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Exports have been an American success story lately. This is corroborated by the U.S. trade deficit falling from 6% of Gross Domestic Product (GDP) in 2006 to the neighborhood of 4% lately. A weaker dollar, in conjunction with stagnant wages at home, has improved American competitiveness vis a vis China where pay scales have moved up.

More recently, in September 2012, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis revealed that American exports stood at $187 billion and imports at $228.5 billion, yielding a monthly trade deficit of $41.5 billion, down from $43.8 billion in August. Stronger exports led to the narrowest trade deficit in a while. Both merchandise and service exports have been on the upswing.  

Not only have exports boomed but the basket of exports has evolved over time. Formerly, the export limelight went to the big corporations such as The Boeing Company (BA - Analyst Report) and Microsoft Corporation (MSFT - Analyst Report). Today, a multitude of small and large companies are enjoying success in overseas markets. The services sector, a traditional American strong point, is doing even better. We believe that companies operating in global markets enjoy diversified revenue streams which may cushion them from shocks.   

Of late, U.S. engineering companies have staged a dramatic comeback. Several companies based in the Mid West, such as Timken Co. (TKR - Snapshot Report), Cummins (CMI - Analyst Report) and Toro Co. (TTC - Snapshot Report), are building Asian and other economies. In the process, they are creating jobs back home. In conjunction with cheap shale gas from fracking, this export- led boom may be a second chance towards industrialization for the Rust Belt of the U.S.A.  
Based in Canton, Ohio, Timken uses its understanding of management of friction, materials and transmission of power to enhance the performance of machinery used in industrial settings. The company operates in four segments, namely, steel, aerospace and defense, mobile industries and process industries. It had sales of about $5,200 million in 2011. At Timken, almost one-third of sales were outside the U.S. Emerging markets accounting for close to $900 million of the company’s revenues. Its sales in Asia climbed 21% year over year.

Headquartered in Columbus, Indiana, Cummins designs, produces and sells engines. It had sales of $18,048 million in 2011, up 36% year over year, and generated 54% of its revenues outside U.S. in the most recent four quarters. Its far-flung operations across China, Brazil and India partly insulate it from a slowdown across industries or geographies.     

Toro, based in Bloomington, Minnesota, has its centennial coming up in 2014. It is a provider of landscape maintenance and turf equipment as well as irrigation systems. The company has a solid following among golf courses through out the world. Toro had sales of $1,884 million in fiscal 2011 and derived about one-third of its revenues from international markets. Most of its export-driven production takes place in America.

The services line item is showing buoyancy and not just in traditional plain vanilla activity such as travel and tourism. Instead, we see broad-based, value-added exports, in such spheres such as consultancy, design, engineering and financial services. Many of these knowledge-based companies may be unlisted. Two prominent service providers doing well overseas are Omnicom Group (OMC - Analyst Report) and Wal-Mart Stores (WMT - Analyst Report).

Advertising and public relations major Omnicom Group has benefited from the boom times in Asia. The company reported sales of $13,873 million in 2011 of which it derived 49% from ex-U.S. markets. It generated revenues of $3,017 million outside the U.S. and Europe, up 30.7% year over year.   

The success of Walmart International, a part of Wal-Mart Stores, in China is well known. The company is now a major retailer in that country and able to take on well- entrenched competitors despite allegations regarding the lack of a level playing field for foreign retailers. Walmart International’s net sales, including foreign exchange and takeovers, rose 15.2% to $125.9 billion in fiscal 2012 (ended January 31, 2012). During the fiscal, the company opened (including acquisitions) 1,094 stores and added 42.2 million square feet of space. It is slated to add 30 to 33 million square feet of area in fiscal 2013.

Prominent education and financial data company, The McGraw-Hill Companies with leading brands such as Standard & Poor’s Rating Services reported flattish sales of $4,248 million in the U.S. in 2011. Its revenues from Asia jumped 11.6% to $557 million with Europe also doing well, up 11.5%, at $1,101 million.   

We may be witnessing a resurgent America with broad-based success in the critical export markets of Brazil, Russia, India and China and South Africa aka BRICS. However, many battles lie ahead for U.S. exporters. Proprietary technologies in bio tech are expected to play an increasingly greater role. We watch Apple’s (AAPL - Analyst Report) effort to shore up growth with greater penetration in the vast Chinese market. In the end, the U.S. trade deficit is expected to remain high partly on account of dependence on imported oil.  

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