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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

July 25, 2010 at 9:01 PM

In ‘export nation,’ Seattle enjoys strong position

When I say that Seattle punches above its weight class, consider exports. According to a new report from the Brookings Institution, Seattle ranked No. 10 among the 100 largest metropolitan areas, with more than $24 billion in exports in 2008 and representing 2.3 percent of all metro exports. The competition above us includes New York, LA, Chicago, Boston and San Francisco.

Seattle also had the 10th highest level of export-related jobs, 196,000. Obviously we can thank Boeing for much of this, which underscores the importance of the aerospace cluster here. The report found that transportation equipment exports from Seattle are 4.5 times larger in relation to its total economy than to the U.S. economy.

“Manufacturing industries are the most export oriented, so metropolitan areas that specialize in manufacturing tend to export the largest shares of their” gross metropolitan product, the report found. “Export-oriented metropolitan areas are also significantly more innovative, as defined by their rate of patent production. This may be explained by existing evidence that more innovative firms are more likely to export internationally and that activity reinforces innovation through competition.” Also workers in export-intensive industries earn more. Seattle ranked 7th in wages, while Portland ranked 2nd.

This information deserves some important footnotes. It’s concerned with goods-producing exports, so we don’t have a complete idea of the (substantial) net positive from Microsoft, the software sector, game development sector and even Amazon and Starbucks. And the most recent data come from the edge of the Great Recession, even though it appears that aerospace has held up fairly well and is bouncing back.

It should also be a reminder that uneasy lies the head that wears a crown. As we’ve been reminded with this week’s big Farnborough air show, Boeing faces a raft of competition, both from Airbus and emerging powers, including in China. Seattle must retain its traditional export strengths and enhance them — no small thing considering the rising number of rivals in Asia and Europe, not only in manufacturing but also research. And all this in a fragile, fractured “recovery” where many Americans are questioning the fairness of our trade policies.

The report also notes the importance in future growth from emerging markets:

Though Canada and Mexico are the nation’s two largest trading partners, U.S. exports to Brazil, India, and China (the so-called BIC countries) have been increasing rapidly during the last decade, doubling in size between 2003 and 2008. The BIC countries are expected to account for about a fifth of the global gross domestic product in 2010, surpassing the United States for the first time. The metropolitan areas that produce the largest U.S. exports to the BICs are well-positioned to take advantage of the growth of these countries.

Yes, but…China and India continue to pose significant challenges to genuine exporters, especially beyond Boeing’s current (but not to be taken for granted) successes. These include both outright and stealth protectionism. Also, transnational companies know no loyalty to America, especially in a world of surplus, skilled labor — Jack Welch says get used to seeing jobs offshored. Easy for him to say.

To take one example, a triumphant story this week reported that General Motors has claimed top market share (13 percent) in China. But this is only through a joint venture with S.A.I.C. Motor Corp., a Chinese state-owned company. So while profits may flow to Detroit, the venture produces few jobs for job-hungry Americans. Indeed, GM employs 32,000 hourly workers in China and is building an alternative energy R&D center. GM once employed nearly half a million Americans in good, middle-class jobs — now its U.S. workforce is 52,000.

Today’s Econ Haiku:

Is Microsoft back?

Did it ever really leave?

The stock price will tell

Comments | More in Aerospace/Boeing, Trade

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