2nd Quarter 2011

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Tennessee International Trade Report

Only three of the state's top 25 exported commodities lost ground in the quarter.

by Steven G. Livingston

Tennessee exporters enjoyed a very strong second quarter. The state's foreign shipments grew to $7.341 billion, up 15% from a year ago. This slightly lagged the national performance, however. Total American exports gained just under 17.8% over the same period. The export gains were broad, whether in terms of product or geography. Only three of the state's top 25 exported commodities lost ground in the second quarter, and only the Middle East, among the state's major trading regions, experienced a decline for the quarter.

Exports of medical equipment, auto parts, and cotton all increased by more than $100 million. Other strong sectors included chemicals (especially titanium dioxide products), computers (though laptop sales were flat), synthetic fibers, aircraft parts, and aluminum plating. The state's performance would have been even better but for a very large drop in car and SUV exports. Sales of these products fell over $130 million, to $167.4 million. Eighty million dollars of that loss was sustained in the Middle East, accounting for the poor performance of that market for the quarter. The other two major commodities that fared poorly for the quarter were paper and paperboard (off $2.5 million) and the export of printed materials (off $21 million).

Tennessee's best region, in percentage terms, was Latin America. Foreign shipments were up by just about a full one-third. Computers, chemicals, and medical equipment led the way. Though exports to Brazil were up 18%, the state's gains were really made in the region's "second-tier" markets. Exports to Chile and Colombia, the second- and third-largest markets within Latin America, grew by nearly 50%, while foreign shipments to Peru and Guatemala, fifth and sixth largest, were up by more than 50%. Sandwiched in between was Argentina, to which shipments from Tennessee increased by 30%, roughly the regional average.

Exports to Asia also grew robustly. China purchased nearly $100 million more in Tennessee goods from a year ago (to $523 million). Cotton, synthetic fibers, medical goods, and computer equipment were at the heart of this increase. Though sales to Hong Kong were flat, they were up 41% to Taiwan. Japan was surprisingly strong, given the difficulties that country has faced this year. There Tennessee exports grew from $320 to $381 million, with medical equipment once again the star performer. Shipments to Southeast Asia were also solid, thanks to aircraft parts, cotton, and synthetic fiber sales. Singapore remains the largest market in the region, but Thailand was without doubt the best market, as its purchases of Tennessee goods more than doubled for the quarter.

Tennessee exporters made similar gains in Mexico and Canada. Each of these countries saw its imports of Tennessee products rise by more than 13%. In Mexico, the story was automotive engines, cotton, and aluminum plating, while for Canada, the gains were made in auto parts, computers, and agricultural machinery.

Though the Middle East was the only area to see a decline in shipments from Tennessee, Europe proved a tough market for the quarter. Though sales to the U.K. were up $30 million, thanks mostly to aircraft-related purchases, the eurozone market grew by only 7% (to $1.011 billion). Economic difficulties in Spain (off $18 million) and in Greece, Italy, and Portugal (each off $1 million) clearly are creating a headwind for state exporters. It is even more surprising that exports to Germany fell 13%, a loss of $27 million. Products performing strongly in the rest of the world, such as auto parts and chemicals, lost sales in Germany. A huge shift in medical equipment exports from Luxembourg to Belgium gave the illusion that the latter country was the best market among the eurozone nations for the quarter, but in fact the Netherlands' $35 million growth (to $222 million) was the strongest "real" performance in the region.

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