GROWTH THROUGH EXPORTS Kristian Richardson U.S. Commercial Service - Arizona March 2015
Why American Firms Should Export Less than 1% of America s 30 million companies export, a percentage that is significantly lower than all other developed countries - tremendous untapped potential, especially SMEs 95% of potential market is beyond our borders Export growth from $224 billion (1980) to $2.35 trillion (2014) Exports have gown from 5% of GDP to more than 15% of GDP since 1950s Need to diversify company s market portfolio Promotes a company s growth and competitiveness U.S. jobs supported by exports reached an estimated 11.3 million in 2013, up 1.6 million since 2009 58% of US exporters export to only one market. Firms exporting to 2 4 markets generate an average of $971K (6 jobs) compared to $308K (2 jobs) in annual exports Closer ties to international partners - More stable economies and political landscape
President Obama s National Export Initiative Goal: Doubling US exports in 5 years to support 2 million jobs 1 st time Government-wide export promotion strategy Key areas Enhanced trade advocacy Improved access to export financing Removing barriers to trade Enforcement of trade rules
Arizona & the Global Economy (Source: U.S. Commerce Dept. International Trade Administration) 2013 merchandise exports = $19.4 billion (up 5.4%) Over 5,800 Arizona companies exported in 2010 Export-supported jobs linked to manufacturing = 4.3% of Arizona s total private sector employment 25% of Arizona s manufacturing workers depend on exports for their jobs More than 24 million visitors come to Arizona every year They spend approximately $2.7 million a day in Pima County 73,000+ Arizonans were employed by foreign-owned companies in 2010
Arizona & the Global Economy (Source: U.S. Commerce Dept. International Trade Administration) Top 5 Export Markets 2014 1. Mexico ($8.6 billion + 22.2%) 2. Canada ($2.2 billion -2.6%) 3. United Kingdom ($1.02 billion +26%) 4. China ($1.01 billion -5.7%) 5. Germany ($753 million +3.6%) Top 5 Export Sectors 2014 Total $21.1B 1. Computer & electronics ($5.0 billion ) 2. Transportation equip ($3.7 billion ) 3. Minerals & ores ($2.5 billion +42%) 4. Electrical Equipment & Components ($1.5 billion) 5. Fabricated machinery (non-electrical) ($1.5 billion )
Arizona & the Global Economy Metropolitan Service Area Stats (MSAs) (Source: U.S. Commerce Dept. International Trade Administration)
U.S. Commercial Service The U.S. Commercial Service is part of the U.S. Department of Commerce, an agency of the United States government. Our three priorities: To increase the number of U.S. companies that export To help smaller companies expand into new markets To help exporters overcome hurdles in foreign markets
Help for Exporters: U.S. Commercial Service Trade specialists in over 100 U.S. cities and 83 countries worldwide Arizona Results Locate international buyers, distributors & agents Provide expert help at every stage of the export process Help U.S. companies enter new markets faster and more profitably Over 225 export transactions to 50+ countries Worth $45 million 600+ companies counseled Phoenix & Tucson Currently Director & 2 International Trade Specialists Growing to 5 by 2016
CS Service Guidelines Applies to fee-based services Commercial Service fee-based services may be provided to an entity that is: 1) a U.S. exporter, and, 2) that self-certifies that its products or services contain a majority U.S. content. * For local assistance, company must have an overall positive effect on the US economy, including job creation/sustainment
Help for Exporters COUNSELING & STRATEGY EDUCATION EXPORTECH WEBINARS TOPICAL / GEOGRAPHIC SEMINARS FEE-BASED SERVICES GOLD KEY SERVICE ($700 SME / $2300) INTERNATIONAL PARTNER SEARCH ($550 SME / $1400) INTERNATIONAL COMPANY PROFILE ($600 SME / $900) BORDER GATEWAY SERVICE in Sonora (Cost varies) TRADE MISSIONS Mexico City, November 2015 / Singapore & Vietnam 2016 PARTNERS ADEC, ACA, GPEC, TREO, MAG, CITIES, UNIV., ECONA, SBA, etc..
MEXICO
Hecho en Mexico For the 1 st time in a decade, Latin America s 2 nd largest economy has become a credible competitor to China. The Financial Times By 2050, Mexico will have grown into the world s fifth largest economy, overtaking Germany, Brazil and Russia. Goldman Sachs
Mexico in 2014 President Enrique Pena Nieto Growing faster than Brazil Net emigration = zero Mexico s fertility rate = U.S. rate Universal health care Murder rate is falling One of the world s most open economies $1.63/hr (China) vs. $2.10 /hr (Mexico) Quicksourcing Attracting Foreign Direct Investment
Mexican Demographics (Source: CIA Factbook) 110 million people 29.6% under age 14 6.1% over age 65 Median age = 26 GDP per capita (PPP) = $14,400 GDP Composition by sector Agriculture 3.7% Industry 34.1% Services 62.2%
Mexico - U.S. Trade Mexico is the U.S. 3 rd largest trading partner (exports + imports) Mexico is the U.S. 2 nd largest export market Mexico accounts for roughly 1/8 of all U.S. exports 26 American states depend on Mexico as their 1 st or 2 nd export destination Over $1 billion per day in two-way trade. In the time it takes me to finish this presentation, over $1.5m will have been traded between Mexico & Arizona alone!
Best Prospects for U.S. Exporters Agribusiness Sector Airport and Ground Support Equipment Automotive Parts and Supplies Housing and Construction IT Health Packaging Equipment Education and Training Services Plastics/Resins Energy Sector Security and Safety Equipment Environmental Sector Franchising Sector Technology Transportation and Infrastructure Equipment
Regional Opportunities: Mexico City Mexico City, with a population of 20 million, is one of the largest cities in the hemisphere and the world. It is both the Political Capital and Financial Center of Mexico. It is also a manufacturing and distribution powerhouse. Centrally located near other major industrial areas including Toluca, Puebla, and Queretaro.
Regional Opportunities: Guadalajara Mexico s Silicon Valley Size: Second largest market in Mexico Business Culture: Bilingual, open to U.S. goods and services Multinational Investors: GE, IBM, Intel, HP, Flextronics, Jabil, Oracle Logistics: Major distribution center Major Industries: Electronics, industrial process controls, packaging, agribusiness and food processing equipment Largest Exposition Center in Latin America: Regional shows
Regional Opportunities: Monterrey Mexico s Industrial Heartland Strategic location in NAFTA corridor Pro business environment with stable workforce 11% of Mexico s total manufacturing output Over 2000 foreign companies Key industries: automotive, household appliances, electronic equipment, packaging, software, specialized medical services, and biotechnology.
Regional Opportunities: Tijuana Main manufacturing industries in Tijuana: Medical, Electronics and Automotive. Sub sectors: Plastics (injection molding, blow molding, thermal molding, extrusion), Metal-Mechanic and Packaging. Manufacturing companies in the city: more than 500 in Tijuana (Baja California Norte has approximately 900+) Tijuana Manufacturing workforce: 160,000 employees. Other areas of opportunity for U.S. Exporters: food and beverage, IT, telecomm, construction, medical tourism, energy. Business culture: ease of doing business and affinity to working with American suppliers- bicultural and bilingual businesspeople.
Regional Opportunities: Sonora Ford Hermosillo plant 50 Tier 1 & 2 Ford automotive suppliers 35 Aerospace Companies ½ of Mexico s industry is concentrated in the NW Mining = 14,000 jobs Maquiladoras 200 statewide 110 in Nogales / employing 33,000 people
Border Gateway Service Expose Arizona businesses to the scope of export opportunities in Sonora s major industrial centers Nogales, Hermosillo, Guaymas/Empalme, and Ciudad Obregon and its most vibrant industries. B2B Matchmaking 100+ companies have joined programs since Nov 2011
Kristian.Richardson@trade.gov www.export.gov/arizona www.exportaz.org