Monthly Article

February 2014 Monthly Article – Export Review

By Jerry Pacheco

According to the U.S. Department of Commerce, U.S. exports to the world topped $2.3 trillion – this is the fourth consecutive year that this figure has set a new record. Exports have increased by more than $700 billion since 2009. The increase in exports helped decrease the nation’s trade deficit, which now stands at $471.5 billion, by $63.1 billion. This is the lowest trade deficit the U.S. has had in five years.

According to U.S. Commerce Secretary Penny Pritzker, “U.S. goods export sectors reached all-time highs across the board in 2013, including key industries such as automotive, industrial supplies, consumer goods, capital goods, and petroleum. Imports of goods decreased for the first time since 2009.” Notable areas of increase include consumer goods, automotive, industrial supplies, capital goods and petroleum. Even though it was by a small percentage, for the first time in five years, imports into the U.S. actually decreased – down by 0.1 percent.

Per Commerce statistics, our North American neighbors were the largest purchasers of U.S. exports, with Canada the number one export market ($300.3 billion – up 2.7 percent), followed by Mexico ($226.2 billion – up 4.7 percent). U.S. exports to Mexico hit a new record level in 2013. Number three was China ($122 billion – up 10.4 percent), followed by Japan ($65.1 billion – down 6.9 percent) and Germany ($47.4 billion – down 2.8 percent).

Closer to home, New Mexico’s 2013 export figures were a mixed bag. The state’s total exports to the world actually declined from $2.96 billion in 2009 to approximately $2.71 billion,
or approximately eight percent. On the other hand, according to Robert Queen, the Director of the U.S. Commercial Service’s El Paso, Texas and New Mexico U.S. Export Assistance Center, “While New Mexico’s total exports declined, exports from the Land of Enchantment to Mexico increased by 33 percent or by $200 million, up from $603 million in 2012 to $802 million in 2013.  This 33 percent increase in exports to Mexico is led by petroleum products, transportation, equipment, and a wide variety of metal and plastic components going into Mexico’s maquiladora industry.” The vast majority of exports to Mexico is being generated south of Las Cruces, New Mexico, mostly in the Santa Teresa region, which has seen explosive growth in the last seven years. Mexico is now New Mexico’s number one export market.

Exports to Israel, which previously was the largest purchaser of New Mexico’s products, fell from $1.2 billion in 2012 to $788 million in 2013 – a 35 percent decrease. Nearly all of the state’s exports to Israel are classified as computer and electronic products, and can be accounted for by Intel’s Rio Rancho, New Mexico plant which ships products to sister plants in Israel. According to Queen, “A quick glance at the state’s totals shows that New Mexico’s exports are more diversified than in previous years. More companies are producing products and exporting from New Mexico, which helps offset a decrease in sales by one or two large companies.”

Texas exports to the world increased by 5.7 percent, or a total of $15 billion, to $279 billion. In the Lone Star State, “crude is king,” as petroleum exports to the world continue to be strong, followed by exports in major industrial sectors such as computer and electronic parts, chemicals, machinery, and transportation equipment. Mexico also is the largest export market for Texas products, with purchases topping $100 billion in 2013. Other major markets are Canada, China, Brazil and the Netherlands.

Texas also is the king of all U.S. states in terms of exports. To put the volume of Texas’s exports into perspective, California, which ranks second at $168 billion, exports $111 billion less than Texas. Rounding out the top five state exporters are New York ($83 billion), Washington ($81 billion) and Illinois ($65 billion).

From a geo-political standpoint, trade foments political relations, and thus more cooperation among trading partners. In the modern world, it is rare for countries that enjoy a healthy trade relationship to go to war with each other. Increasing the nation’s exports also is important because they bring out-of-country money into the domestic market. This creates jobs and new investment, while helping to decrease the nation’s trade deficit. Export-related jobs generally pay more than non-export related jobs, and they provide a brighter future for the American workforce.