Exporting Trends, Facts & Profits Andrew Cassey, WSU James McCafferty, WWU
Introductions Who we are Why we do what we do
During this Session Understand how exporting will help you build a stronger business. Learn how to select and enter a market. Understand exporting trends, activities and free trade agreements. Know how to access the free and low-cost resources available to help you every step of the way. Have the opportunity to ask every question you can imagine about exporting.
Why Export, Market Selection & Entry Methods
Ways to Increase Profits 1. Squeeze dollars from your expenses 2. Sell more to your existing market 3. Sell to a new market niche Government Different demographic 4. Sell to an entirely new market but to your same customer profile What is easier?
Exporting
Exporting Trends, Facts & Profits Foreign trade is an essential piece of our economy. High political interest Theory of McDonald s and conflict Bottom line: creates jobs and stability Exporting is relatively new from a human history standpoint.
Exporting Trends, Facts & Profits 1492 1800 Columbus opens trade from the old world to the New World Country to Country trade 1800 2000 Industrial Revolution Country to Country trade Falling transportation costs Falling telecommunications costs 2000 Today Rise of software power Individual to individual trade Easy access to global shipping methods
Exporting Trends, Facts & Profits Why Go Global? Increase sales Changing domestic situations Economies of scale Domestic regulations Lower cost structures Access to lower labor, materials, or other Global branding Global cash flows
Exporting Trends, Facts & Profits When are you ready? Management commitment In-depth experience with product or service Adequate cash flow Capacity and capability to produce the amount of product or services
Exporting Trends, Facts & Profits What does not matter? International expertise Foreign language ability Although it helps Travel to foreign markets Although it can help All of these things your company may acquire and/or learn.
Foreign Market Selection
Exporting Trends, Facts & Profits There are several ways to select a foreign market 1. The complex matrix An analysis of different weighted factors that are important to the company Based on research 2. The existing market analysis A faster look at existing imports and exports around the globe of your product Looks for countries with lower exports and higher imports
Exporting Trends, Facts & Profits Let s make this easier We will do the second one for you in about a week. You can start this process today! We will also help you do the first but it takes longer (of course) and you will do at least some of the work.
Exporting Trends, Facts & Profits I have heard exporting is hard Taxes Fixed rates, Percent based, US, Foreign Not getting paid Excellent tools to help you with this Government hoops CE mark, FDA, regulated items, labeling Shipping Selling Mode of entry plays a huge role
Exporting Trends, Facts & Profits Mode of Entry Licensing Direct To buyer Indirect Via your foreign salesperson Via your overseas sales/marketing office Via a distributor Via your overseas manufacturer Increasing Risk
Increasing Sales Exporting This sounds hard again Multiple players to help you take care of this. WWU provides research data, support and referrals to other resources as appropriate Resources range from basic to full hand holding services US Commercial Service Private consultants
Exporting Trends, Facts & Profits Where do I start? Looking at the baseline trade data is a good start. Understand what markets make sense If appropriate Direct sales to Canada Direct sales globally via the web
Discussion / Questions
Export Trends in Washington State Andrew J Cassey Assistant Professor & Extension Economist School of Economic Sciences Washington State University October 25, 2012
Agenda & Notes Ø Export Trends in Washington from 2002 to 2011 Ø Industry Composition Ø Destination Composition Ø Industry Time Series Ø Number of Destinations Ø Manufacturing and Processed Agriculture Ø Free Trade Agreements: Colombia, Korea, and Panama Ø Washington Agricultural Trade Barriers Ø Export Trends in Washington State annual publication Ø Data obtained from port of exit Ø Not necessarily state of production
Top 5 WA Manufacturing Export Sectors INDUSTRY 2011 2005 10 Rank Exports Share Rank Exports Share (millions) (percent) (millions) (percent) Aerospace 1 11868 55 1 10488 60 Petroleum & Coal Products 2 1585 7 2 755 4 Nav, Meas, Electromed & Control Instruments 3 744 3 3 618 4 Pulp, Paper & Paperboard Mill Products 4 465 2 4 374 2 Fruit & Vegetable Preserves 5 447 2 8 312 2 TOTAL 15108 70 12547 72 Facts: 1. Aerospace dominates Washington export statistics 2. Exports increasing for each industry 3. Industrial composition of exports not changing much
Top 5 WA Process Ag Export Sectors INDUSTRY 2011 2005 10 Rank Exports Share Rank Exports Share (millions) (percent) (millions) (percent) Fruit & Vegetable Preserves 1 447 35 1 312 31 Dairy Products 2 212 17 3 139 14 Meat & Meat-Packaging Products 3 148 12 4 126 13 Foods Not Elsewhere Specified 4 146 12 5 119 12 Grain & Oilseed Milling Products 5 130 10 2 149 15 TOTAL 1082 86 844 84 Facts: 1. Same industries lead but relative shifts 2. WA doesn t produce Grain & Oilseed milling
Top 5 WA Manufacturing Export Destinations MARKET 2011 2005 10 Rank Exports Share Rank Exports Share (billions) (percent) (billions) (percent) Canada 1 3.24 15.10 1 2.90 16.55 China 2 2.45 11.42 2 1.95 11.12 Japan 3 1.68 7.84 3 1.93 11.03 United Arab Emirates 4 1.15 5.35 4 0.89 5.09 United Kingdom 5 0.87 4.05 9 0.54 3.07 TOTAL 9.39 43.75 8.21 46.88 Facts: 1. Exports increasing to most countries 2. Japan is the exception 3. Lots of country change in 6 10 range: Aus, HK, Turkey replace India, Taiwan, and Singapore
Top 5 WA Processed Ag Destinations MARKET 2011 2005 10 Rank Exports Share Rank Exports Share (millions) (percent) (millions) (percent) Japan 1 216.38 18.45 1 171.88 18.53 Canada 2 213.07 18.17 2 171.86 18.52 Philippines 3 133.73 11.40 3 92.33 9.95 Mexico 4 103.67 8.84 4 69.05 7.44 China 5 80.99 6.91 5 59.44 6.41 TOTAL 747.84 63.76 564.56 60.85 Facts: 1. Ag exports to all countries including Japan increasing 2. Destinations stable
WA Aerospace Products and Total Exports Facts: 1. Aerospace exports drive State total 2. Aerospace less important now than before 3. The story of WA exports is the story of Aerospace
Four WA MFG and Total Exports
The Number of Countries for WA MFG
WA Processed Agricultural Products
The Number of Countries for WA PAP
US Free Trade Agreements No. Country and Agreements Signed Force 1 Israel 1985 1985 2 Canada (NAFTA) 1992 1994 3 Mexico (NAFTA) 1992 1994 4 Jordan 2000 2001 5 Chile 2003 2004 6 Singapore 2003 2004 7 Australia 2004 2005 8 Bahrain 2004 2006 9 Morocco 2004 2006 10 Central America and Dominican Republic (CAFTA-DR ) 2004 2009 11 Oman 2006 2009 12 Peru 2006 2009 13 Colombia 2006 2012 14 Korea 2007 2012 15 Panama 2007 Pending
Exports for WA MFG with FTAs
Exports for WA MFG with FTAs (Cont'd)
Exports for WA PAP with FTAs
Exports for WA PAP with FTAs (Cont'd)
Conclusion Ø Washington exports dominated by aerospace industry Ø Washington exported more in 2011 than any year in the previous decade Ø Export gain was widespread across many leading industries Ø The composition of Washington s leading export industries was relatively unchanged Ø The composition of Washington s leading export destinations experienced changes in 6 10 range Ø Export growth mixed after free trade agreements entered into force Ø Processed agricultural exports show initial gains over the pre-agreement level
FTA Tariff Tool at EXPORT.GOV Ø http://export.gov/fta/ftatarifftool/
Washington Agricultural Trade Barriers Ø http://agtradebarriers.wsu.edu/
Exporter's Toolkit Ø http://extecon.wsu.edu/pages/toolkit
Acknowledgements Ø Community Economic Revitalization Board Ø Washington Small Business Development Center Ø Washington State Department of Commerce Ø Washington State Department of Agriculture Ø Washington State University Extension Ø WSU School of Economic Science Ø SES IMPACT Center
Available Resources Where you can find help
Resources Technical Assistance Financial Market Entry Data Books
Discussion