If national export trends were an exercise routine, it would probably
go something like this: up, up, up, down. That's because after a decade
of strong growth, exports have stagnated or fallen in most states.
U.S. manufactured exports have seen strong and steady growth for the better
part of four decades. In 2000, they cracked the $700 billion mark, the
highest of any country, and a 16 percent increase over 1998 export levels.
Since then, however, U.S. exports have been on a crash diet, dropping
12 percent over the last two years.
As a group, district states have had a generally similar experience, with
exports decreasing slightly last year. A closer look, however, shows that
each state has its own unique export story. Wisconsin and North Dakota
saw manufactured exports rise in 2002the third annual increase in
a row for Wisconsinwhile Minnesota, Montana and South Dakota each
had small drops of between 1 percent and 3 percent.
In general, since 1997 manufactured exports in Minnesota and Wisconsin
have displayed a more stable growth patternone that more closely
mirrors the nationwhile the Dakotas and Montana have been up and
down like Mexican jumping beans (see chart). Montana's exports have tumbled
22 percent since 2000. North Dakota's have jumped 30 percent over the
Much of that volatility is due to the small pool of exports pushed out
of these states, which means individual companies and industries with
either a good or bad year can have a large impact on statewide export
For example, transportation exports in North Dakota have hit the skidsdouble-digit
percentage decreases two years runningthanks in part to tough times
and the ongoing downsizing of a Motor Coach bus plant in Pembina. The
workforce is being slashed by 40 percent, and two bus assembly lines are
getting moved to the company's plant in Winnipeg, according to local news
Montana's export decline is due in part to the free fall of primary metal
manufacturing exports, which was particularly jarring because it came
on the heels of a 15 percent increase (to $123 million) in 2000. But in
early 2001, Mexican-owned Asarco announced that it was closing its lead
and silver smelter in East Helena, a major exporting facility that had
been operating for more than a century. Primary metal exports that year
plummeted to just $25 million and dropped again to $7 million last year.
Individual export markets can have a big influence on export numbers as
well. Exports to Belgium went from $2 million to $114 million and back
to $4 million from 1999 to 2001, the result mostly of a one-time machinery
delivery. The same thing occurred in Minnesota a few years back when the
state saw big increases in stone, clay and glass, in part because of major
orders for Malaysian skyscrapers, according to Bob Isaacson, director
of research with the Minnesota Department of Trade and Economic Development.
Source: Massachusetts Institute for Social and Economic Research
Exports also don't account for changes in business operations.
Isaacson said that a few years ago, transportation equipment exports droppedthough
total company sales did notwhen Ford shifted truck shipments out
of its St. Paul plant from Canada to domestic markets.
All trade routes lead to Canada
Though companies in the district export to most of the world's countries,
only a relatively small handful really matter from an economic standpoint.
In fact, you could sum it up mostly as: Canada, and then everybody else.
More than half of Montana's manufactured exports go to Canada, a portion
two and half times that of the next closest destination, Europe. Canada
is the leading destination for North Dakota (46 percent of exports), South
Dakota (45 percent) and Wisconsin (38 percent). Minnesota is unique as
the only district state whose biggest export market is not Canada (though
it is second, at 25 percent). Its biggest marketby a reasonably
large margin of some $800 million in 2002is Europe.
The reason for Canada's dominance is one of proximity and convenience,
several sources said. "By nature, Canada will probably remain as
our top destination, by virtue of its location. It's easy to transport
to. It's a ready market," said Mark Bisom from the Montana Office
of Trade and International Relations. He added that the nearest major
metropolitan market is neither east (Minneapolis) nor west (Seattle),
but north in Calgary. "So you'll continue to see that [Canadian export]
The same goes for South Dakota, according to Liuyi Moore of the South
Dakota International Business Institute. Asked if the Canadian dominance
is likely to change, Moore responded, "I do not think so. Canada
will still be the most popular export destination because of the location
and close cultural and business ties."
All eyes, but not exports, on China
Any talk of the "next Canada" for exporters, and the conversation
often swings quickly to China, with its 1.3 billion peopleone of
every five people on the planeta rapidly expanding economy and an
aggressive, state-led infrastructure spree that the World Bank predicts
might cost $750 billion in the coming decade.
"There is this fascination, on the good side and bad, with China,"
according to Elaine Bliss of the Minnesota Trade Office. The country is
seen both as a demon for stealing many manufacturing jobs and as an export
savior of sorts because of its huge buying potential.
But a closer look shows that China's export potential has not yet translated
into reality. Exports to China are growing rapidly on a percentage basis
in all district states, including 28 percent last year alone for Minnesota.
From 2000 to 2002, Wisconsin manufactured exports to China doubled. But
that added up to just $348 million, or less than 4 percent of the state's
total. China's export market share for other district states is even smaller.
Curt Hanson, a principal with the Trade Acceptance Group in Edina, Minn.,
and corresponding via e-mail, said he once worked with a company that
wanted to export software to China. The company was paid a small amount
for a half-dozen copies of the software, and once it was tested "to
the satisfaction of the Chinese, they would receive the multimillion dollar
order," according to Hanson. "I strongly advised against this
structure and told the client if he sent over six copies he would never
hear from them again."
"It was a large potential order so their mind was clouded with dollar
signs," Hanson said. "They argued that to break the program
code would take thousands of hours costing millions of dollars. I argued
that the Chinese could put hundreds of mathematicians and computer science
engineers on the project for a fraction of the cost of purchasing the
programs from them. They disagreed and sent over the six copies. Needless
to say I never heard from [the company] again, and they never received
For Bliss, this represents the crux of the China dilemma. For companies,
the most important factor for exportseven ahead of tariffs"is
the establishment of clear and transparent rules ... that will be enforced
and not changed at the drop of a hat," Bliss said. In that sense,
the big deal about getting China into the World Trade Organization "was
having [China] play by the same set of [trade] rules" that governed
Bliss acknowledged that China was a high-risk, high-reward opportunity
for exporters. She warned that China "is not for everyone. It can
be a black hole of money. ... For those new to exporting, it's not the
place to start. It's sort of the deep end of the pool. It's an extremely
difficult and expensive market to tap into."