THE AVENUE APRIL 14, 2010
In this year’s State of the Union, President Obama made one of his goals the doubling of US exports in five years. The president launched the National Export Initiative in March 2010 at the Export-Import Bank’s Annual Conference. This export promotion policy is focused on increased trade financing, advocacy, and assistance for American businesses, especially small- and medium-sized businesses (SMBs) interested in expanding their markets abroad.
The latest profile of the U.S. exporting companies released this week by the Department of Commerce shows the landscape of U.S. exporters.
U.S. businesses increased their export activity in 2008. The number of U.S. exporters increased in 2008 by 7.5 percent, translating into about 20,000 U.S. companies that decided to start exporting in 2008. Sixty-three percent of all U.S. exporting companies exported both in 2007 and 2008, a slight increase over the preceding period. This shows that more U.S. companies are exporting as a consistent source of sales.
While forming the bulk of U.S. exporting companies, SMBs ship only a fraction of the value of U.S. exports. Similar with previous years, SMBs were 97 percent of the number exporting companies in 2008, but accounted for only about a third of the value U.S. exports. Large-sized businesses are only 3 percent of all U.S. exporters, but generate almost 70 percent of U.S. export value.
The size distribution of U.S. exporting companies has remained largely unchanged from 2007 to 2008. The only difference is the service sector, which has been consolidating. While the number of large service exporters grew less than one percent, the value of their exports grew by about a third. In comparison, the exporting SMBs increased their numbers by 5 percent, but in terms of value they increased their exports only by 15 percent.
Before any new federal policy on exports was in place, U.S. companies increased their export activities in 2008. However, the size distribution of U.S. exporters puts into question the effectiveness of the National Export Initiative. Most of the U.S. exports are generated by large companies, so any surge in exports over the next five years would most likely not come from targeted SMBs, but from these large exporters. It is still unclear how the National Export Initiative addresses their needs and the needs of their subsidiaries across the United States.