October 2, 2012

U.S. goal of doubling exports by 2015 now likely, survey of high-tech firms says

Rise in exports driven by higher overseas incomes, narrowing of wage gap, and gains from free-trade pacts, according to respondents

By Mark B. Solomon

A survey of U.S. high-tech manufacturers said it is likely the United States will meet a goal set by President Obama two years ago to double export values by 2015. This finding from UPS Inc.'s annual "Change in the (Supply) Chain" survey conducted by IDC Manufacturing Insights is a far cry from a similar survey conducted in 2010 when less than half of that survey's respondents said the objective was achievable.

According to the survey of 125 senior-level supply chain executives, 85 percent of respondents believe it is "very likely" or "somewhat likely" that the U.S. will hit the export objective set by President Obama in his 2010 State of the Union address. By contrast, only 40 percent of respondents responding to a 2010 survey thought that way.

One-third of respondents said the goal would be met because of an increase in disposable income in emerging markets. Another one-third said that exports are up because increasing labor rates in traditionally low-cost manufacturing centers has narrowed the cost gap between these countries and the United States. Finally, one in five cited recently signed free-trade agreements with South Korea, Panama, and Colombia.

The respondents said they expect demand for U.S. high-tech goods to be strong for the next five years. Although North America is expected to remain the largest high-tech consumer market over the next three to five years, demand for goods is expected to decrease by 7 percent in the region, according to the survey. However, demand in other markets is expected to increase, in some regions by double-digit percentages, according to the survey.

Executives forecast their companies will increase sales and fulfillment activities in India, the Middle East, and Africa by 22 percent each, and in Brazil by 18 percent. Sales and fulfillment in other South American regions is expected to increase by 19 percent, the survey said.

"Global demand will continue to grow in new and existing markets, causing supply chain executives to shift not only their fulfillment operations but also their sourcing strategies to serve those markets," said Ken Rankin, high-tech marketing director, UPS, in a statement. "We have already begun to see such a shift as companies look to India and Brazil as key markets not only for fulfillment but for production as well."

The 2012 survey was conducted from May to July. The respondents to the 2012 survey were different than participants in the 2010 version.

More articles by Mark B. Solomon

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