1st Quarter 2015

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What we really need is a more robust global economy.


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Trade Report continued

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But one of the more frustrating features of tracking auto-related shipments is that they are actually spread over a sizable number of export codes, as products as varied as automotive glass, seats, air bags, engines, and so forth are placed under different codes. If we try to aggregate everything that goes into or on a car, Tennessee auto-related exports (excluding the cars and trucks themselves) appear to have grown about 7 percent for the quarter, to just above $1 billion. Looking at it that way, it wasn't such a bad quarter for much of the industry.

Regrettably, it's a lot harder to make a positive case for several other key state industries. The plastics industry lost about 10 percent of its foreign shipments (to $464 million). Germany, Korea, and China accounted for most of this decline. Manmade fibers and artificial filaments dropped even more, from $232 million to $169 million. These losses were concentrated in China. Aluminum plating may have fared worst of all, dropping by more than a third ($90 million) thanks to large declines in Mexico and in Saudi Arabia.

Aircraft-related exports gained about 10 percent, but that includes that large shipment to Iraq. Without it, they instead would have fallen nearly 10 percent. Medical exports, another sector that's spread over many codes, was pretty much a wash. Total sales were off about $14 million, a roughly 1 percent decline from the first quarter of 2014. Computer sales posted a very small gain (about $12 million) because a very large increase in laptop sales to Mexico was enough to counteract declines almost everywhere else.

Among smaller export sectors, two highlights were sales of lawn mowers and kraftliner. Exports of the latter increased from $47 to $64 million, with most of the gains coming in Mexico. Lawn mower shipments grew more than 77 percent ($71 million). The vast majority of these exports and their growth were to the Netherlands and Canada. Tennessee, by the way, exported more lawn mowing equipment than any other state during the first quarter. Agricultural exports were also generally strong, with soybeans (Costa Rica) and corn (Ecuador) joining cotton in posting gains. The only agricultural export that fared poorly was poultry, thanks to the growing global ban on imports from the U.S. as a result of the "avian flu" that is afflicting American chicken and turkey farms.

The marked slowdown in export growth in the third and fourth quarters of 2014 meant that 2015's poor numbers were not exactly a shock that came out of the blue. Once the huge growth in automotive exports that had powered state export growth in 2013 and early 2014 diminished, the underlying weakness across most other export sectors was exposed. There are simply too many headwinds. The dollar's climb was has been arrested for the past several months, and this may bring some relief. But what we really need is a more robust global economy, with growth returning to Europe and China shaking its recent doldrums. Until that happens, anemic growth is the most likely future for Tennessee exporters.