Trade Creates Jobs for Alabama

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1 Trade Creates Jobs for Alabama 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 Alabama. Export growth increases jobs by generating new business for Alabama s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping Alabama businesses compete and saving Alabama families real dollars at the cash register. Foreign investment in Alabama creates good jobs across a range of sectors. 1 IN 5 ALABAMA JOBS DEPENDS ON TRADE Alabama workers need trade to maintain and create jobs. Today, 529,700 jobs in Alabama depend on trade. In 2008, 20.1 percent of jobs in Alabama depended on trade, up from 9.3 percent in Alabama s trade-related employment grew nearly three times faster than total employment from 2004 to Alabama Jobs Tied to Trade, 2008 Wholesale & Retail Trade 88,200 Prof., Sci., & Tech. Services 22,700 Finance & Insurance 20,900 Transp. & Warehousing 19,800 Information 9,500 Small and Large Employers Partner to Export Small and medium-sized enterprises (SME) and workers in Alabama 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 passing through Alabama s ports, including Mobile and Huntsville, provides nearly 67,000 jobs and generates nearly $8 billion for the State economy, including more than $263 million in taxes. 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 ALABAMA S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS According to the U.S. Department of Commerce, Alabama ranked 24 th in the United States with total exports valued at $15.9 billion in Transportation equipment was Alabama s leading export category in 2008, accounting for 35.9 percent of total exports. One of the fastest growing export categories for Alabama is primary metal manufacturing, increasing at an average annual rate of 24.0 percent since In 2008, Alabama companies sold their products in nearly 200 foreign markets. The top export market is Germany ($3.2 billion). Other leading markets include Canada ($2.8 billion) and Mexico ($1.0 billion). China is one of Alabama s fastest growing trading partners. In 2008, Alabama companies exported $817.1 million worth of goods to China, an increase of 262 percent since In 2008, exports accounted for approximately 9.3 percent of Alabama s state gross domestic product (state GDP). Since 2002, exports have increased more than twice as fast as state GDP. Services exports are also important to Alabama, including port services, education of foreign students at state colleges and universities, including Auburn University and the University of Alabama, and spending by foreign visitors to tourist destinations in Alabama. Services companies employ 1.7 million workers in Alabama. In 2008, 386,800 Alabama services jobs depended on trade. Alabama is also an exporter of agricultural products. Leading markets are China, Mexico, Colombia, Korea, and Chile. Alabama is the fourth largest exporter of poultry products, accounting for nearly 9 percent of all U.S. poultry exports. The State is also a leading exporter of cottonseed, cotton and linters, tree nuts, and peanuts. These exports directly benefit the State s farmers in northeastern Alabama.

3 ALABAMA S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT Exports particularly benefit workers at Alabama s small- and mid-size companies. In 2007, 2, percent of Alabama s exporting companies were small- or mid-sized companies. Larger Alabama 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 Alabama companies also indirectly export when they supply goods and services to larger Alabama exporters. Every job at an Alabama worldwide company supports nearly two others at companies that are part of its supply chain. Leading Alabama Exporters Company Products Foreign Markets Alabama River Group (Perdue Hill) Bleached kraft woodpulp Italy, Netherlands, China American Cast Iron Pipe Co (Birmingham) Ductile pipe Peru, Iraq, Costa Rica, UAE Dixie Pellets (Selma) Wood pellets Belgium, Netherlands Drummond (Birmingham) Coal Colombia, Italy, Brazil, Turkey Jim Walter Resources (Brookwood) Coal Brazil, Netherlands, Turkey Lenzing Fibers (Axis) Lyocell fiber China, India, Pakistan, Indonesia Mercedes Benz (Vance) Automobiles and parts Germany, Belgium, UK Sabic Innovative Plastics (Burkville) Synthetic resins Japan, Thailand, Netherlands Weil Brothers Cotton (Montgomery) Raw cotton Pakistan, China, Panama, Turkey

4 MORE OF A GOOD THING FOR ALABAMA 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. Alabama has increased its exports to partner countries following the implementation of the U.S. bilateral and regional free trade agreements (FTAs). Exports to Chile experienced the strongest growth, increasing by an average annual rate of 52 percent since the FTA s implementation. Since the North American Free Trade Agreement went into effect in 1994, Alabama s exports to Canada have increased $2.0 billion (268 percent), while exports to Mexico have increased $843 million (449 percent). Since 2002, transportation equipment exports, Alabama s top export category, to FTA partners have increased more than twice as fast as transportation equipment exports to the world. The average annual growth of textile exports from Alabama to FTA partners outpaced average annual growth of textile exports to the world by nearly two percentage points. 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 Alabama

5 FOREIGN INVESTMENT IN ALABAMA CREATES JOBS Foreign-owned companies invest significant amounts of capital to open or expand facilities in Alabama every year. These companies employ 73,600 workers, more than 4 percent of all Alabama employees in the private sector. Foreign-owned manufacturing accounts for 42,100 jobs, representing nearly 14 percent of all manufacturing jobs in Alabama. 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 Alabama Company Industry Country Akzo Nobel Pharmaceuticals Netherlands BAE Systems Aerospace/Defense United Kingdom BP Petroleum & Chemicals United Kingdom Honda Transportation Equipment Japan HSBC Financial Services United Kingdom Lafarge North America Building Materials France Michelin Rubber Products France Siemens Electronics Germany ALABAMA 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. farmers and companies, including companies in Alabama. Services, especially transportation from Alabama 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 Alabama s growth, and account for 36.6 percent of state GDP, more than twice as much as manufacturing.

6 EXPORTS AND IMPORTS HELP ALABAMA 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 Alabama 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 Alabama family of four. SOURCES Alabama State Port Authority ( Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC ( 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