- March 6, 2015
- 12:55 pm
- John Caltagirone
- no comments
Export Nation
Taking into account last week’s post in its international build, we will step back stateside and discuss the international relevance of the United States.
According to a recent report released by the Department of Commerce, it was reported that 26 states in the U.S. have reached records in their number of exports in the last year. Texas leading the way with exports worth $289 billion and California following with $174 billion, it seems that things are looking up for U.S. exports. In total, goods and services exported accumulate to around $2.35 trillion for the 2014 year.1
In the 2011 report “Made in America, Again,” The Boston Consulting Group approaches the growing idea of the United States as a manufacturing nation, but not necessarily in its traditional sense.
There was evidently a decline and perhaps a “death” in the manufacturing industry in America during the 1970s and 1980s after holding a majority of the market share in manufactured goods in the 1950s. Although it seems that this decline has continued well into the 21st century, the U.S. manufacturing industry made a comeback in the late 1990s with more higher-valued industries like aerospace, software and pharmaceuticals.
Now the U.S. is facing a similar manufacturing issue against its greatest competitor China with cheap labor and growing pool of innovators and engineers, fixed currency, and support from the local governments. And once again, the U.S. is turning the tides and creating value amongst competitors. According to the report by BCG, production costs in the U.S. will be only around 10 to 15 more in China than in some U.S. factories and in some sense, shipping costs and inventory costs would be cheaper because those goods are destined for the North American market.
Moreover there is mention of rising wages in China as well as growing problematic management of employee welfare in China, as we saw with the Foxconn International incident. While Chinese productivity will improve in comparison to that of U.S. productivity, it does not diminish the rising cost of other factors in China like electricity and the cost of industrial land which continues to rise.2
Exports are important to an economy because it not only creates competitiveness for the nation on the whole, it creates jobs and builds economic security. Trade agreements are crucial in creating an equilibrium of trade among world players. With about 11.3 million American jobs supported by exports, examining current and future trade agreements. This growth in exports by the United States and in BCG’s report, things look optimistic for the U.S.
-Riti Patel, Assistant, Supply & Value Chain Center
Sources:
1.http://www.supplychain247.com/article/twenty_six_states_achieve_record_export_levels
2. “Made in America, Again,” The Boston Consulting Group, 2011