The number of US companies exporting in 2017, the last year data is available for, dipped slightly from the previous year. In 2017, 284,168 companies exported, over 1,000 less than the 2016 figure of 285,281.
Figures for 2017 are preliminary and based on past analyses are likely to change, probably upwards, meaning there will be little change year on year.
It’s a lot of companies, but not as many as there should be, given the export process has gotten a lot easier. Back in the good old days of 2013, over 302,000 companies exported. So, ease in the process can’t be the whole story.
In 2017, there were fewer companies but they exported more: $1.29 trillion in goods versus $1.21 trillion the previous year. In 2014, US companies exported goods worth $1.42 trillion.
Why the fluctuation? The majority of exporters are small and midsize, meaning less than 1,000 employee with many under 100. Many are micro enterprises, but some are micro multinationals: very small companies with sales in multiple international markets. Someone should look at these micro multinationals to see how they do it, and what help they need to do more of it. There’s a greater likelihood of spawning more of these companies, then there is of more Fortune 500 behemoths.
Some smaller companies for whom international customers are not their chief source of earnings, export periodically but are not dedicated to expanding these sales every year. Many lack an export plan, meaning they lack a strategy. Others may skip a year to wait out lower margins because of higher costs and lower demand due to changes in the micro economic climate. Companies may also decide to focus more on the domestic market if conditions are more favorable, as they have in the US during the last eight years of a booming US economy. Jumping in and out of the cross-border market is not a great strategy when buyers and distributors expect a commitment to their market.
It’s also possible that not all exporters are captured in the US Census Bureau numbers because they are low value, e-Commerce shipments that aren’t captured in official data.
Focus on export promotion
From a policy perspective it makes sense to promote exports. Boosting exports by encouraging more companies, especially smaller ones, to sell cross border should takes precedent over focusing on creating an even playing field.
Substantial cuts to US government trade promotion program budgets have been threatened but not carried out, so far. Accessing existing programs continues to be an issue for smaller exporters, probably worsened by the lack of information about them. Export finance programs remain a disjointed puzzle box to the smaller firm, and the Export-Import Bank of the US is still not authorized to loan at its statutory level.
This lack of a focus hamstrings US companies who because of geography and a robust domestic market (for the moment anyway) have not had to rely as much as other countries on trade. Exports from the US comprise 14 percent of GDP, while in Germany it’s closer to half. Maybe that’s too many eggs in same basket, but doubling US exports to 28 percent seems manageable, prudent, and would add millions of new jobs (if workers can be found and properly trained).
Failure to secure trade deals with Asia Pacific countries and the EU has kept potential exporters out of the game. In the case of China, a trade agreement may be forthcoming, potentially reversing a seven percent drop in the value of US goods exports to China in 2018. Trade agreements with Mexico and Canada are pending and will add as much as .04 percent to US GDP. Agreements with the EU and Japan are at various stages of discussion, but none is likely this year.
If you’re not exporting regularly now, it’s never too late to explore the benefits. Webport Global is ready to help.
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