'More work to do' on U.S. exports effort

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Posted: Friday, January 10, 2014 12:00 am | Updated: 11:26 am, Tue Mar 25, 2014.

NOTTINGHAM, Pa. — Employees still pack pretzels by hand at the Herr Foods Inc. plant in Nottingham, Pa., to ensure that the fragile snacks don't break. Some of the pretzels ship east to nearby Philadelphia, but others go much farther, perhaps to the Philippines, the snack maker's fastest-growing market.

Herr Foods, better known as Herr's, exports to 47 countries, and every potato chip, pretzel and cheese curl that goes overseas is made at the Pennsylvania plant, which employs 400 people.

The U.S. is in the midst of a push to increase exports, one that began in January of 2010 when President Barack Obama announced the National Export Initiative in his State of the Union address.

“The more products we make and sell to other countries, the more jobs we support right here in America,” Obama said.

The executive order called for doubling exports from 2009 levels within five years as a way to boost the nation's sluggish post-recession economic recovery. Obama outlined a strategy of assisting small businesses with exports, ramping up export promotion and opening new markets to U.S. goods and services.

Exports have increased each year since the initiative launched, and so have jobs. Exports of goods and services supported 9.7 million jobs in the U.S. in 2011, an increase of 1.2 million since 2009, according to the Obama administration.

But current trends indicate that the country isn't increasing exports fast enough to meet the administration's target or to narrow a trade deficit that's widened fivefold over the past two decades.

“How realistic the goal is even from its outset was probably a little too ambitious,” Wells Fargo economist Tim Quinlan said.

Reaching the initiative's export goal requires annual growth of about 15 percent, economists projected. The current growth rate falls short, according to Ryan Donahue, a Brookings Institution researcher.

If growth continues at the 11.9 percent average rate seen during the initiative's first three years, total annual exports at the end of 2014 will be $2.77 trillion, about $390 billion short of the target, Donahue said. That means they would have risen about 75 percent.

And that's based on full-year data through 2012. Based on early 2013 projections, even that growth rate is optimistic, Donahue said, since export growth slowed in 2013.

“We have more work to do to build on our success,” said Michael Masserman, a top official in the Department of Commerce's International Trade Administration.

“The NEI is about a whole-of-government effort to increase exports and American competitiveness, and to better integrate trade into the DNA of American businesses so that they are thinking about exporting their goods and services to the 95 percent of consumers who live outside the United States,” he said.

Despite the challenges, Donahue said export growth had been a bright spot for the economy since 2009, playing a major role in the country's post-recession recovery. Sluggish economic conditions abroad, over which U.S. policymakers have little control, have slowed export growth, according to a report in October by Wells Fargo economists.

The goal remains worthwhile, experts said. For example, Donahue said increasing exports was the most effective way to create jobs. For local areas, it can be more important than attracting new companies.

“If you look at sources of job creation in a metro area, the overwhelming focus has been trying to attract new companies,” Donahue said. “But in reality, that creates relatively few jobs.”

Brookings has advised several cities, including Los Angeles and Portland, Ore., on crafting export strategies. “What we're trying to do is make exporting an integrated part of everything they do in economic development,” he said.

Governments at every level are working to boost trade. Cities such as Miami and Philadelphia, with Charleston, S.C., soon to follow suit, have kicked off major port-expansion projects. Governors from many states regularly embark on trade missions across the globe.

The U.S. Department of Transportation provides funding for rail, highway and port improvements, and over the last several years it's directed $417 million to projects at 33 U.S. ports, both inland and coastal.

“As a result, U.S. exports will be more competitive — and that's a win for the American economy,” Transportation Secretary Anthony Foxx said in a November speech in New Orleans.

Policymakers also are looking to stimulate trade growth on the local level. In Florida, for example, Gov. Rick Scott, a former CEO who campaigned to run the state like a business, has worked to inject state money into infrastructure developments and to implement tax benefits in order to attract businesses.

In Texas, federal and state governments collaborated in November to host a mission in Houston among 30 Pakistani companies and leading U.S. energy companies that are looking for business opportunities.

Texas also is making efforts to support small businesses, such as San Antonio's SANA International, a strategy that experts point to as a good way to boost exports.

Accelerated export growth could come from small and medium-sized firms, which have fewer than 500 employees.

“What's more important than doubling exports is increasing the number of firms that export,” Brookings' Donahue said.

SANA International ships oil and gas products, renewable energy, marine equipment, industrial products and food products from manufacturers to foreign destinations, all with just 69 employees. The company, which won the Small Business Administration's 2011 Small Business Exporter award, has tried to adapt to whatever the market needs since its founding in 1994, said Rossie Ortiz, SANA's general manager.

“We always have room for improvement,” Ortiz said of her company, which exports to Latin America, Europe and the Middle East.

Boosting exports by small and medium-sized businesses is one of the top goals of the export initiative, given that only 1 percent of America's 30 million companies export.

Small businesses don't have time and resources to spare, and many of them feel that they still have to tap into various parts of the domestic market, said Doug Smith, the assistant director of the International Trade Center, a San Antonio-based nongovernment trade-assistance organization that serves 79 counties in Texas

“For them, it's a big step. It's taking them out of their comfort zone,” he said.

The president has charged organizations such as the SBA, the Export-Import Bank and the International Trade Administration with ramping up small-business exports.

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