May
22
2009
Recent trade balance improvements make USA export distributor wholesalers more important than ever.
Our trade imbalance has improved tremendously in recent months. Why, then, is an export distributor so important? If, as a country, we’re now exporting more, we’re obviously moving products overseas.
However, before US manufacturing declares victory, we must also look at an overall manufacturing index, such as the one published by the Institute for Supply Management. http://www.ism.ws/ISMReport/MfgROB.cfm The ISM reports that, although the index is showing signs of improvement, “economic activity in the manufacturing sector failed to grow in April for the 15th consecutive month, and the overall economy contracted for the seventh consecutive month.”
While I hate to rain on our parade, with this data, it can then be argued that the improvement in our trade imbalance is the function of lower demand and production, versus an overall economic improvement. Further support of this is seen in the March FT900 Report (issued May 12, 2009), showing a gap that slightly widened.
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May
03
2009
In tough economic times, one of the ways that may seem economical to export your products to Europe is to go it alone without a USA export master distributor, start in the UK, and work your way out from there. It’s a tempting argument; it seems like since the language barrier is small and it’s on a separate island, this would provide the best entry to Europe.
USA Export: US Dollar Compared to British Pound
However, things are not always as they seem, and this argument has fatal flaws. Speaking the same language doesn’t mean conducting business the same way. First, as different as it is to do business in two regions of the US, it is far less than the difference in doing business in the UK. Second, as seen in the 8 year chart, there is far less play in terms of price advantage between the Pound Sterling and the US Dollar. This is absolutely critical, as your products have become far more expensive there than they were just two, three, or five years ago. Lastly, economic conditions are tied closer together between the US and the UK than between the US and the European Union. Simply put, the reason you export is to diversify; selecting a UK-only strategy minimizes your portfolio diversity, yet exposes you to the same level of market entry risk.
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