Trade Creates Jobs for North Carolina

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1 Trade Creates Jobs for North Carolina Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services. Trade creates jobs for North Carolinians. Export growth increases jobs by generating new business for North Carolina s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping North Carolina businesses compete and saving North Carolina families real dollars at the cash register. Foreign investment in North Carolina creates good jobs across a range of sectors. MORE THAN 1 IN 5 NORTH CAROLINA JOBS DEPENDS ON TRADE North Carolina workers need trade to maintain and create jobs. Today, 1.1 million jobs in North Carolina depend on trade. In 2008, 20.7 percent of jobs in North Carolina depended on trade, up from 8.4 percent in North Carolina s trade-related employment grew nearly three times faster than total employment from 2004 to North Carolina Jobs Tied to Trade, 2008 Wholesale & Retail Trade 178,200 Prof., Sci., & Tech. Services 47,400 Finance & Insurance 45,700 Transp. & Warehousing 38,900 Information 25,400 Small and Large Employers Partner to Export Small and medium-sized enterprises (SME) and workers in North Carolina supply goods and services to large U.S. companies in and out of the State. Those bigger companies use the SME goods and services to make other products and services that they, in turn, export to customers around the world. Trade through North Carolina s ports support 85,000 jobs and contribute nearly $300 million annually in state and local tax revenues. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Newly exporting firms increase employment almost four times faster than non-exporting firms.

2 NORTH CAROLINA S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS According to the U.S. Department of Commerce, North Carolina ranked 15 th in the United States with total exports valued at $25.1 billion in Chemicals was North Carolina s leading export category in 2008 accounting for 19.8 percent of total exports. One of the fastest growing export categories for North Carolina is transportation equipment, increasing at an average annual rate of 18.0 percent since In 2008, North Carolina companies sold their products in nearly 210 foreign markets. The top export market is Canada ($5.8 billion). Other leading markets include Mexico ($1.8 billion) and the Japan ($1.7 billion). China is one of North Carolina s fastest growing trading partners. In 2008, North Carolina companies exported $1.9 billion worth of goods to China, an increase of 431 percent since In 2008, exports accounted for approximately 6.3 percent of North Carolina s state gross domestic product (state GDP). Since 2002, exports have increased twice as fast as state GDP. Services exports are also important to North Carolina, including port services, education of foreign students at North Carolina colleges and universities, like Duke University and the University of North Carolina, and spending by foreign visitors to tourist destinations in North Carolina, including the Outer Banks. Services companies employ 3.6 million workers in North Carolina. In 2008, 835,200 North Carolina services jobs depended on trade. North Carolina is a leading exporter of agricultural products. Important markets are the European Union, China, Russia, and Indonesia. The State is the largest exporter of tobacco in the United States, accounting for nearly 45 percent of total U.S. tobacco exports. North Carolina s other key export products include animals and meat, poultry products, soybeans, wheat, cotton and cottonseed. These exports directly benefit North Carolina s farmers in regions like the southern and central coastal areas.

3 NORTH CAROLINA S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT Exports particularly benefit workers at North Carolina s small- and mid-size companies. In 2007, 6, percent of North Carolina s exporting companies were small- or mid-sized companies. Larger North Carolina companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals. Small and medium-sized North Carolina companies also indirectly export when they supply goods and services to larger North Carolina exporters. Every job at a North Carolina worldwide company supports nearly two others at companies that are part of its supply chain. Leading North Carolina Exporters Company Products Foreign Markets Alliance One International Inc. (Farmville) Flue-cured, burley tobacco Belgium, China. France Carolina Cotton Growers Co-op (Garner) Cotton Thailand, Taiwan, China, Turkey Celanese Acetate (Charlotte) Organic chemicals China Hong Kong, Indonesia Global Nuclear Fuel (Wilmington) Radioactive materials Japan, United Kingdom Invista (Charlotte) Organic chemicals China, Japan, Argentina Italiana Commissionaire Pine wood chips Turkey Legnami (Wilmington) Renfro (Mt. Airy) Yarn, textile machinery Mexico R. J. Reynolds Tobacco (Winton Salem) Cigarettes Japan, China, Germany, Indonesia Syngenta Crop Protection (Greensboro) Fungicides, herbicides, chemicals Brazil, Netherlands

4 MORE OF A GOOD THING FOR NORTH CAROLINA TRADE AGREEMENTS LEVEL THE PLAYING FIELD The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations trade barriers and opening up foreign markets to U.S. exports. North Carolina has increased its exports to partner countries following the implementation of the U.S. bilateral and regional free trade agreements (FTAs). Exports to the North American Free Trade Agreement (NAFTA) countries experienced the strongest growth, increasing by 157 percent since NAFTA s implementation. Since the U.S. Chile Free Trade Agreement went into effect January of 2004, North Carolina s exports to Chile have increased $64.3 million (132 percent), growing more than twice as fast as North Carolina s exports to the world. Since 2005, exports of machinery, North Carolina s second largest export category, to Morocco have increased by 672 percent, nearly 17 times faster than machinery exports to the world. While textile exports from North Carolina to the world have decreased since the passage of the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), North Carolina s textile exports to El Salvador (one of the DR-CAFTA signatory countries) have grown $6.3 million (420 percent). The United States enjoys a trade surplus in manufactured goods with its FTA partners.* U.S. Trade Balance, 2008 Services Agricultural Products Manufactured Goods: 15 FTA Partners Oil Products Manufactured Goods: Other Countries $ billions * State-specific data are not available for imports, so this chart cannot be prepared for North Carolina

5 FOREIGN INVESTMENT IN NORTH CAROLINA CREATES JOBS Foreign-owned companies invest significant amounts of capital to open or expand facilities in North Carolina every year. These companies employ 209,400 workers, more than 6 percent of all North Carolina employees in the private sector. North Carolina ranks sixth in the United States for highest share of workers employed by foreign subsidiaries. Foreign-owned manufacturing accounts for 77,200 jobs, representing nearly 14 percent of all manufacturing jobs in North Carolina. U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies. Selected Multinational Corporations Employing Workers in North Carolina Company Industry Country Bridgestone Americas Rubber Products Japan GlaxoSmithKline Pharmaceuticals United Kingdom Honda Transportation Equipment Japan Miller Brewing Co. Alcoholic Beverages United Kingdom Rexam Consumer Product Packaging United Kingdom Siemens Electronics Germany Smiths Aerospace Aerospace United Kingdom Sodexho Food/Facility Management France Square D Electrical Equipment France NORTH CAROLINA COMPANIES AND WORKERS USE IMPORTS TO STAY COMPETITVE In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets. Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in North Carolina. Services, especially transportation from North Carolina s ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to North Carolina s growth, and account for 39.5 percent of state GDP, more than twice as much as manufacturing.

6 EXPORTS AND IMPORTS HELP NORTH CAROLINA FAMILIES ENJOY A HIGHER STANDARD OF LIVING Exports and imports support family incomes. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Imports help keep prices for North Carolina families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year. Imports Keep Inflation Low ( ) Price Change Toys -45% Clothing -10% Household Appliances -9% Footwear -3% JOBS Trade and investment liberalization policies are worth over $10,000 per year to an average North Carolina family of four. SOURCES Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC ( North Carolina Ports ( U.S. Department of Labor ( U.S. Department of Commerce ( ( ( EXPORTS U.S. Department of Agriculture ( U.S. Department of Commerce ( ( ( ( Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott ( PIERS Trade Intelligence database ( FOREIGN INVESTMENT Organization for International Investment ( IMPORTS U.S. Department of Labor ( U.S. Department of Commerce ( STANDARD OF LIVING Council of Economic Advisers ( U.S. Department of Labor ( U.S. Department of Commerce ( TRADE LIBERALIZATION U.S. Department of Commerce ( Contact: David Thomas Director, Public Policy Business Roundtable dthomas@businessroundtable.org January 2010