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February 28, 2006
OREGON'S CANADA CONNECTION
Oregon's exports flow to a record high
Friday, February 17, 2006
RICHARD READ
The Oregonian
Oregon exports ranging from trucks to wine jumped 11 percent last year, reaching a record $12.4 billion as Canada became by far the state's biggest foreign customer.
While overall exports pulled out of a post-2000 dip, however, high-tech shipments abroad remained stuck below 1999 levels. Transportation equipment -- notably Freightliner rigs sold to Canada -- led the recovery, which translates into well-paying jobs.
The numbers show Oregon entwined ever more tightly with the global economy, although not as predictably as trade promoters once assumed. Exports to Japan, long the state's largest foreign customer, continued a five-year decline. Sales to China, touted as a hot emerging market for Oregon, faltered last year.
In fact, the export bounce may have as much to do with the stronger U.S. economy as with demand for Oregon products abroad. Increasingly, factories here make components that are sent overseas for assembly into products shipped back for sale to U.S. consumers. This trend helps explain the nation's massive, persistent trade deficit, even as exports grow. U.S. exporters, for example, ship $1 semiconductors to South Korea, where they are installed in $9 cell phones sold in the United States.
"So you still have good jobs in Oregon, but you also still have the trade deficit," says Scott Goddin, director of the U.S. Commerce Department's export assistance center in Portland.
Historically, Oregon exported raw products such as logs and grain. But now regions compete worldwide to process goods before shipping them abroad, capturing additional value. High-tech products and machinery account for at least half the value of Oregon exports, according to the World Institute for Strategic Economic Research, which compiles the trade data.
But today's high-end product becomes tomorrow's mass-produced commodity, forcing businesses to innovate and cut costs. In this competitive climate, the flow of trade shifts quickly. Oregon companies that once shipped electronics parts to Japan now send them to Southeast Asia, as Japanese companies send manufacturing to cheaper offshore factories.
Canada is shopping more in Oregon as its economy expands and its strengthening currency buys more goods priced in U.S. dollars. Freightliner, which makes tractor-trailer trucks in Portland, sold 14,850 U.S.-made rigs to Canada last year, up from 12,600 in 2004. Oregon Steel Mills, which manufactures steel plate in Portland, ships it to an Alberta subsidiary. The Canadian plant turns the plate into large-diameter pipe for the booming oil and natural-gas business.
Exports bring new infusions of money that multiply in Oregon's economy, says Tom Potiowsky, the state economist. He expects foreign sales increases to persist this year -- but not across the board. Freightliner sales, for example, are partly driven by U.S. and Canadian companies rushing to buy trucks before 2007, when stricter emissions requirements are expected to boost sticker prices.
Global trade is tugging more small and medium companies into the export business. Sokol Blosser Winery has sought foreign customers aggressively, building exports to 7 percent of the 40,000 to 50,000 cases it sells annually. Managers of the Dundee winery think their vintages must be available in top foreign wine markets to build an international reputation.
Alex Sokol Blosser, vice president of sales, closely monitors currency fluctuations in Canada, the winery's top foreign customer. "People travel," he says. "I get a lot of sales in Canada because I have good distribution in Las Vegas. I get good sales in Japan because I have good distribution in Alberta."
Some factors remain out of Oregon's control. State agricultural exports can swing widely depending on world prices and events. They dropped 4 percent last year after jumping 20 percent the year before. Japan's import ban on U.S. beef, reimposed recently after a shipment containing bone revived fears of mad cow disease, has hurt American food products' reputation there.
"Trying to do a promotion over there has been a little more of a challenge," says Patrick Mayer, the Oregon Agriculture Department's international trade manager.
Richard Read: 503-294-5135; richread@aol.com.
Posted by smithr at 10:17 AM