Tennessee Trade Report 4th Quarter 2015
Tables and Graphs
Most Rapidly Changing Exports and Markets
Across almost every industry, Tennessee export losses in percentage terms were significantly less than for the nation as a whole.
A $200 million Loss, but it Could Have Been Worse
Against a backdrop of a struggling global economy, it likely comes as no surprise that Tennessee exports fell in the fourth quarter. At $8.035 billion, the state exported about $200 million less than in the fourth quarter of 2014, a loss of 2.4 percent. The surprise, really, is that exports held up as well as they did. By comparison, total American exports were off by slightly more than 10 percent, four times Tennessee's percentage drop. This difference is not simply due to what Tennessee sells. Across almost every industry, Tennessee export losses in percentage terms were significantly less than for the nation as a whole.
Electric Auto Batteries Have Become a Large Export
If there's a single reason why Tennessee buckled but didn't break under all the global bad news, it is the commencement of electric storage battery exports. In the fourth quarter, exports of these batteries rose from virtually zero in 2014 to over $20 million. Foreign shipments of electric battery parts soared to over $80 million, again from virtually zero a year ago. Japan was by far the largest destination for these exports. This surge was enough to outweigh a downturn in car exports themselves, electric or otherwise. Passenger vehicle sales slipped from $608 million in the fourth quarter of 2014 to $566 this past quarter. Most auto parts, however, fared better, breaking roughly even last quarter.
Before we get to the bad news, we might note a few other industries that had quite strong quarters. The medical instrument industry continued its growth, gaining some $50 million in foreign sales. The 8 percent gain in medical industry exports stands in comparison to the overall American loss of about 3 percent in this industry. The majority of these increased exports went to the European Union. Pharmaceutical goods had an even better performace, nearly doubling their exports from $63 million to $125 million. These too, largely went to Europe. Aircraft industry exports were up about 7 percent, to just over $400 million. Here it was a wild ride, as a very large drop in aircraft-related exports in both Mexico and Singapore was more than matched by very large increases to Sweden, Brazil, India, the Czech Republic, and Canada. The cell phone industry, too, had a strong quarter. Thanks mostly to Hong Kong and Southeast Asia, its foreign shipments more than tripled, to $44 million for the quarter.
Sizable Losses in China and Other Emerging Markets
Losses were centered on exports destined for the emerging markets and China. (Actually a significant loss in car exports to the Middle East suggests we should add oil-producing countries to this list as well). Thus many raw materials, such as iron and steel, wood, and cotton, were all down. The largest hit was the chemical industry, where exports dropped by $100 million last quarter. Particularly hard hit was the coloring pigments and dyes sector, which lost about half of its foreign sales in the fourth quarter. The computer industry also struggled. Laptop exports fell 20 percent, while PC shipments fell by a third.
Most Automotive Exports Lost Ground
Looking at exports regionally, the biggest disappointments have to be in our neighboring markets. If exports to Canada had only matched last year's performance, state exporters would have broken even for the fourth quarter. Both auto industry and computer industry exports lost ground north of the border. Shipments to Mexico also fell, though not as much. Aircraft exports, along with car engines, were the major factors behind a $100 million quarterly loss in Mexico.
The Major Gains Were in Europe
Europe was the site of the biggest gains for Tennessee exporters in the fourth quarter, perhaps because it was one of the few areas were the dollar was not getting stronger. Led by a $250 million gain in shipments to the Benelux countries, state exports to the EU rose from $978 million to $1.166 billion. The U.K. market was similarly strong, as state exports there gained over 10 percent in the quarter. The world's other large developed market, Japan, performed even better, in percentage terms. Led by those electric battery shipments, Tennessee's exports to Japan grew by nearly $100 million (almost 20 percent). The state's sales to Australia were also up by 10 percent.
Outside the developed world, however, things were tough going indeed. The troubles of China and the rest of the developing world clearly show up in the export statistics. Tennessee's shipments to China were down 12 percent (a loss of $67 million). The smaller Middle East market posted losses of $83 million, almost one-quarter of its Tennessee shipments of last year. Exports to Latin America were also down substantially with only Chile and Peru, among the markets of any size, bucking the tide. Shipments to Russia all but collapsed, with Tennessee exports falling from $93 million to $23 million for the quarter. The bright spot among the emerging markets, if you can call it that, was Southeast Asia, where state exports fell “only” $5 million.
An oddity for the quarter is that almost all of the state's best markets were in the Baltic region. However, that turned out to be merely a coincidence, since although all of the nations bought a lot more of Tennessee's goods, for each it was a different good.
It doesn't seem very plausible that Tennessee businesses will be able to turn a somewhat somber export picture around anytime soon. Besides the headwind of the dramatically lowered growth in most regions of the world, exporters face the problem of the extremely strong American dollar in Canada, by far the state's largest export market. Until at least one of these two trends changes, increasing global sales will be an uphill battle for many Tennessee businesses.