Surge in exports buoys U.S. economy

The world is rediscovering "Made in USA."

American exports are now coursing their way around the world at a record level.

In a major shift from the past five years, the US trade deficit, after stabilizing last year, is now shrinking. US companies, faced with slower economic growth in their home market, are now targeting foreign buyers. It doesn't hurt to have the dollar sinking in value – down almost 9 percent so far this year – and a relatively strong global economy. In fact, the US economy would be flirting with recession if it weren't for the 1 percentage point of growth fueled by the export surge.

"Exports have suddenly become a key source of growth at a time when the economy is looking for any growth it can get," says Mark Zandi, chief economist at Moody's Economy.com.

The largest US exports last year: nuclear power plants, followed by electrical machinery, vehicles, airplanes, and medical equipment. The trade situation has shifted so dramatically, Mr. Zandi says, that the US is now exporting lumber to Canada for the first time in 25 years.

North Dakota exports up 87 percent

Part of the improvement is due to state trade-development offices. That's the case in North Dakota, for example, where its trade office has helped the state's foreign exports grow by 87 percent since 2001. "Everyone on the staff is motivated and compensated by increasing export volume," says Susan Geib, executive director in Fargo.

North Dakota is focusing on nations with "transitional" economies, such as Ukraine, which is now seeing substantial direct investment and is in the process of revamping its agricultural sector.

That focus has helped Fargo-based Amity Technology, which makes sugar-beet harvesters and other specialty farm equipment. Amity now exports nearly 60 percent of its production. Exports have gone from $4 million in 2001 to $40 million today.

"We can supply the entire US market with six weeks of our production," says Brian Dahl, a vice president. "The rest of it goes abroad."

In Amity's case, a lot of the credit goes to the company for persevering. It had to improve the quality of its products and redesign them to fit inside a standard shipping container. For four years, Amity knocked on doors without success.

"Before the first sale, we must have bought 50 tickets to Russia and the Ukraine; we spent money we didn't have, but we sensed that eventually we would get the opportunity," says Mr. Dahl.

A US access ramp fit for a queen

Another North Dakota company, DT&J Inc., has been quick to react to legal changes in Europe that now mandate wheelchair access to buildings. It proudly notes that its product, called Roll-A-Ramp, is now used at Buckingham Palace and Oxford University.

Exports – now to 19 countries – have allowed the company to expand its employment in three years from four people to 12. "Our domestic production pays for our fixed costs and our exports are our profits," says Tom Kenville, president of the company.

The declining value of the dollar is attracting foreign companies that now see the US as a manufacturing and reexport base. Jim Dillon, president of Passport Marine in St. Petersburg, Fla., is now negotiating with two Italian boat and yacht manufacturers to move their manufacturing to the US.

"They will send component parts, plus the boat molds, and produce [in the US] a quality product that is exported to take advantage of the exchange rate," says Mr. Dillon, who's also exploring exporting Passport's own craft to Dubai and Japan.

The export surge is not completely tied to the exchange rate. The Houston Airport System decided five years ago to increase its facilities for moving airfreight. Now, instead of loading planes on the taxiways, it has parking space for 20 jumbo jets to load and unload goods.

The new facilities have attracted new air freighters, such as AirBridge Cargo, the first Russian all-cargo airline. The airfreight companies are hauling oil-field equipment to Saudi Arabia, computers to Britain, and medical equipment to France. So far this year, freight airlines in Houston have boosted exports 24.6 percent.

As the airfreight business has grown, companies have built some 3 million square feet of warehouse space around the airport.

"We definitely have an employment surge around the airport," says Rick Vacar, director of aviation for the Houston Airport System.

The export surge is causing some problems as well. Back in North Dakota, Dahl says his company is experiencing some wage inflation as it competes to keep its employees.

"Wages are up at a pretty rapid rate," he says. "In fact, we're investing in more capital goods because of a scarcity of employees."

North Dakota isn’t the only place where labor is becoming more expensive. It’s true in China, which also grows sugar beets. So, this year, Dahl exported a harvesting machine to China. “I hope there will be more [sales] asthey move to mechanical harvesting,” he says.