May 22 2009
USA Export: The US Trade Balance Improves…or Does It?
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.
But, rather than go back to being depressed, there is a silver lining to this cloud. The reduced gap between USA import and USA export signals that price differences have also shrunk.
Right now, American made products are more cost competitive against imported products. This represents a spectacular opportunity to export! If USA Export products have gained some cost advantage against foreign goods, it is then possible that these products are more price competitive overseas.
The case for an export distributor right now is more favorable than ever:
• With your excess manufacturing supply and inventory that’s not moving here in the United States right now, wouldn’t it be a good idea to use an export distributor to explore how the overseas markets look for your products? The data you may have gathered just a year ago may be completely irrelevant in today’s market.
• With the current tight credit markets, “cash is king.” With increasing demand on your business’ free cash flow, can you afford to try exporting on your own? It’s far more wise (and a heck of a lot cheaper) to use an export distributor to sell your products overseas, in markets that they have far more experience in than you.
This week, the Census Bureau painted a pretty picture about the US’ improving trade imbalance. On a monthly basis, the February FT900 Report (issued April 9, 2009) states that:
- exports of goods increased $2.5 billion to $84.7 billion, and
- imports of goods decreased $7.6 billion to $121.5 billion…
- the goods deficit decreased $10.1 billion from January to $36.9 billion in February
http://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
Expansion into foreign markets is long overdue for most manufacturers. In today’s economy, only the smartest of expansion plans support a suitable return on investment. USA export distributors can help make overseas expansion very cost effective.
