Economic analyst explains how U.S. can increase exports

November 1, 2010

Nobody doubts that the U.S. must get better at exporting, says Dr. Chris Kuehl. There was a call earlier in 2010 to increase exports by 5 percent in the next few years, but there was nothing to support that goal in subsequent speeches, and congressional action has actually made things worse.

Kuehl, an economic analyst for the Fabricators & Manufacturers Association Intl., Rockford, Ill., and managing partner of Armada Corporate Intelligence, says most Americans oppose free trade and are convinced isolating the economy behind massive walls of protectionism will solve the crisis. The average citizen thinks that the only nations that benefit from trade are those that have low wage structures; lax safety and environmental laws; and governments willing to manipulate currency, establish trade barriers, and stack the deck in favor of its local companies.

People making this assumption, explains Kuehl, have not looked very closely at a nation that is far more like the U.S. than any of the developing nations — Germany. The Germans are now the export masters of Europe and keep that position despite having all the same disadvantages as the U.S. They have high wages, a generous system of benefits, high taxes, and strict environmental and safety laws. In most respects the Germans have more inhibitions than the U.S. when it comes to competing on the global stage.

The German economy is only about a quarter of the size of the U.S. economy, but it exports more in the way of manufactured goods and in more categories. The demand for high-value German machine tools and technology is well-known, yet the Germans export consumer goods as well, including inexpensive goods that sell well in markets such as China, India, and Brazil.

Kuehl says that the U.S. should consider emulating several factors that have made Germany a successful exporter:

  1. Strong support from the top. A significant amount of time and energy must be spent engaging high-level leaders in trade missions. The U.S. leaves too many trade missions to collections of businesspeople who lack power to change government policies.
  2. Commitment to trade promotion within the government. The rest of the world only has to figure out how to sell to the U.S. and Europe, but a U.S. company needs to grasp how to sell to more than 100 nations. The U.S. Department of Commerce and state agencies promoting exports do a yeoman's job, but their budgets are paltry compared to what is spent in Germany, Japan, or most other nations. Until the U.S. funds these agencies better, progress on trade will be limited.
  3. Support of strongest export sectors. The Germans establish policies that focus on opening up the world market to the niche manufacturing companies that often dominate their unique sectors. The U.S. has to protect industry better with more attention to intellectual property support, innovation, and more aggressive attempts to overcome barriers.

The Germans unite behind the notion of export and import. The government, business community, and workers all see their future in global business, and they work for a common purpose more often than not. Kuehl explains that the Germans know their future lies in the world market, and they cooperate in reaching their common goals. The U.S., on the other hand, rips itself apart over the issue and leaves everybody poorer in the process.

FMA is a professional organization with more than 2,100 members working together to improve the metal forming and fabricating industry.

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