FMA Economist says 4 factors will continue export surge.
Press Release Summary:
According to Dr. Chris Kuehl, economic analyst for FMA, weaker U.S. dollar has meant that U.S. goods are being sold overseas at 30% discount, helping manufacturers get past high tariff barriers, consumer resistance, and competition to build volume in foreign sales. When dollar starts to recover, Kuehl says export surge will continue due to energy costs, increased sophistication of U.S. manufacturers overseas, changes among foreign manufacturers, and more money in overseas market.
Original Press Release:
Four Factors Will Continue Export Sector Surge Says Economist for Manufacturing Group
ROCKFORD, IL, August 15 - Will the current U.S. export boom continue even when the weak U.S. dollar recovers? An economist for the manufacturing industry predicts this surge will endure.
"There have been new records set in exporting every month for over two years, and in July the United States even managed to make some inroads on its trade deficit," says Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, Intl. (FMA). "The reason for all this activity is obvious - a weaker dollar has meant that virtually every U.S. good is being sold overseas at a 30 percent discount. This helps manufacturers get past high tariff barriers, consumer resistance, and competition to build volume in foreign sales.
"Many ask what happens when the dollar starts to recover," Kuehl adds. "Granted, this may take a while, but recently the Euro sank a little as analysts in Europe noted that its central bank is getting a little nervous about growth. So, will there be an export boom when the dollar regains some of its luster?"
Kuehl resoundingly answers yes, and in the current FMA economic update newsletter Fabrinomics(TM), he details these four key reasons to think so:
1. Energy Costs. "The current system of export trade is predicated on costs of transportation as they were 10 years ago," Kuehl says. "Those days are gone, which will place more emphasis on being closer to one's supply chain. That means U.S. manufacturers will see more business across the borders of the United States - both coming and going. The nations of Latin America will become more complete customers for the United States."
2. Increased Sophistication of U.S. Manufacturers Overseas. Companies that started with some tradeshow and Internet orders have often taken this to the next level, according to Kuehl. There are sales organizations in place, contacts have been made, and overseas consumers now have experience and familiarity with U.S. products. The weak dollar allowed a foothold, and companies have leveraged it from there.
3. Changes among Foreign Manufacturers. "Changes have occurred in countries that have evolved as manufacturing bases," Kuehl says. "They are experiencing the challenges of development - higher inflation, shortage of qualified workers, shortage of management skill, and societal demands that could affect their competitiveness. The advantages that these countries once had in terms of production costs have been eroding, bringing these nations much closer to United States and European costs than before."
4. More Money in Overseas Markets. "With more money in overseas markets than there used to be, global consumers are interested in and have the wherewithal to buy U.S.-made products," Kuehl explains. "The old markets used to be confined mostly to Europe, but now there is demand from Latin America, South Asia, East Asia, and even from parts of Africa.
"The ability of consumers in most of the world to afford U.S.-made products has expanded dramatically and created a whole new set of opportunities in countries that only played marginal roles in the past," he adds.
Based in Rockford, Ill., the Fabricators & Manufacturers Association, Intl. (FMA), is a professional organization with more than 2,300 members working together to improve the metal forming and fabricating industry. Founded in 1970, FMA brings metal fabricators and fabricating equipment manufacturers together through technology councils, educational programs, networking events, and the FABTECH International & AWS Welding Show. FMA also has a technology affiliate, the Tube & Pipe Association, International (TPA), which focuses on the unique needs of companies engaged in tube and pipe producing and fabricating.
