After experiencing a decline and mediocre rebound in the last two years, NH’s exports are on the rise. The state’s exports dropped more than 5 percent between 2014 and 2015 and saw only a 3.5 percent increase last year. However, export activity is heating up this year, with a near 25 percent jump between August 2016 to August 2017, climbing from $2.6 billion to $3.3 billion, according to data tracked by WiserTrade, which provides data on international trade. (Year-end figures will not be available until early 2018.)
Russell Thibeault, an economist and founder of Applied Economic Research of Laconia, says that’s a good sign since exports play an important role in the state’s overall $80 billion economy. “It’s about 5 percent, but that’s an important 5 percent,” he says. “Exports are a very valuable economic activity because they bring in fresh dollars that then circulate throughout the state’s economy, and multiply as they do that. So $1 million in exports is worth more than $1 million in retail sales because retail sales, with the exception of tourism, is money that is already here.”
What’s Behind the Spike?
Massood Samii, a professor of international business and the former director of the Institute for International Business at Southern NH University in Manchester, says there are a number of reasons for the increase. Among them is an initiative undertaken by NH several years ago to use funds from the federal government’s State Trade Expansion Program to assist NH companies interested in developing their exports, particularly in the aerospace and electrical/industrial machinery sectors.
“We work with small and medium-sized companies,” explains Tina Kasim, program manager of the state’s International Trade Resource Center (ITRC), which manages the initiative. “We’ve been able to use those funds for a whole range of export promotional activities, from enhancing websites, like translating pages for specific markets, to helping offset costs for attending trade shows, and from sales missions in order to enter new markets to paying for training so companies are more compliant with other countries’ import regulations.”
Most significantly to Samii, the federal funds were used to launch the NH Aerospace and Defense Export Consortium (NHADEC), which is made up of various industry-related companies. The consortium works to brand the state as a place where overseas businesses can find “innovations, solutions and some great manufacturers,” says Kasim, and it has also helped NH businesses attend the Paris Air Show as well as similar events in London, Dubai and Singapore.
Samii says that the state’s recent growth in exports reflects its focus on high-tech, value-added companies. Aerospace exports grew more than 141 percent between August 2016 and August 2017, rising from $132.4 million to $319.3 million following an increase of slightly more than 200 percent the previous year. Over the same eight months this year, electrical machinery, which is the state’s top export sector, jumped by more than 51 percent, from $696 million to $1.05 billion.
Aerospace & Defense Climb
Dawn Wivell, a business consultant who serves as executive director of the NHADEC, says NH’s focus on global growth sectors like aerospace and engineering helps to fuel its export business. “American aerospace manufacturers produce the highest trade surplus of all manufacturing sectors and account for more American jobs that are tied to exports than any other industry,” she notes.
The aerospace and defense sectors are growing around the world, Wivell says. “First, the fleet of aircrafts are aging out so they’re being replaced.” She adds newer aircraft frequently needs the kind of high-quality, specialized components that NH is known for producing.
“Second, there’s a lot of emerging markets getting into the industry, like Indonesia. And, third, it’s a dangerous world. Where there might have been defense cuts a few years back, because of the dangers of the world—terrorism, possible conflicts—now, there’s been a reversal of defense cuts,” she says.
Companies still need to work for that export business, though, with strategic sales and marketing efforts, according to Kasim. “Our companies are smart,” she says of businesses that work with the ITRC. “They’re very savvy and aggressive when it comes to finding sales and partners overseas. They know what to do, they want to do it and they’re not afraid of doing it.”
Don Tyler, CEO and president of Corfin Industries in Salem, which provides component preparation services to a number of industries, says, seven years ago, his company began aggressively pursuing opportunities outside the United States, working with local sales representatives who live and work in its target markets in Europe and Israel. Since then, Corfin’s export business has grown from less than 7 percent of total sales to between 10 and 15 percent annually. “Generally our whole business has grown, so for exports to grow and stay at that rate shows how much it’s grown,” Tyler says.
Corfin Industries' robotic hot solder dip. Courtesy photo.
Chris Pegge, vice president of business development at Marmon Aerospace & Defense in Manchester, was one of the founding members of the consortium and attributes his company’s boost in exports to a similar aggressive approach. “Our growth has come from being smart,” he says, noting some competitors have not collaborated with defense industry organizations but his company has done so successfully.
Shop floor at Marmon Aerospace & Defense. Courtesy photo.
Global Growth
Samii says that some of the export uptick may simply be related to NH reclaiming business it lost during the recession. In addition, the general growth in the global economy has increased demand for U.S. goods. The dollar has weakened slightly during the last year, making U.S. exports to Europe and China somewhat more competitive in price, Samii notes.
New Hampshire’s small size also plays a role. “If a company has a big sale or a contract comes to an end, that does create a bigger blip here than if that happened in California or Pennsylvania,” Kasim says.
Samii says while the future looks promising for NH exports, there are some areas of caution, including the recent discussion about changes to the North American Free Trade Agreement (NAFTA). “We have a major trade partner in Canada and, to a lesser extent, in Mexico,” he says.
In addition, what’s happening with the European Union—including England’s Brexit—impacts NH’s exports business. “We are exporters to Europe and if there are problems there, that creates a problem for us,” Samii says.
In general, the trade expert is optimistic about the future. “I think we’re doing very well. We’re very well located. The infrastructure is there for exports. We are transitioning to very high value-added [businesses], which create much more high-paying jobs... Overall, my view is that we’re in a good position for the future.”