economy.

The decision not to use that power is a unilateral one that the United States has had on hold for more than three years with Korea, Colombia and Panama. We are patently acting against our own best interests, and the Europeans and others are flooding in to take advantage of our absence.

Not to belabor a point that has been raised by international economists and trade policy analysts across the political spectrum: Cutting tariffs and non-tariff barriers in foreign markets through preferential trade agreements does not reduce or outsource American factory jobs, it creates more of them. How? Our market is open, with tariffs averaging 2.5 percent. Most other markets (developing as well as some developed) in the world have tariff and non-tariff barriers that are far higher. When we sign a FTA with a country, its barriers come down, and as a result, our exports go up, both in volume and value, and more than our imports from that country. (continue reading…)