Trade Creates Jobs for Pennsylvania

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1 Trade Creates Jobs for Pennsylvania Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services. Trade creates jobs for Pennsylvanians. Export growth increases jobs by generating new business for Pennsylvania s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping Pennsylvania businesses compete and saving Pennsylvania families real dollars at the cash register. Foreign investment in Pennsylvania creates good jobs across a range of sectors. MORE THAN 1 IN 5 PENNSYLVANIA JOBS DEPENDS ON TRADE Pennsylvania workers need trade to maintain and create jobs. Today, 1.6 million jobs in Pennsylvania depend on trade. In 2008, 21.5 percent of jobs in Pennsylvania depended on trade, up from 10.1 percent in Pennsylvania s trade-related employment grew nearly four times faster than total employment from 2004 to Pennsylvania Jobs Tied to Trade, 2008 Wholesale & Retail Trade 246,700 Finance & Insurance 76,700 Prof., Sci., & Tech. Services 76,200 Transp. & Warehousing 68,100 Information 36,200 Manufacturing 34,000 Small and Large Employers Partner to Export Small and medium-sized enterprises (SME) and workers in Pennsylvania supply goods and services to large U.S. companies in and out of the State. Those bigger companies use the SME goods and services to make other products and services that they, in turn, export to customers around the world. Trade through Pennsylvania ports, including Erie, Philadelphia, and Pittsburg, has a significant impact on employment in the State. The Port of Pittsburgh alone supports 217,877 jobs in southwestern Pennsylvania. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Newly exporting firms increase employment almost four times faster than non-exporting firms.

2 PENNSYLVANIA S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS According to the U.S. Department of Commerce, Pennsylvania ranked 11 th in the United States with total exports valued at $34.6 billion in Chemicals was Pennsylvania s leading export category in 2008 accounting for 15.8 percent of total exports. One of the fastest growing export categories for Pennsylvania is primary metal manufacturing, increasing at an average annual rate of 21.9 percent since In 2008, Pennsylvania companies sold their products in over 200 foreign markets. The top export market is Canada ($10.5 billion). Other leading markets include Mexico ($2.4 billion) and China ($1.6 billion). Belgium is one of Pennsylvania s fastest growing trading partners. In 2008, Pennsylvania companies exported $1.6 billion worth of goods to Belgium, an increase of 351 percent since In 2008, exports accounted for approximately 6.3 percent of Pennsylvania s state gross domestic product (state GDP). Since 2002, exports have increased nearly four times faster than state GDP. Services exports are also important to Pennsylvania, including port services, education of foreign students at Pennsylvania colleges and universities, and spending by foreign visitors to tourist destinations in Pennsylvania, including Philadelphia, and the Pocono Mountains. Services companies employ 5.4 million workers in Pennsylvania. In 2008, 1.3 million Pennsylvania services jobs depended on trade. Pennsylvania is a major exporter of agricultural products, accounting for more than 12 percent of all U.S. agricultural exports in Leading markets are Canada, Saudi Arabia, Egypt, Morocco, and Turkey. The State is exporter of dairy products, wheat, animals and meat, feed grains, and fruit and fruit products. These exports directly benefit Pennsylvania s farmers in southeastern and central Pennsylvania.

3 PENNSYLVANIA S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT Exports particularly benefit workers at Pennsylvania s small- and mid-size companies. In 2007, 10, percent of Pennsylvania s exporting companies were small- or mid-sized companies. Larger Pennsylvania companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals. Small and medium-sized Pennsylvania companies also indirectly export when they supply goods and services to larger Pennsylvania exporters. Every job at a Pennsylvania worldwide company supports nearly two others at companies that are part of its supply chain. Leading Pennsylvania Exporters Company Products Foreign Markets Air Products & Chemicals (Allentown) Heat exchange machinery Japan, Korea, Germany, China Alcoa (Pittsburgh) Aluminum products China, Korea, Saudi Arabia, UK Alpha Coal Sales (Latrobe) Coal Belgium, Brazil, Turkey, Italy Bayer (Pittsburgh) Chemicals China, Mexico, Brazil, Belgium Coil Tainer (West Chester) Stainless steel products Italy, Belgium, Spain, China General Electric Company (Erie) Diesel locomotives & parts China, Egypt, Libya, Brazil LWB Refractors (York) Refractory materials Japan, Germany, Belgium PPG Industries (Pittsburgh) Vinyl chlorides, copper glass Brazil, Mexico, Korea, Ireland Rohn & Haas (Philadelphia) Chemicals China, Turkey, India, Belgium Xcoal Energy & Resources (Latrobe) Coal Korea, Japan, China, South Africa

4 MORE OF A GOOD THING FOR PENNSYLVANIA TRADE AGREEMENTS LEVEL THE PLAYING FIELD The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations trade barriers and opening up foreign markets to U.S. exports. Pennsylvania has increased its exports to partner countries following the implementation of each of the U.S. bilateral and regional free trade agreements (FTAs), with exports to Morocco experiencing the strongest growth. The United States enjoys a trade surplus in manufactured goods with its FTA partners.* U.S. Trade Balance, 2008 Services Agricultural Products Manufactured Goods: 15 FTA Partners Oil Products Manufactured Goods: Other Countries $ billions * State-specific data are not available for imports, so this chart cannot be prepared for Pennsylvania

5 FOREIGN INVESTMENT IN PENNSYLVANIA CREATES JOBS Foreign-owned companies invest significant amounts of capital to open or expand facilities in Pennsylvania every year. These companies employ 249,000 workers, nearly 5 percent of all Pennsylvania employees in the private sector. Pennsylvania ranks fourth in the United States for number of workers employed by foreign subsidiaries. Foreign-owned manufacturing accounts for 77,800 jobs, representing nearly 12 percent of all manufacturing jobs in Pennsylvania. U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies. Selected Multinational Corporations Employing Workers in Pennsylvania Company Industry Country Air Liquide Industrial Gases France BAE Systems Aerospace/Defense United Kingdom BASF Chemicals Germany Bayer Chemicals Germany GlaxoSmithKline Pharmaceuticals United Kingdom Mitsubishi Electric Electronics Japan Nestle USA, Inc. Food Products Switzerland Philips Electronics Netherlands SAP Business Software Germany Sony Electronics Japan PENNSYLVANIA COMPANIES AND WORKERS USE IMPORTS TO STAY COMPETITVE In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets. Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in Pennsylvania. Services, especially transportation from Pennsylvania s ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to Pennsylvania s growth, and account for 41.9 percent of state GDP, three times as much as manufacturing.

6 EXPORTS AND IMPORTS HELP PENNSYLVANIA FAMILIES ENJOY A HIGHER STANDARD OF LIVING Exports and imports support family incomes. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Imports help keep prices for Pennsylvania families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year. Imports Keep Inflation Low ( ) Price Change Toys -45% Clothing -10% Household Appliances -9% Footwear -3% JOBS Trade and investment liberalization policies are worth over $10,000 per year to an average Pennsylvania family of four. SOURCES Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC ( Port of Pittsburgh Commission ( U.S. Department of Labor ( U.S. Department of Commerce ( ( ( EXPORTS U.S. Department of Agriculture ( U.S. Department of Commerce ( ( ( ( Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott ( PIERS Trade Intelligence database ( FOREIGN INVESTMENT Organization for International Investment ( IMPORTS U.S. Department of Labor ( U.S. Department of Commerce ( STANDARD OF LIVING Council of Economic Advisers ( U.S. Department of Labor ( U.S. Department of Commerce ( TRADE LIBERALIZATION U.S. Department of Commerce ( Contact: David Thomas Director, Public Policy Business Roundtable dthomas@businessroundtable.org January 2010