From California sheet music to North Carolina construction equipment, U.S. exports are roaring back as the global economy recovers from recession.
Exports shot up 18.1% the last three months of 2009, helping the U.S. economy expand at a 5.7% annual rate. U.S. factories were behind the surge: Exports of goods soared 28.1%.
Companies across the country are expanding outside the U.S.: Sheet Music Plus in Emeryville, Calif., says its international sales rose 22% last year. Fuel Tech of Warrenville, Ill., which makes emissions-control systems, last week announced $1.75 million in contracts in China, Italy and South Korea. Pemco World Air Services of Dothan, Ala., last week announced a deal to convert six Boeing 737-300 passenger aircraft into cargo planes for China’s Hainan Airlines.
Exports won’t keep up the blistering quarterly pace — but are likely to remain a bigger part of the nation’s economic growth. “We will become more of a producing nation and not so much of a consuming nation,” says Nigel Gault, chief U.S. economist for IHS Global Insight.
Part of the fourth-quarter boom was a rebound from the depths of a global recession: Exports plunged 19.5% in the fourth quarter of 2008, 29.9% in the first quarter of 2009 and 9.9% for all of last year, the worst annual performance in 51 years.
The weak dollar also gives U.S. exporters a price advantage over foreign competitors. Dyke Messinger, president of construction equipment manufacturer Power Curbers in Salisbury, N.C., says the weak dollar means his company doesn’t have to offer discounts to compete with a German rival.
U.S. companies are looking outside the U.S. to markets that are recovering from the recession faster than the U.S. Before the recession, Power Curbers did about 20% of its business outside the U.S. That’s up to 80% after demand for its machines — which make curbs, sidewalks and medians — collapsed at home. Power Curbers is supplying a tunnel project in Turkey, highways in Ecuador, curbs in Mongolia. “We literally span the globe from a small town in North Carolina,” Messinger says.
Similarly, Vermeer, a Pella, Iowa, maker of industrial equipment, says exports now account for nearly a third of its business, double their share in the past.
The tilt toward international sales is likely to last. As U.S. consumers recover from the debt binge of the past couple of decades, developing countries will encourage their own people to save less and spend more, creating more opportunities for U.S. companies. “Developing countries are now being driven more by domestic demand because they don’t have much choice,” says economist Uri Dadush of the Carnegie Endowment for International Peace. “That is going to be good for U.S. exports.”
Messinger expects that exports will account for about 50% of Power Curbers’ business even after the U.S. economy regains full strength: “I’m bullish on American manufacturing. Everybody is finding a way to survive and fine-tune their business so they’re more competitive.”