STEVENS POINT AREA ECONOMIC INDICATORS College of Professional Studies 2008: Third Quarter Presented
November 14, 2008 Marshall & Ilsley Bank Presented by: Central Wisconsin Economic Research Bureau Randy F. Cray, Ph.D. Professor of Economics, CWERB Director Scott Wallace, Ph.D Associate Professor of Economics, CWERB Research Associate Sarah J. Bauer Research Assistant Special Report: Wisconsin Exports and the Impact on the Central Wisconsin Economy Brad Schneider and Stanley Pfrang
Wisconsin Department of Commerce Division of Investment and Export TABLE OF CONTENTS National and Regional Outlook .............................................................................................. 1 Table 1: National Economic Statistics .......................................................................... 1 Central Wisconsin ................................................................................................................... 2 Table 2: Unemployment in Central Wisconsin ............................................................ 2 Table 3: Employment in Central Wisconsin ................................................................. 3 Table 4: Central Wisconsin Employment Change By Sector ....................................... 3 Table 5: County Sales Tax Distribution ........................................................................ 3 Table 6: Business Confidence in Central Wisconsin .................................................... 4 Figures 1‐4 .................................................................................................................... 5 Figures 5‐6 .................................................................................................................... 6 Stevens Point‐Plover Area ...................................................................................................... 7 Table 7: Portage County Employment Change By Sector ........................................... 7 Table 8: Retailer Confidence in Stevens Point – Plover Area ...................................... 7 Table 9: Help Wanted Advertising in Portage County ................................................. 7 Table 10: Public Assistance Claims in Portage County ................................................ 8 Table 11: Unemployment Claims in Portage County .................................................. 8 Table 12: Residential Construction in Stevens Point – Plover Area ............................ 8 Table 13: Nonresidential Construction in Stevens Point – Plover Area ...................... 8 Figures 7‐10 .................................................................................................................. 9 Special Report ...................................................................................................................... 10 Wisconsin Exports and the Impact on the Central Wisconsin Economy Association for University
Business and Economic
Research
CWERB ‐ Division of Business and Economics University of Wisconsin‐Stevens Point Stevens Point, WI 54481 715/346‐3774 715/346‐2537 www.uwsp.edu/business/CWERB National and Regional Outlook There is no doubt the national economy is feeling the effects of the collapse of the sub prime housing market and the pain in the nation’s financial sector. The problems have now spread to the real economy. The National Bureau of Economic Research has not officially declared the U.S. to be in a recession, however, most economists would say that we are already in one. Please consider the following evidence. The Fourth Quarter of 2007 experienced a decline in GDP and First Quarter of 2008 was very weak and future revisions of the data may push this quarter’s growth down far enough that is turns out to be negative. Moreover, the economic figures from the Second Quarter 2008 were propped up by government tax rebates and the Third Quarter 2008 GDP numbers were negative. Given that Fourth Quarter 2008 and First Quarter 2009 are likely to register sharp declines in economic activity, it is very likely the NBER will say that we entered a recession in late 2007. quarter. In addition, personal consumption expenditures by households fell by 3.1 percent in third quarter. This is important because household spending accounts for about two thirds of GDP. You would have to go back to 1980 to find a larger quarterly decline in consumer spending. In previous reports, I have alluded to falling housing prices, the drop in the stock market, and job loss (or the fear of job loss) as being major contributors to the all time low in consumer confidence. The Conference Board reports that the index has contracted from 110 in October 2007 to 40 in October 2008. Table 1: National Economic Statistics
The most recent data for Real GDP indicates that the economy declined in Third Quarter 2008 at an annualized rate of 0.3 percent. This is only the fifth quarter in the last 68 quarters to register a decline. GDP of course measures the monetary value of all final goods and services produced in the economy. There are a number of other indicators that suggest the economy is contracting and will continue to do so. For example, net job loss in the U.S. is around 800,000 for the year 2008. Moreover, a recent survey of employers suggests they are likely to reduce their payrolls next year, so this figure is likely to rise. In addition, industrial production, a measure of the nation’s factory output, declined by 6.0 percent on an annualized basis in the third 2007
Third Quarter
2008
Third Quarter
Percent
Change
Nominal Gross Domestic
Product (Billions)
$13,926.7
$14,429.2
+3.6
Real Gross Domestic
Product (Billions of 2000 $)
$11,630.7
$11,720.0
+0.8
Industrial Production
(2002 = 100)
112.3
107.3
-4.4
Three Month U.S. Treasury
Bill Rate
3.82%
1.10%
-71.2
Consumer Price Index
(1982-84 = 100)
208.5
218.8
+4.9
Further, real nonresidential fixed investment by business firms decreased by 1.0 percent in third quarter and real residential investment decreased by a huge annualized rate of 19.1 percent during the same period. However, real inventories added about 0.6 percent to the GDP number. Helping to offset some of the declining component of GDP was the government sector. Real federal and state expenditures increased respectively by 13.8 percent and 1.4 percent annualized rate in third quarter. Lastly, real exports rose at a 12.3 percent clip while imports fell at a 1.9 percent rate during the quarter. Thus, the 1 net export picture helped to bolster the overall GDP figure. Without federal government expenditures and the improvements in net exports, the GDP results would have been considerably worse. Looking toward the future, the Leading Indicators Composite Index has been on a downward trend. Since mid‐2007 the index has fallen, indicating an ongoing weakening of the economy. Also making matters harder for policy makers is the upward movement in the Consumer Price Index. The index shows that from September 2007 to September 2008 inflation increased by about 5.0 percent. However, in September 2008 the rate increased by a more moderate 2.5 percent. The Wisconsin Department of Revenue forecasts that Wisconsin is expected to see a decline in its total nonfarm employment of about 0.5 percent in 2008, and 0.4 percent in 2009. They indicate that it will be well into 2010 before the trend is reversed. The U.S. is forecasted to outperform Wisconsin in job and income growth. The state also reports that home prices and sales in Wisconsin are declining. From Second Quarter 2007 to Second Quarter 2008, home prices fell 3.0 percent and sales declined by a huge 20.7 percent, compared to 7.6 percent and 16.3 percent nation wide. Also bankruptcy filings in Wisconsin rose by 38 percent in Third Quarter 2008 compared to Third Quarter 2007. The major factors influencing the forecast for Wisconsin are its heavy reliance on the manufacturing sector and its status as a net importer of energy. However, a lower valuation of the dollar and declining energy prices could help to bolster state exports and stem the outflow of dollars spent on energy. Until the housing market stabilizes, the flow of credit is restored, household finances improve, and a recapitalization of the nation’s financial sector occurs, the U.S. and state economies will face a rocky road. Once these issues are resolved, and they will be, the nation and Wisconsin will return to positive growth. Central Wisconsin A summary of this section is as follows: changes in the unemployment rates around the region were varied; total employment in Central Wisconsin fell by 0.3 percent, largely attributable to the 1,500 job decline in Marathon County, Central Wisconsin total nonfarm employment fell by 1,700 jobs, mainly in the manufacturing sector where 2,100 jobs have been lost since 2007, and except for Portage County, sales tax collection contracted from a year ago. Lastly, regional business executives felt that economic conditions have declined and they do not see an improvement taking place in the short run. Table 2: Unemployment in Central Wisconsin
Unemployment Rate Unemployment Rate Percent
September 2007
September 2008
Change
Portage County
3.7%
3.6%
-2.9
City of Stevens Point 4.8%
4.6%
-4.2
Marathon County
4.0%
4.1%
+3.9
Wood County
4.9%
4.9%
-1.2
Central Wisconsin
4.2%
4.2%
0.0
Wisconsin
4.6%
4.4%
-4.5
United States
4.5%
6.0%
+31.4
The unemployment rates in Portage and Wood counties fell from one year ago. The rates dropped from 3.7 percent to 3.6 percent and from 4.92 percent in 2007 to 4.86 in 2008 respectively. Due to rounding, Table 2 shows the rate at 4.9 percent in each period. Marathon and the U.S. 2 unemployment rates rose over the year by 0.1 percent and 1.5 percent respectively. The labor force weighted unemployment rate for Central Wisconsin was unchanged. So far the economic downturn has not impacted the regional unemployment rate. The total employment figures in Table 3 show that employment actually rose in Portage, Wood, and Wisconsin when measured from September 2007 to September 2008. However, Marathon County experienced a 2.0 percent decline and this helped to pull down the Central Wisconsin total employment figure for the year. Employment fell for the three county area by about 400 positions or declined from 151.1 thousand to 150.5 thousand in the year over comparison. The U.S. was losing about 138,000 jobs over the period. Another measure of employment is predicated on a survey of employers. Overall total nonfarm employment in the region fell from 155.3 thousand to 153.6 thousand, a decline of 1,700 jobs or 1.1 percent. Sectors experiencing decline were construction, manufacturing, trade, transportation & utilities, and government. It should be noted that manufacturing has been hit hard as employment in this sector declined by 2,100 positions. Sectors growing over the year were financial activities, education & health services, leisure & hospitality, and information & business services. The information & business services sector and education & health services sector registered the largest gains, 1,100 and 1,000 respectively. over the period or by about 1.3 percent. Similarly Wood County collections fell from $1.40 million to $1.29 million over the same period. This represents a drop of approximately 10.0 percent. Table 3: Employment in Central Wisconsin
Total Employment
September 2007
(Thousands)
Total Employment
September 2008
(Thousands)
Percent
Change
Portage County
40.7
41.0
+0.7
City of Stevens Point
14.1
14.2
+0.7
Marathon County
72.4
70.9
-2.0
Wood County
38.0
38.6
+1.7
Central Wisconsin
151.1
150.5
-0.3
Wisconsin
2,941.9
2,952.1
+0.3
United States
146,448
145,310
-0.8
* Percent change figures reflect data before rounding
Table
4: Central Wisconsin Employment
Change by Sector
Employment
Employment
September 2007 September 2008 Percent
(Thousands)
(Thousands)
Change
Total Nonfarm
155.3
153.6
-1.1
Total Private
136.3
135.5
-0.6
Construction & Natural Resources 6.8
5.9
-13.3
Manufacturing
26.6
-7.3
Trade
25.6
24.4
-4.4
Transportation & Utilities
8.3
8.3
-0.4
+1.8
Financial Activities
11.8
12.0
Education & Health Services
23.4
24.4
+4.3
Leisure & Hospitality
13.0
13.9
+7.2
Information & Business Services
18.8
19.9
+6.1
Total Government
19.0
18.1
-4.8
Table
5: County Sales Tax Distribution
2007 Sales Tax
Third Quarter
(Thousands)
2008 Sales Tax
Third Quarter
(Thousands)
Percent
Change
Portage County
$1,283.8
$1,336.4
+4.1
Marathon County
$2,799.7
$2,764.1
-1.3
Wood County
$1,433.7
$1,287.5
-10.2
County sales tax data in Table 5 shows that collections rose in Portage County from $1.28 million to $1.34 million or about 4.1 percent. However, Marathon County declined from $2.80 million to $2.76 million 28.7
* Percent change figures reflect data before rounding
3 The CWERB survey of area business executives is presented in Table 6. Our group of business executives were asked their thoughts about recent changes in national economic conditions and those locally. They felt that conditions had deteriorated and remain rather pessimistic about the economic situation. They were also asked to forecast the economic condition of the U.S., local area, and their industry over the near term. The results suggest that they expect little change. Given their feelings about recent changes this means they expect little improvement to take place. Table 6: Business Confidence in Central Wisconsin
June 2008
Index Value
September 2008
Recent Change in National
Economic Conditions
30
39
Recent Change in
Local Economic Conditions
32
36
Expected Change in
National Economic Conditions
50
55
Expected Change in
Local Economic Conditions
47
52
Expected Change in
Industry Conditions
50
52
100 = Substantially Better
50 = Same
0 = Substantially Worse
4 Figure 2: Unemployment Level: Wisconsin; NSA
Figure
1: Employment Level: Wisconsin; NSA
3000
190
2975
180
2950
170
2925
160
2900
150
2875
140
2850
130
2825
2800
2004
2005
2006
2007
2008
2005
2006
2007
2008
2009
Figure 4: Labor Force: Wisconsin; NSA
Figure
3: Unemployment Rate: Wisconsin; NSA
6.50
6.25
6.00
5.75
5.50
5.25
5.00
4.75
4.50
4.25
4.00
3.75
2004
120
2004
2009
3150
3125
3100
3075
3050
3025
3000
2005
2006
2007
2008
2975
2004
2009
2005
2006
2007
2008
2009
5 Figure 5: Wisconsin: Manufacturing; Average Weekly Earnings Figure 6: Wisconsin: Education and Health Services; Emp.
740
730
720
710
700
690
680
670
660
650
640
630
2004
410
405
400
395
390
385
380
375
370
2005
2006
2007
2008
365
2004
2009
2005
2006
2007
2008
2009
6 Stevens Point‐Plover Area Total nonfarm employment in the area increased by a net 100 positions over the year. Retailers are saying that store traffic and sales are lower than one year ago and that they do not expect much improvement in the all important Christmas period. Job advertising in the area indicates that job seekers are going to experience a harder time in finding a position. It is also quite clear that local family financial distress has increased over the past twelve months. Residential construction continues to contract but not as much as in prior periods. Lastly, nonresidential construction was generally ahead of the pace in 2007. Portage County’s nonfarm total employment increased by a net 100 jobs or 0.2 percent over the previous twelve months. Sectors that increased their payrolls and the amount of the change were, financial activities, 300; education & health service, 500; leisure & hospitality, 600; and information & business services, 800. On the negative side, the sectors that contracted and the amount of the change were, construction, 300; manufacturing, 300; trade, 400; transportation & utilities, 100; and total government, 1,000. The CWERB survey of local merchants is given in Table 8. The survey group was asked about total sales and traffic compared to a year ago. They indicated that both were down in their estimation. The CWERB also asked them to forecast future sales and store traffic. The retailers felt that business would be noticeably lower than a year ago. A barometer of which way the unemployment rate will track is help wanted advertising. Even though it only captures a small fraction of the jobs available it is nonetheless considered to be a good barometer of labor market conditions. The results for this quarter suggest that the local labor market will become less favorable to job seekers. This is even more true at the national level. Table 7: Portage County Employment
Change by Sector
Employment
September 2007
(Thousands)
Employment
September 2008
(Thousands)
Percent
Change
Total Nonfarm
37.3
37.4
+0.2
Total Private
31.3
32.3
+3.5
Construction & Natural Resources 1.3
1.0
-23.0
Manufacturing
4.7
4.4
-5.9
Trade
6.2
5.8
-6.1
Transportation & Utilities
1.7
1.6
-6.5
Financial Activities
4.7
5.0
+6.3
Education & Health Services
3.5
4.0
+12.9
Leisure & Hospitality
4.3
4.9
+14.8
Information & Business Services
4.9
5.7
+15.3
Total Government
6.1
5.1
-16.5
* Percent change figures reflect data before rounding
Table 8: Retailer Confidence
Stevens Point-Plover Area
June 2008
Index Value
September 2008
Total Sales Compared
to Previous Year
44
46
Store Traffic Compared
to Previous Year
40
40
Expected Sales Three
Months From Now
46
44
Expected Store Traffic
Three Months From Now
46
42
100 = Substantially Better
50 = Same
0 = Substantially Worse
Table 9: Help Wanted Advertising in Stevens Point
Index Value
2007
2008
Stevens Point
69
47
(September)
1980=100
U.S.
23
15
(August)
1987=100
7 Table 10 and 11 give insight into the change in local family financial distress. New public assistance claims in Portage County on a monthly average basis increased slightly from 270 to 273 or by 1.1 percent. However, the total caseload figure shot up from 5,488 to 6,549 an increase of 19.3 percent. Similarly, new unemployment claims on a weekly average jumped from 120 to 187 which represents a 55.3 percent gain. Total unemployment claims also rose at an alarming rate by increasing from 789 to 1,279 or 62.1 percent since September 2007. Thus, Tables 10 and 11 show that there has been a considerable increase in family financial distress. Table 12 gives residential construction data for the area. Even though there were declines in the number of permits issued, their estimated value, the rate of decline, was smaller than in the previous quarters. In second quarter the number of permits was 24 with an estimated value of $5 million and this represented 34 housing units. Residential alteration activity fared much better than new construction. The number of new permits rose from 219 to 280 or by 28.0 percent and the associated value of the alteration activity grew by 35.0 percent. Table 13 displays the nonresidential construction data from the area. We do not provide percent changes because this type of data is very volatile. The number of permits was 6 compared to 5 last year and the value of the activity rose from $1 million to $10.4 million from Second Quarter 2007. The number of business alteration permits also increased. They rose from 40 to 52 over the past year and likewise the value of the activity increased from $2.8 million to $3.1 million over the year. T able 10: Public Assistance Claims in Portage County
2007
Third Quarter
(Monthly Avg.)
2008
Third Quarter
(Monthly Avg.)
Percent
Change
New Applications 270
273
+1.1
Total Caseload
6,549
+19.3
5,488
Table
11: Unemployment Claims in Portage County
2007
Third Quarter
(Weekly Avg.)
2008
Third Quarter
(Weekly Avg.)
Percent
Change
New Claims 120
187
+55.3
Total Claims 789
1279
+62.1
T able 12: Residential Construction
Stevens Point-Plover Area
2007
Third Quarter
2008
Third Quarter
Percent
Change
Residential Permits Issued
25
24
-4.0
Estimated Value of
New Homes
$5,234.1
(thousands)
$5,007.9
(thousands)
-4.3
Number of Housing Units
51
34
-33.3
Residential Alteration
Permits Issued
219
280
+27.9
Estimated Value
of Alterations
$2,164.8
(thousands)
$2,912.8
(thousands)
+34.6
Table
13: Nonresidential Construction
Stevens Point-Plover Area
2007
Third Quarter
2008
Third Quarter
Number of Permits Issued
5
6
Estimated Value of
New Structures
$1,045.2
(thousands)
$10,444.2
(thousands)
Number of Business Alteration Permits 40
52
Estimated Value
of Business Alterations
$3,008.5
(thousands)
$2,794.5
(thousands)
* Includes Stevens Point, Village of Plover, and the Towns of Hull, Stockton, Sharon,
and Plover.
8 Figure 7: Employment Level: Portage County, Wisconsin; NSA
Figure 8: Unemployment Level: Portage County, Wisconsin
41500
41000
40500
40000
39500
39000
38500
38000
37500
37000
36500
2004
2600
2400
2200
2000
1800
1600
1400
2005
2006
2007
2008
1200
2004
2009
2005
2006
2007
2008
2009
Figure 9: Unemployment Rate: Portage County, Wisconsin; NSA
Figure 10: Labor Force: Portage County, Wisconsin; NSA
6.5
43500
6.0
43000
42500
5.5
42000
5.0
41500
4.5
41000
4.0
40500
40000
3.5
3.0
2004
39500
2005
2006
2007
2008
2009
39000
2004
2005
2006
2007
2008
9 2009
Wisconsin Exports and the Impact on the Central Wisconsin Economy Brad Schneider and Stanley Pfrang Wisconsin Department of Commerce Division of Investment and Export OVERVIEW International trade is extremely important to Wisconsin’s economic strategy, and exports are a major engine of growth. Over the last four years, Wisconsin exports have experienced significant growth and broken records. If the current trend continues for the remainder of the year, 2008 will be another banner year. Earlier this year, the U.S. Census Bureau began releasing export data at the sub‐state level allowing a review of Central Wisconsin’s role in the state’s export economy. While Wisconsin’s export growth has been strong, the Wisconsin Department of Commerce has programs to help state firms initiate or expand further their export sales. WISCONSIN EXPORTERS SET RECORD IN 2007 Wisconsin's exports of agricultural and manufactured goods (excluding services) increased by 11.8 percent in 2007 and reached a record of $19.2 billion. Wisconsin now ranks 18th in exports among the 50 states, up one place from its ranking in 2006. The state's exports of physical products have seen continuous export growth since 2001. Exports are now double what they were in 1996 and five and a half times greater than they were 20 years ago. In the first six months of 2008, state exports grew by 13.88 percent compared to the same period in 2007. If growth continues at this same pace, total Wisconsin manufactured and agricultural exports for 2008 will surpass $20 billion. Wisconsin Exports 1987-2008
(2nd half of 2008 estimated)
$25,000,000,000
$20,000,000,000
$15,000,000,000
$10,000,000,000
$5,000,000,000
$0
20 08
2007
2006
2005
2004
2003
2002
20 01
2000
1999
1998
1997
1996
1995
19 94
1993
1992
1991
1990
1989
1988
19 87
The export of services (education, banking, insurance, engineering, entertainment, business consulting, and other activities that may not involve a tangible product that crosses a physical border) from the United States, while an increasingly important segment of the economy, is very difficult to track and monitor. Trade data used for this report measures only the export of physical goods. While exports to many of Wisconsin’s traditional international customers have been strong, sales to developing markets have been particularly robust, growing 28.5 percent in 2007 over 2006 figures. The falling value of the U.S. dollar has helped many Wisconsin exporters by making their products less 10 expensive compared to those of competitors in Canada, Europe, and some Asian countries. According to a report published by the Office of Trade and Industry Information, International Trade Administration, U.S. Department of Commerce entitled Wisconsin: Exports, Jobs, and Foreign Investment, the vast majority of Wisconsin's exporting companies (85 percent) are small‐ and medium‐
sized enterprises with less than 500 employees. However, larger firms ship a larger portion, up to 77 percent, of Wisconsin's total exports. Overall, it is estimated that 178,600 Wisconsin jobs are due to exports and international trade. Wisconsin ranks 12th in employment related to manufacturing exports with export‐supported jobs linked to manufacturing accounting for an estimated 6.5 percent of Wisconsin's total private‐sector employment. Those jobs represent over one‐sixth (17.4 percent) of all manufacturing workers in Wisconsin. For many years the federal government has released export information at the state level. Within the last year the federal government has resumed the release of export data for the top 375 metropolitan statistical areas. This new data allows the first review of Wausau/Marathon County specific export data. Import data is only available on the national level. WHAT DOES WISCONSIN EXPORT? Industrial machinery (HS84) continues to be WI Exports by Product Category - 2007
Wisconsin's top manufacturing export commodity, growing by 11.8 percent to $6.2 billion in 2007. Important subsectors within this category include Other
internal combustion engines (HS8407) which totaled 19%
Ind.
$960 million, down 12.5 percent, parts for mining, Paper
Mach.
4%
material handling, and loading equipment (HS8431) 33%
which totaled $619 million, up 70.2 percent); and Trans.
Equip.
office machine parts (HS8473) which totaled $403 9%
Elec.
Agmillion, up 5.9 percent. Mach.
related
14%
Inst.
10%
For the second year in a row, electrical machinery 11%
(HS85) was the #2 product category. The category grew by 5.7 percent to total $2.7 billion in 2007. Telephone parts (HS8715) account for approximately 20 percent of this category or $541 million. Electric generating sets and rotary converters (HS 8502) followed with 8.5 percent or $199.6. Medical and scientific instruments (HS90) ranked third. Exports in this category grew by less than 1 percent and totaled $2.1 billion. Medical, Surgical, Dental Instruments experienced a 1.2 percent increase to reach $734 million. Exports of X‐ray machinery (HS9022) declined by 21.9 percent for a total of $503 million. This was nearly offset by a 50.4 percent increase in the exports of optic fibers (HS9001), which totaled $336 million. If the various categories related to agriculture were grouped together, agricultural exports would rank fourth. Exports of farm commodities, processed foods, and wood products grew by 45.1 percent to just over $2 billion. The state's agricultural exports have nearly doubled in the past three years, up from $1.1 billion in 2004. Cereals and grains (HS10), many of which are not grown in Wisconsin, but are exported via Wisconsin ports, are the largest subsector at $502.5 million, up 97.3 percent over 2006. Exports of dairy/egg/honey products (HS04) skyrocketed 131 percent, up from $84.7 million in 2006 to $195.8 million in 2007, driven by demand for cheese, whey, and butter. A relatively new export, dried 11 distillers grains (HS2303), jumped 245 percent, up from $6 million in 2006 to $19.2 million in 2007, driven by strong demand in Asia. A by‐product of the state's burgeoning ethanol industry, distillers grains are sought as a high‐protein livestock feed. Transportation equipment (HS87) ranked fifth with an 18.4 percent increase to $1.7 billion, and paper products (HS48) grew by 4.0 percent. WHERE DO WISCONSIN EXPORTS GO? Wisconsin Exports by Destination (Top 10 Markets) In order by 2007 exports Export Value Export Value Export Value Export Value First Country 2005 2006 2007 Half 2008 Canada $5,237,727,730 $5,446,924,974 $5,845,787,916 $3,263,891,077 Mexico $1,333,042,573 $1,854,465,106 $1,890,879,410 $835,547,117 China $673,766,965 $870,286,596 $1,178,516,055 $613,530,568 United Kingdom $642,836,378 $686,452,305 $722,779,952 $342,012,470 Germany $549,554,703 $582,727,348 $660,820,243 $418,306,412 Japan $695,964,617 $738,808,759 $655,118,137 $375,917,832 Australia $424,739,008 $466,616,947 $563,686,740 $288,837,215 Saudi Arabia $167,531,373 $505,112,169 $475,566,091 $242,694,197 France $414,630,648 $467,838,148 $441,931,726 $259,015,382 Belgium $375,618,477 $383,760,223 $422,929,209 $227,276,777 Source: Global Trade Information Services, Inc Canada continues to be Wisconsin's best international customer. Our northern neighbor bought 30.5 percent of all the goods that Wisconsin firms exported in 2007, totaling $5.8 billion, a 7.1‐percent increase. Industrial machinery (HS84) accounts for 34.3 percent of state exports to Canada. Over one‐
third of that category is composed of internal combustion engines (HS8407). The #2 subcategory, self‐
propelled bulldozers/mechanical shovels/excavators/rollers (HS8429), grew 139.5 percent while the #3 category, centrifuges and filters (HS8421), grew by 93.1 percent. The province of Ontario accepts 71 percent of Wisconsin’s shipments to Canada. Manitoba follows with 12 percent. Mexico is Wisconsin's second‐largest export market. Exports to that country grew 2 percent to $1.9 billion. Electrical machinery (HS85), dominated by battery components (HS8548), is the leading category and accounts for 43 percent of Wisconsin exports to Mexico. The category grew by 3.9 percent to reach $813 million. Industrial machinery (HS84) slipped 6.2 percent to $306 million. Vehicles (HS87) is the #3 category. Agricultural exports to Mexico grew by 32 percent. 12 Wisconsin’s exports to China grew by 35.4 percent and totaled $1.2 billion, topping $1 billion for the first time. Total U.S. exports to China grew by 18.2 percent in the same period. Exports of the top three Wisconsin product categories ‐‐ industrial machinery (HS84), scientific and medical instruments (HS90), and electrical machinery (HS85) ‐‐ were up 20.2 percent, 97.0 percent, and 26.2 percent respectively. The United Kingdom and Germany rank 4th and 5th as destinations for Wisconsin exports. Of Wisconsin’s top 20 export destinations, seven are located in the 27‐member European Union (EU). If the EU were counted as a single destination, it would rank #2, accounting for 20.2 percent of Wisconsin exports. Shipments to the trade bloc grew by 11.3 percent and totaled $3.9 billion. Exports of industrial machinery (HS84) were up 8.9 percent, led by strong growth in the harvesting/threshing/agricultural produce machinery (HS8433), 55.6 percent. Japan slipped two spots to be ranked #6 as a destination for Wisconsin exports. Shipments to that country were off 11.32 percent. Medical and scientific instruments (HS90) declined by 22.0 percent, but are still the leading category, followed by industrial machinery (HS84), which was down by 15 percent. Exports of electrical machinery (HS85) and dairy products (HS04) were up by 14.8 and 31.1 percent respectively. Exports to Australia grew by 20.8 percent, and that country moved up two spots to 7th place. Industrial machinery (HS84) shipped there was up 20.6 percent. Exports to Middle Eastern counties were up 16.1 percent. Passenger vehicles (HS8703) account for 34.1 percent of Wisconsin exports to the region. Total exports to South America grew by 29.1 percent, with industrial machinery (HS84) growing by 53.9 percent and vehicles by 134.7 percent. HOW DOES WISCONSIN COMPARE TO OTHER STATES? Exports more
Exports less
than Wisconsin
than Wisconsin
13 In 2007 Wisconsin ranked #18 among the 50 states in total exports. Most of the higher ranked states have larger populations and/or major ports. Within the Midwest, Wisconsin exports more than Minnesota, Iowa and Missouri, while it follows states such as Michigan, Ohio, Illinois and Indiana. On a per capita basis, Wisconsin exports $3,425.01 for each of its residents, compared to $3,829.24 for the country as a whole and $3,880.07 for the four neighboring states of Illinois, Iowa, Michigan, and Minnesota. Wisconsin exporters lead the country in international shipments of several product categories, chief among them, with Wisconsin’s percentage of total U.S. exports in 2007, are: • Battery Components (95%) • Marine Outboard Engines (80%) • Slag and Ash of aluminum (78%) • Arc Welding Machinery (61%) • Non‐self‐propelled Tamping/Compacting Mach. (55%) • Concrete Pumps (52%) • Generating sets w/spark‐ignition engines (50%) • Bovine Semen (44%) • Ginseng Roots (44%) • Sweet Corn (36%) • Grated Cheese (36%) • Durum Wheat (35%) • Computed Tomography Devices (35%) • Bicycles (33%) • Beer (29%) • Magnetic Resonance Imaging Devices (26%) • Bakery Mixes and Dough (22%) • Specialty Coated Papers (21%) • Fire Extinguishers (21%) • Packaging and Wrapping Machinery (19%) CENTRAL WISCONSIN’S SHARE OF EXPORTS The U.S. Department of Commerce’s Bureau of the Census is once again releasing data on exports by metropolitan statistical areas (MSA), although not on the same schedule as the state‐by‐state data. This data set uses NAICS codes for product descriptions rather than the HS codes used in the state data series. Data for metropolitan area exports in 2005 and 2006 were released on January 24, 2008. Data through the first six months of 2007 were released in September of this year. The Wausau metropolitan area, composed of Marathon County, had exports of $211 million in 2006 and ranked #255 nationally. That amounted to just over 1.2 percent of the state’s total export volume. During the first half of 2007, Wausau exports totaled $114 million. 14 Wisconsin communities on the 2006 list included: MSA national rank in exports total 2006 exports, millions % of the state total GDP, millions % GDP from exports Milwaukee‐Waukesha‐West Allis #30 $6,849 39.89% $77,660 8.82% Racine #89 $1,484 8.64% $6,551 22.65% Madison #100 $1,310 7.63% $30,160 4.34% Appleton #119 $975 5.68% $8,705 11.20% Oshkosh/Neenah #139 $828 4.82% $6,925 11.96% Janesville #142 $803 4.68% $4,950 16.22% Fond du Lac #176 $522 3.04% $3,434 15.20% La Crosse (inc. Houston County in Minn.) #180 $512 2.98% $4,819 10.62% Sheboygan #195 $442 2.57% $4,845 9.12% Green Bay #197 $432 2.52% $13,341 3.24% Eau Claire #199 $427 2.49% $5,509 7.75% Wausau #255 $211 1.20% $5,231 4.03% Kenosha County is considered part of the Chicago‐Naperville‐Joliet Metropolitan Area and Superior is considered part of the Duluth Metropolitan Area for statistical purposes. For additional information on metropolitan area exports and to view the complete data series and methodology, visit www.trade.gov/metrodata. In 2006, the Wausau MSA’s leading export category was Paper (NAICS 322), which totaled $55 million, and accounted for 26.21 percent of the county’s total exports. Machinery, except electrical (NAICS code 333), which totaled $46 million or approximately 22 percent of the area’s total exports, was in second place. During the first six months of 2007, these two categories flipped positions. Machinery accounted for 26.10 percent of the region’s exports while Paper accounted for 22.71 percent. Electrical equipment, appliances, and components (NAICS 335), fabricated metal products (NAICS 332), and wood products (NAICS 321) followed in descending order. 15 Wausau Metro Area Exports by Top 5 Global NAICS NAICS ‐ Description Export Value 2005 Export Value 2006 Export Value First half 2007 333 ‐ Machinery, Except Electrical $41,507,495 $46,344,289 $29,752,376 322 ‐ Paper $58,499,832 $55,312,312 $25,704,469 335 ‐ Electrical Equipment, Appliances, and Component $26,962,776 $33,470,372 $20,249,068 332 ‐ Fabricated Metal Products $14,610,723 $15,159,531 $7,200,095 (NA) $12,260,555 $6,897,681 311 ‐ Food And Kindred Products $17,883,842 (NA) (NA) RES ‐ All Others (Residual) $55,209,726 $48,474,473 $24,176,447 $214,674,394 $211,021,532 $113,980,136 321 ‐ Wood Products TOTAL (NA) = NAICS code is not in the top 5 categories for that year.
Source: Bureau of the Census, U.S. Department of Commerce. Prepared by the Office of Trade and Industry Information, International Trade Administration, U.S. Department of Commerce Marathon County is the epicenter of Wisconsin’s ginseng cultivation. The root is highly valued in China and many other parts of East Asia for its general positive health effects, from helping alleviate the effects of stress to reducing fatigue and promoting brain function. Wisconsin exported $22 million worth of ginseng roots (HS121120) in 2007, a 54 percent increase over the previous year. Wisconsin accounted for 43.8 percent of the United States’ ginseng exported in 2007. U.S. Department of Agriculture data reports that Wisconsin’s 190 ginseng growers exported 304,414 pounds of dried roots in 2006. While Wisconsin is still a giant in ginseng cultivation and exports, it does not dominate the market as much as in the past. The U.S. Department of Commerce reported in 1995 that Wisconsin ginseng farms produced 1.9 million pounds and worked 95 percent of all acres harvested in the United States. Of the roots harvested that year, 1.8 million pounds were exported. In 1996, Wisconsin exports of ginseng were valued at $40.4 million. Over half of the Wausau area’s exports stay within North America. 16 Wausau Metro Area Exports by Regional Destination Destination Africa Export Value 2005 Export Value 2006 Export Value First half 2007 $1,475,590 $1,424,616 $509,807 $177,319,669 $179,552,621 $90,446,142 $9,380,535 $10,217,447 $6,896,862 $47,277,939 $48,281,007 $27,578,030 $1,211,933 $1,186,877 $849,362 $20,378,621 $13,600,134 $5,896,306 Western Hemisphere $135,624,964 $136,488,727 $66,919,055 NAFTA (North American Free Trade Agreement) $128,804,453 $130,093,460 $59,432,965 OPEC (Organization of Petroleum Exporting Countries) $5,526,229 $5,589,421 $9,780,299 South America $4,399,947 $3,788,085 $5,436,533 APEC (Asia‐Pacific Economic Cooperation) ASEAN (Association of Southeast Asian Nations) Asia DR‐CAFTA (Dominican Republic‐Central American Free Trade Agreement) EU‐25 (European Union) Note: These world destinations are based on political, economic, and geographic groupings. Some countries may be members of multiple groups; therefore, values for country groups cannot be summed to arrive at meaningful totals. Source: Bureau of the Census, U.S. Department of Commerce. Prepared by the Office of Trade and Industry Information, International Trade Administration, U.S. Department of Commerce. Full description of each destination can be found at http://ita.doc.gov/td/industry/otea/metro/world_destinations.html. Through periodic surveys, monitoring press reports, and direct contact with exporters, the Wisconsin Department of Commerce tries to estimate the number of exporters in different communities around the state. According to our latest data, we have identified 26 exporters in Wood County, 32 in Portage County, and 83 in Marathon County. We recognize that our lists are not exhaustive, but can give an estimation of the relative importance of exporting in different counties. SERVICES TO INCREASE WISCONSIN EXPORTS The Wisconsin International Trade Team provides a broad array of services to help Wisconsin companies succeed in their exporting efforts. Wisconsin firms – whether new to exporting or seasoned international businesses – can benefit from the Wisconsin International Trade Team’s market knowledge and exporting experience. Team members work with a variety of Wisconsin companies ranging from food processors, to livestock companies, to manufacturers of everything from metal fasteners to high tech scientific instruments. Services and support are not limited to Wisconsin’s borders. By combining staff here in Wisconsin with international offices in Brazil, Canada, China, Europe, Mexico, plus an additional 15 international offices specializing in food and agricultural exports, the Wisconsin International Trade Team can provide assistance in Wisconsin or abroad. Most Wisconsin‐based services are free of charge. The state contracts with business professionals in other countries to provide additional services. Fees are charged for several of these services to help cover part of the full cost. 17 International Business Counseling and Education ƒ One‐on‐One Consultations — Outreach Consultants located around the state meet with company representatives to help evaluate a firm’s export potential; offer guidance on the mechanics of the export process; discuss available resources and potential strategies for new or expanding markets; and furnish contact information on private‐sector export support service providers such as freight forwarders, translation services, international law firms, accountants, and banks. ƒ Export Seminars — Wisconsin companies can attend exporter education seminars presented throughout the state. Seminar topics range from exporter basics to detailed sessions on trade regulations, tariffs and insurance to market characteristics. ƒ Food Export Helpline™ — The Food Export Helpline offers customized export assistance on the details affecting food and agricultural exports ranging from sanitary certifications issues affecting shipping live or frozen cargo. Market Research ƒ Area Specialists — Team members with knowledge of the business culture and practices of different parts of the world can help companies understand the differences from the U.S. way of doing business, how to best respond to foreign inquiries, and identify important issues that will affect how customers in other countries may respond to a product. ƒ Market Overview — International office staff will evaluate potential for products and analyze current market conditions including market size, cultural issues affecting sales of your product, government regulations, tariffs, and existing competition. ƒ Market Builder™ — The Market Builder service, available to food and agricultural companies, provides customized in‐market research to help determine if certain markets are appropriate for product(s) and how a product compares to the competition. The service can generate feedback from qualified importers and distributors, as well asset up one‐on‐one meetings with interested buyers. Interna tional Promotions and Market Development ƒ Agent/Distributor Search — If conditions look positive for a product in a market, international office staff will identify potential agents or distributors, contact them to determine their interest in the product, obtain background information, and arrange meetings and follow‐up with those candidates that best meet the Wisconsin firm’s needs. ƒ Client/End User Search — In markets too small to support distributor networks or in situations where products are customized for each customer, international office staff can develop a list of potential buyers, obtain background information, and introduce a product to them but allow your own staff to make sales calls on them. ƒ Buyers’ Missions — Buyers’ Missions bring primarily foreign agricultural buyers to the U.S. to meet directly with you. These missions are a great opportunity to learn more about a product’s export potential and build relationships with key industry players, without the time and expense involved in overseas travel. 18 ƒ
Food Show PLUS!™ — This service, available to food and agricultural companies, provides exhibitors at international tradeshows with the information and in‐market support needed to be fully prepared for the event. The list of services is customized for each show but may include: pre‐show feedback on the competition, translation of company profile, on‐site interpreters, pre‐
arranged meetings with potential buyers, site visits to local retailers, in‐market seminars, and follow‐up assistance. ƒ
Trade Missions — Trade missions can open doors to influential decision makers and give new‐
to‐market firms valuable firsthand market research and a running start when approaching the market. On trade missions, trade team staff arrange meetings for participants with qualified business contacts and senior government officials. Our trade missions vary in size from 75+ participants from all industries led by the Governor to a handful of businesses in a related industry led by Trade Team staff members. ƒ
Trade Show Grants — The Wisconsin Trade Project Program awards grants of up to $5,000 to state firms with annual sales of less than $25 million to reimburse some of the costs involved in exhibiting at international trade shows in new markets. Companies that have developed high‐
tech products with worldwide applications can potentially receive a grant for an international show held in the United States. The grants are intended to help small‐ and medium‐sized exporters make initial forays into new markets. ƒ
Branded Program™ — The Branded Program, available to food and agricultural companies, provides 50% cost reimbursement for a wide variety of international marketing activities including advertising, in‐store promotions and product demonstrations, fees for exhibiting at overseas tradeshows and selected domestic tradeshows, public relations, promotional publications and freight costs for samples. The Wisconsin International Trade Team is a collaboration of the Wisconsin Department of Commerce and the Department of Agriculture, Trade and Consumer Protection. Contact us at Telephone: 1 (800) 462‐5237 Email: international@wisconsin.gov Website: http://international.wi.gov/business.html 19 DATA SOURCES Information on U.S. merchandise exports is compiled from data filed with the federal government for individual export shipments. Available data only accounts for products shipped and does not include exports of services, income from international tourists in the state, or sales of services or software delivered via the internet. Exporters are required to electronically file a Shipper’s Export Declaration with the U.S. federal government for shipments in which the value of any product group by HS code is $2,500 or more, the federal government does not release the names or other identifiable data on individual exporters. Exporters are not required to report data to the Wisconsin Department of Commerce. Data reflects the state from which the merchandise starts its export journey and is not always the same as where goods were produced. This is particularly true for agricultural shipments. Wheat grown in the Dakotas but consolidated in and exported from the port of Superior is credited as a Wisconsin export. Likewise Wisconsin‐grown corn shipped down the Mississippi River by barge and then exported via the port of New Orleans is often added to Louisiana’s total. Manufactured goods can be produced in one state and be warehoused in and eventually exported from another state. Another factor is shipments of goods that are arranged by wholesalers and trading companies. The manufacturer may have made a domestic sale, but it was the wholesaler or trading company that made the export sale. The categories of Unspecified State or Country refer to shipments of bulk commodities destined for famine relief that may be stockpiled in various locations around the world, but which have not been determined at the time the goods leave the United States. Global Trade Information Services, Inc. (GTI) reformats federal data into user‐friendly formats that were used to create this report. GTI publishes more than 55 separate country editions, each containing the official merchandise trade data of the respective country. Additional data from the U.S. Department of Commerce, International Trade Administration, and Bureau of Census, Foreign Trade Division: Exporter Database & State Export‐Related Employment Project was also used. 20