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Friday, December 25, 2009

Massachusetts; exports outpace production and industrial jobs

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Massachusetts' exports of manufactures totaled $5.1 billion in 1981, the latest year for which statistics are available, according to a study by the Commerce Department's International Trade Administration (ITA) obtained from Census Bureau data. That figure equals 3 percent of U.S. manufactured exports.

The $5.1 billion is 121 percent higher than the value in 1977, when a similar study was conducted. Between 1977 and 1981, Massachusett's manufactured exports rose more than twice as fast as production.

Massachusetts moved up in the state ranking from eleventh in 1977. It was out-ranked in 1981 only by California, Texas, Illinois, Ohio, Michigan, New York, Washington, and Pennsylvania, in that order.

Massachusetts' manufactured exports provided direct employment for an estimated 59,400 workers in 1981. From 1977 to 1981, total jobs in manufacturing in the state increased 13 percent while employment directly related to exports advanced about 40 percent.

An estimated 39,000 jobs were required in the state to manufacture products used by other establishments in the United States as inputs for manufactures that were ultimately exported. Thus, an estimated 98,400 jobs in Massachusetts were directly or indirectly dependent on exports of manufactured goods in 1981. This was 14.2 percent of all manufacturing employment in the state, or about one of every even manufacturing jobs.

Over half of Massachusetts jobs dependent on manufactured exports were concentrated in these industries, accounting for one out of four jobs in the nonelectric machinery industry and one out of five jobs in the instruments and electric/electronic industries.

An additional 56,700 jobs were generated in nonmanufacturing industries that supply materials and services supporting manufactured exports. Massachusetts' total employment related to manufactured exports in 1981 amounted to 155,100 jobs, ninth largest among the states.

Massachusetts exports a wide variety of manufactures. Nonelectric machinery, electric/electronic equipment, and instruments were Massachusetts' leading exports. The foreign sales of these three industries were $3.7 billion, almost three-fourths of the 1981 total. Other high-valued exports from Massachusetts were chemical products, fabricated metal products, and transportation equipment.

Massachusetts ranked third nationally as an exporter of instruments, between fourth and fifth in leather products, fifth in both nonelectric machinery and electric/electronic equipment, and sixth in textile mill products.

Exports of nonelectric machinery totaled $2.1 billion in 1981, a rise of 181 percent from 1977. Output of nonelectric machinery, the largest industry in Massachusetts, rose by 107 percent from 1977 to 1981. Exports generated about a third of the expansion in that industry.

Exports of electric and electronic equipment more than doubled after 1977 to total $855 million in 1981. Export growth outpaced production in the industry. Massachusetts' output of electric and electronic equipment advanced by four-fifiths during that time.

Massachusetts' foreign shipments of instruments totaled $734 million in 1981, advancing 83 percent from their 1977 level. The export growth rate was much faster than the rate of expansion in the industry's total output, which advanced 53 percent during the period. As a result, exports generated about one-fourth of the increase in the industry's production in the state from 1977 to 1981.

The Census Bureau has estimated that export-related manufactures, including materials and parts incorporated in products exported from elsewhere in the nation, accounted for 15.4 percent of Massachusetts' manufacturing production. thus, of the expanded manufacturing output generated between 1977 and 1981, 22 percent--or $1 out of every $5--was due to export-related shipments.

Massachusetts' share of U.S. agricultural exports in fiscal year 1982, including some manufactures of farm origin, totaled an estimated $24 million, double the fiscal year 1977 level. Shipments of fruit accounted for $12 million, or half of the total value. Estimated sales of $3 million each were recorded for exports of unmanufactured tobacco and vegetables.

The sharp growth in exports of agricultural products from fiscal year 1977 to fiscal year 1982 accounted for 11 percent of the rise in farm sales and added to the income of Massachusetts' farmers. In this period, the export contribution to each dollar of the state's farm sales increased from 6 to 8 cents.

Exports of fishery products from Massachusetts were valued at about $46 million in 1981. These shipments were two and a half times the value in 1977. The majority of these overseas sales was in fresh and frozen form. Small shipments of cured fish also were delivered to foreign markets.

Massachusetts exported iron and steel scrap which was valued at an estimated $50 million in 1981.

ITA's Office of Trade and Industry Information/Trade Information and Analysis will publish reports on exports from the 50 states later this month.

During the 1975 recession, Package Machinery Co. of East Longmeadow, Mass., sat up and took notice when its overseas sales increased 10 percent while its U.S. sales plunged 50 percent.

"Those figures reinforced our international sales programs and illustrated the desirability of diversification," says John Zebryk, the company's director of international administration.

The company zeroed in on exporting and won the President's "E" Award for exporting achievement in 1978.

Package Machinery sells in more than 40 countries. It manufactures machines used to package frozen food and other items in retail stores and to make a range of plastics products including flatware, glass frames and medical supplies.

The company has appointed overseas agents to sell its machinery. It also has established foreign licenses to whom it sells machinery and technology.

What advice does Zebryk offer the beginning exporter?

"Plan and make advance preparations. Find out the nature of your foreign market. Figure out how to adjust to its requirements. Be selective. Exercise Patience, because results won't be forthcoming immediately."

Zebryk believes that advice from the U.S. Department of Commerce is "well worth heeding." The Department has helped him locate overseas agents and analyze foreign markets. Country desk officers have answered his specific questions. And he has participated in Department-sponsored trade shows and trade missions.

What many small firms regard as obstacles to exporting, we regard as opportunities, says Richard Lee, founder and owner of ECONOCORP of Randolph, Mass., manufacturer of packaging machines.

"A great many small companies complain about the red tape, language problems, or differences in electrical voltage abroad," he explains. "they find dozens of excuses not to export."

Because such excuses keep so many firms out of the action, Lee says that tremendous opportunities exist for the firm which is willing to tackle problems and become proficient in exporting.

"The most important thing is for the management of a firm to develop an export attitude," Lee says. Under his leadership, the 40 employees of ECONOCORP have become personally involved in the firm's export progress.

Normally, the firm exports 50 percent of its machinery. At the moment, Lee is pushing especially hard on exports to overcome "dollar inflation," which he considers a major impediment to overseas sales.

ECONOCORP has a manager of sales and marketing who focuses on the Western Hemisphere. Lee himself handles the rest of the world. Last year, he traveled 120,000 miles, mainly to meet with the firm's oveseas agents.

Ocean Spray Cranberries, Inc., a farmers' cooperative based in Plymouth, Mass., has launched an aggressive international marketing program on behalf of the cranberry and grapefruit growers who comprise its membership.

"Our operation is unique in that we export both raw materials and know-how," says Edward Trundle, area marketing manager for international sales. The cooperative sells fresh or frozen cranberry fruit and grapefruit concentrate plus the technical knowledge for converting it into bottled or canned juice or sauce.

Ocean Spray has established foreign licenses in Canada, Japan, Taiwan, Australia, the United Kingdom, and Switzerland. It now is negotiating with prospective licensees in three other countries.

The cooperative exported only "haphazardly" until ten years ago, when it created an international division, according to Trundle. Now, 3 percent of the cooperative's sales are international.

We're going to get quite aggressive in exporting and have developed a five to ten-year international marketing plan," Trundle says. "We're always looking for new overseas markets."

Ocean Spray represents 700 cranberry growers in Massachusetts, New Jersey, Wisconsin, Oregon, Washington, and Canada, and 100 grapefruit growers in Florida.

Having been in business for only 13 years, Excel Dryer Corp., a small company, is proving that low-technology manufacturers can overcome the challenge that exporting presents. Excel, located in East Longmeadow, Mass., manufactures electric hand dryers for use in public lavatories and restaurant kitchens and "stand under" hair dryers for locker rooms and swimming facilities.

For the past five years, Excel has been selling its products abroad with an international marketing staff of only two people--Robert Carroll, the general manager, and an assistant. By doing their homework carefully and using the services of the U.S. Department of Commerce, they are able to minimize the trips they take. Before they visit a country, they have already screened out and communicated with interested national distributors. thus, they reduce their time and expenses abroad by limiting their personal interviews to two or three of the best prospects.

"Because our products are low technology," says Carroll, "we are surprised that they have done as well internationally as they have." He added that it is often very easy to market high-tech products abroad, especially where the competition is not keen, but it is much harder to market low-tech products where there may be as many as five or six manufacturers already competing.

The key to successful entry into the export arena, he believes, is not to get discouraged. Many low-tech manufacturers discouraged because of the competition, will not even try, Carroll says. "If you have a good product in this country, there is probably an international market for it."

Source Citation
"Massachusetts; exports outpace production and industrial jobs." Business America 7 (1984): 8+. Academic OneFile. Web. 25 Dec. 2009. .


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