3rd Quarter 2015

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State exporters now must face what many believe will be a persistent global economic slowdown. 


Before and After continued

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As for the exports themselves, the biggest change since the crash is the large increase in automotive exports. At the commodity (NAICs Code) level, the share of automotive goods in Tennessee’s exports has grown substantially. About one of every six dollars in state exports is now in the automotive sector, a third higher than it was in 2008. Most of this increase is in the shipment of cars themselves, in large part the result of the development of global platforms by Nissan and Volkswagen. Of the state’s larger export sectors, only cotton suffered a significant decline in export share. In fact, the major trend has been toward a concentration of exports. The top eight export industries now account for nearly 57 percent of Tennessee’s foreign shipments.

Taking a somewhat finer-grained look at exports using commodity (HS) data, we get a better sense of where the auto growth is coming from: it is not only cars but engines. Gas internal combustion engines and engine parts have quadrupled their share of exports since 2008. Medical exports, which have also increased their share of state exports, were led by not only medical instruments but also orthopedic goods and pharmaceuticals. We can also see which sectors saw their share of foreign shipments reduced. In several instances, it was due to technological changes as much as anything. Exports of DVDs, video games, and printers each not only lost half or more of their share of Tennessee’s exports but also exported substantially less in 2014 than they had in 2008. Aluminum plating and boat exports were other sectors that declined sharply.

On one hand, we can’t say that the five years following the world’s financial crisis led to truly dramatic changes in the state’s export profile. But we see a continuing evolution in the state away from Europe and toward the NAFTA market and East Asia. We also see a rotation in exported goods toward automotive and medical products, although a variety of chemicals must be included as well. Perhaps the biggest trend is toward greater concentration both in markets and in exported goods. All that said, one has to wonder if the growing economic challenges in China and the emerging markets will undermine these trends.

For Tennessee, it’s fair to say the crash turned out to be more of an interruption of longer-term trends than a remaking of the state’s export picture. Yet, having survived the crash, state exporters now have to face what many believe will be a persistent global economic slowdown. How might that remake Tennessee’s export profile?

[ See interactive map and charts]