1st Quarter 2009

Graphs link to larger view.

Tennessee trade-weighted dollar index


tennessee monthly exports


tennessee's leading trade partners graph

Tennessee International Trade Report

by Steven G. Livingston

How bad was it? Over the past 10 years, nothing else compares.

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How bad was it? That seems the best question to ask in the middle of a worldwide recession. Trade has borne the brunt of the global economic slowdown, and Tennessee exporters were not immune. State exports fell more than $600 million dollars from the first quarter of last year. At $4.59 billion, this amounts to an 18% drop in foreign sales. (For what it's worth, this was not quite as bad as America's overall 22% decline.) Over the past 10 years, nothing else compares. The third quarter of 2001 (the quarter of 9/11), the second-worst quarter of the past decade, saw a drop in trade only half as large as what we are now experiencing.

As might be expected then, almost all products to almost all countries saw significant declines in their foreign sales. Only one of the state's large markets, Japan, actually grew over the quarter. This was because of substantial increases in medical sales: medical instruments, pharmaceuticals, and orthopedic goods. Medical instrument sales also account for the spectacular, if fluky, increases in exports to Luxembourg, the state's single best-performing market for the quarter. Tennessee increased its exports to exactly 11 out of the state's top 50 markets. Two other strong markets, Iraq and Afghanistan, owed their success to the American war efforts in those two countries.

Southeast Asia was arguably the worst-hit region. There exports dropped by a third. Computer equipment and electronics sales suffered terribly. As a result, only Indonesia, which primarily purchases apparel-related products, was spared. It managed just an 8% decline in exports. The Middle East was nearly as bad. Very large declines in automotive sales, along with sales of aluminum plating, led to a 15% fall in exports (from $305 to $219 million). The Chinese economic area also posted double-digit percentage losses. China itself saw a drop of "only" $17 million in trade, thanks to a continuing increase in cotton and filament tow purchases from Tennessee. But the region's overall losses were also on the order of 15%, concentrated in chemicals and electronics. The story in Latin America was similar: a 13% decline, with the chemical and electronics industries again bearing the brunt.

Unfortunately, things were no better close to home. Tennessee exports to Canada were down a full 21%. Heavy machinery, auto parts, and electronics (including video games) all took large losses. In Mexico, large losses across the chemical and automotive sectors led to an 11% drop in exports. These losses were mitigated a bit by increases in cotton and soybean sales. Soybean exports were in fact one of the few bright spots for the quarter. Tennessee's global sales of soybeans increased from $4.2 million in the first quarter of 2008 to $36.5 million this past quarter.

Europe was the comparative bright spot (if we do not count the small African market, which remained virtually unchanged for the quarter, at $65 million). Losses were held to 8%, although this in fact amounts to a loss of about $250 million in sales. The relatively good performance was due mostly to strong medical-sector and orthopedic-goods sales to the region.

In fact, medical equipment is the one genuinely bright story here. Medical instrument sales actually rose by 12% for the quarter (to $362 million). This vaulted the industry into the top spot among the state's export sectors. Orthopedic exports were up by 25% and artificial joints another 62%. Medical needle and catheter exports gained a dramatic 364%. Medicaments grew by 57%, and surgical catgut a robust 200%: a remarkable achievement under current conditions!

The state's traditional big-export industries, on the other hand, fared worse. The auto, electronics and computer, and chemical industries all suffered 20+% declines, more or less spread across the globe. Industries intimately connected to economic growth, such as metal scrap and waste, fell dramatically. Even Tennessee whiskey, normally impervious to slowdowns, saw its exports reduced by 11%.

April exports were down another 16%, indicating that we are still far from seeing the bottom of this crash in exports. It is unreasonable to expect to see better numbers while the recession continues. Given the cyclical nature of several of the state's largest industries (transportation and electronics), we can only hope that the turnaround will be quick and decisive when it finally arrives. Until then, expect to see continued difficulties for Tennessee's exporters.

Tennessee's Largest Export Sectors


Change over

Transportation equipment
Computer & electronic products
Misc. manufactured goods
Nonelectrical machinery
Primary metal manufacturing

Greatest Export Growth and Decline

Value of Exports
Decline %
Semiconductor media storage devices
Special purpose vehicles
Medical needles & catheters
Frozen chicken
Integrated circuits
Plastic coated paperboard > 150g/m2
Mufflers & exhaust pipes
Aluminum waste & scrap

*among Tennessee's top 100 exported goods

Fastest-Changing Export Destinations*

Value of

*among countries averaging > $2m sales/quarter