Monday, February 4, 2008

Rochester : Export Engine for Upstate Economic Growth

On Jan 24, the U.S. Commerce Department introduced a new data series that precisely measures manufacturing export values for metropolitan areas. Service export values are not included in this series. As per this report, in 2006, the Rochester metropolitan areas recorded export sales of $ USD 4.6 billion. Overall U.S. exporters reported a record $1.4 trillion in goods and services in 2006. Final 2007 numbers are forecast to exceed 2006 totals.

Rochester with it’s USD 4.6 billion was the leader in Upstate New York , ahead of Buffalo-Niagara Falls (USD 4.2 billion), Albany-Schenectady-Troy (USD 3.4 billion), Poughkeepsie-Newburgh-Middletown (USD 2 billion) and Syracuse (USD 2 billion). In fact, Rochester was the number one Metro area in the entire state excluding the Tristate New York-Northern New Jersey-Long Island, NY-NJ-PA area (USD 66 billion). A remarkable achievement indeed. More remarkable is the fact that this has been achieved at a time when the area is seeing a steady decline in the manufacturing potential of it’s erstwhile stalwarts like Kodak and Xerox. This speaks highly of the mid-size Rochester companies which have picked up the slack.

Canada is Rochester’s single biggest manufactured exports trading partner (USD 1.2 billion) followed by Mexico (USD 703 million), China (USD 270 million) and Germany (USD 249 million). Our area’s biggest exports were Chemicals ( USD 1.7 billion), Computers and Electronic products (USD 1 billion), Machinery (USD 663 million) and Plastics and Rubber products (USD 197 million)

These statistics throw up certain important points:

· Rochester area’s delegations to Albany and Washington should take note of these facts and ensure that they are factored in while deciding the allocation of governmental developmental dollars to the Rochester area. We always seem to be fighting a losing battle with Buffalo.

· Exports based industries not only create jobs but also help in reducing the national debt. Special incentives should be formulated to attract and grow such businesses in the Rochester area.

· One will have to wait and see the economic implications of the changed travel requirements with Canada. Delays or unease in traveling between the two countries may manifest itself in reduced trade. The local governments need to be on their toes in making these new changes as smooth and painless as possible. This is one area where federal policy will very directly affect Rochester residents.

· Mexico is also a major export destination. Opportunities exist to leverage our area’s Hispanic heritage and enhance the bilingual potential.

· The exports destination basket is spread very thin. Area businesses should be striving for establishing toeholds in other emerging economies : India, Russia, Brazil, South Africa, Middle East etc. Exports to China also do not seem to reflect the potential which exists there. Business associations like the Rochester Business Association should help their members in making breakthroughs in the non-traditional export markets. Trade delegations, increased web presence, participation in trade shows etc should help.

· The high proportion of Chemicals/Plastics and Rubber etc. in the mix appears slightly troubling as these are often considered sunset industries in the US, likely to be impacted the most by tougher environmental standards. For all the other Metro areas in the same export size range – Computers and Electronic products were the number one export product. For Buffalo , Transportation equipment was the number one.

Overall, these numbers speak well for the resilience of the Rochester economy and the adaptability of the local businesses to the changing economic environment. The spirit of innovation and out-of-the-box thinking which drove Rochester in the past can continue to do so in the future. Local business and political leadership has a very important role to play by adequately harnessing and directing federal , state and local resources.

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