Inland Empire International Trade Economic Forecast Mira Farka Adrian Fleissig Institute for Economic and Environmental Studies Orange County / Inland Empire Regional SBDC Network California State University, Fullerton 17 November 2011
Main Topics The Big Picture Global Economic Trends Exports as a source of Growth Inland Empire Economy and International Trade Inland Empire Exports: Analysis and Forecasts Exports by Countries and Regions Exports by Sector Data and Methodology
Inland Empire: Quick Facts Area: Largest MSA in US Population: 13 th MSA in US; 3 rd MSA in CA As a separate state, ranks 27 th on population, ahead of Oregon GMP (Gross Metro Product): 25 th in US and 5 th in CA As a separate country, ranks 57th in world based on GDP, ahead of Vietnam Exports: 40 th in US (top 10%); 5 th in CA Exports: 5.2% of region s economic activity Exports grew on average by 18% over 2005-2008
Inland Empire Export Profile (2009, billions and shares of total) Largest trading partners Canada ($1.0 billion; 19% of total) Mexico ($0.85 billion; 16% of total) Largest trading Areas NAFTA ($1.9 billion; 35% of total) Asia ($1.4 billion; 27% of total) EU ($1.3 billion; 24% of total) Largest Exports by Sector Computer & Electronic Products ($1.06 billion; 20% of total) Miscellaneous Manufacturing ($1.04 billion; 19% of total) Transportation Equipment ($0.7 billion; 13% of total)
Global Economic Trends and International Trade
Global GDP in 2050: A Different World 60,000 (adjusted for purchasing power parity) 56,785 50,000 40,000 30,000 20,000 41,374 2000 2010 2050 38,061 35,288 10,000 9,772 7,641 0 China India US EU Brazil Japan
Strength in Numbers: Share of Global Middle Class Population by 2030 70% 60% 50% 40% 30% 20% 10% 28% (% of world middle class population) 54% 66% 2009 2020 2030 36% 22% 14% 18% 10% 7% 0% Asia Pacific Europe North America
Majority of Spending by the Middle Class Will Come from Asia 70% (% of spending based on 2009 PPP dollars) 60% 50% 40% 30% 20% 23% 42% 59% 2009 2020 2030 38% 29% 26% 20% 17% 10% 10% 0% Asia Pacific Europe North America
World Volumes have Risen Sharply Vastly Exceeding Growth in World GDP 14,000 (Index; 1960=100) 12,000 10,000 8,000 6,000 4,000 World GDP World Trade 2,000 0 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008
50% 45% 40% 35% 30% 25% 20% 15% Export Contribution to GDP is Large in Main Economies, but not in the US 47% 46% (exports as % of GDP) 40% 38% 27% 20% 18% 12% 10% 5% 0% Germany Asia EU China UK India Japan US
Exports Have Potential to Drive US Growth (percent contribution to GDP growth, 2010) Consumption 44% Gov. 5% Business Investment 65% Exports 48%
Inland Empire Economy and International Trade
Inland Empire s Role in International Trade Has Grown, but Imports Dominate 14 12 10 8 6 4 2 0.8 2.5 (total volumes, billions of dollars) Exports 2.8 5.9 Imports 3.8 8.1 6.3 12.4 0 1990 2000 2005 2010
Los Angeles-Long Beach- Santa Ana San Jose-Sunnyvale-Santa Clara San Francisco-Oakland- Fremont San Diego-Carlsbad-San Marcos Riverside-San Bernardino- Ontario Sacramento--Arden-Arcade-- Roseville Oxnard-Thousand Oaks- Ventura Inland Empire is the 5 th Largest El Centro 3,502 2,484 1,993 5,356 Exporter in CA (level, millions, 2009) 13,419 16,040 21,406 51,528 7.2% of GDP 14.4% of GDP 5.0% of GDP 7.9% of GDP 5.2% of GDP 3.8% of GDP 7.2% of GDP 43.6% of GDP Bakersfield Fresno 1,778 1,660 6.4% of GDP 5.7% of GDP 0 10,000 20,000 30,000 40,000 50,000 60,000
Exports Support a Large Number of Jobs Nationally and Locally (thousands of employees) Region Jobs U.S. Total 9,200 U.S. Manufacturing 5,300 CA Total 1,560 CA Manufacturing 616 SoCal Total 500 Inland Empire Total 90
Exports Can be an Important Factor in Supporting the Recovery Every $1 billion increase in exports supports 5,000 jobs 22% of manufacturing jobs are supported by exports Exporting jobs: Pay 15% higher wages than non-exporting jobs Offer 11% higher benefits than non-exporting jobs Exporting businesses are: 20%-30% more productive than non-exporting firms Experience 20% more job growth than non-exporting firms 25% less likely to fail than non-exporting firms
Before the Crisis, Inland Empire Manufacturing Labor Force Rose Dramatically 2,200,000 (level, thousands of employees) 130,000 2,000,000 1,800,000 1,600,000 1,400,000 California Inland Empire 120,000 110,000 100,000 90,000 1,200,000 80,000 1,000,000 70,000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Cal State 2010 Fullerton
Trade-Related Jobs Suffered Most from Recession, But have already Started to Pick Up (level, thousands of employees) Construction M anufacturing Prof. & Business Services Retail Trade Leisure & Hospitality Financial Activities W holesale Trade Government Logistics Food & Beverage Educational & H ealth -62,200-37,300 Job Gains in 2011-24,900 Job losses in recession -18,700-5,500-11,200-1,100-9,700-8,400-4,400-7,900-800 -1,800-1,700 2,500 2,100 900 6,100 6,000 3,600 1,900 8,100-80,000-60,000-40,000-20,000 0 20,000
Inland Empire Relies Heavily on Blue Collar Work (% of Adults with High School or Less Diploma) Im perial San B ernardino Riverside Los Angeles Ventura 36% 47% 45% 49% 58% Orange 35% San Diego 34% 0% 10% 20% 30% 40% 50% 60% 70%
Inland Empire Household Median Income is amongst the Lowest in SoCal (household median income, level) Orange Ventura San Deigo California Los Angeles Riverside 60,103 58,925 56,375 55,151 71,735 71,246 San B ernardino 52,137 Im perial 37,846 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Export-Related Industries have Low Training Barriers and High Pay (level, average salary) Sector Average Salary Mining $55,910 Wholesale Trade $50,660 Construction $47,470 Manufacturing $45,680 Logistics $43,400 Administrative $34,140 Retail Trade $28,980 Agriculture $25,530 Accommodation and Food $22,440
Inland Empire is well Positioned to Expand Exports since it has over 4,000 Manufacturing Firms Sector Jobs Businesses Average Salary Fabricated Metal 11,449 649 45,038 Misc. Manufacturing 8,601 305 48,965 Plastic & Rubber 8,520 204 40,002 Food 7,334 208 39,890 Transportation Equipment 5,693 226 41,852 Machinery 5,509 290 46,967 Chemicals 5,046 141 56,924 Computer & Electronics 4,773 123 54,531
Inland Empire Merchandise Exports Forecasts and Analysis
Inland Empire Total Export Volume: 7,000 6,000 5,000 4,000 3,000 2,000 Historical Data (millions of dollars) 4,971 6,241 5,356 1,000 811 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 Cal State 2008Fullerton
Inland Empire Total Export Volume: 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 Forecasts (millions of dollars) 6,316 7,034 7,825 8,992 2,000 1,000 0 811 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
30% 25% 20% 15% 10% 5% 0% -5% -10% Inland Empire Exports Growth 15.6% Historical Data (percent change, y-o-y) 11.1% 18.6% 25.6% -15% -20% -14.2% 2005 2006 2007 2008 2009
Inland Empire Exports Growth 30% 25% 20% 15% 10% 5% 0% -5% 15.6% 11.1% Forecasts (percent change, y-o-y) 25.6% 18.6% 17.9% 11.4% 11.2% 14.9% -10% -15% -14.2% -20% 2005 2006 2007 2008 2009 2010 2011 2012 2013
Inland Empire Exports by Country
25,000 Inland Empire Top Trading Partners are Similar to CA (CA exports, millions of dollars, 2010) 20,000 20,949 16,198 CA Exports by Country 15,000 12,469 12,180 10,000 5,000 8,027 6,757 6,518 5,122 4,181 4,126 - Mexico Canada China Japan South Korea Hong Kong Taiwan Germany United Kingdom Netherlands
Inland Empire Exports: Top 5 Countries ( 2009 levels, millions of dollars) Country Year 2009 Canada 1,006 China 305 Japan 290 Netherlands 595 Mexico 852 Rest of World 2,305 43% Canada 1,006 19% Netherlands 595 11% China 305 6% Japan 290 5% Rest of World 2,305 Mexico 852 16%
110% 90% 70% 50% 30% 10% -10% -30% -50% Inland Empire Export Growth Top 5 Countries (percent change, y-o-y) 32.8% 25.6% 11.5% 2006 2007 2008 2009-33.0% 15.1% 10.3% -6.5% -13.7% 12.7% -15.1% 26.5% -26.7% 45.4% 96.1% 26.6% -1.1% -3.9% 19.0% 4.3% 43.0% Canada China Japan Netherlands Mexico
Inland Empire Export Shares have Evolved (% of Total Volumes) 30% 25% 20% 15% 10% 5% Canada Mexico 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
1,800 1,600 1,400 1,200 1,000 800 600 400 1,184 Inland Empire Export Forecasts Top 5 Countries 1,382 1,488 1,705 (level, millions of dollars) 565 483 428 393 2010 2011 2012 2013 479 419 385 333 825 771 938 1,097 994 940 1,151 1,310 200 0 Canada China Japan Netherlands Mexico
Inland Empire Exports by Region
2,000 1,800 Inland Empire Exports by Region ( 2009 levels, millions of dollars) 1,860 1,600 1,400 1,200 1,000 800 600 400 1,449 1,290 200 166 165 70 - NAFTA Asia European Union South America OPEC Africa
Inland Empire Export Growth by Region (percent change, y-o-y) Year Africa Asia European Union NAFTA OPEC South America 2007 24% 11% 15% 18% 56% 69% 2008 6% 25% 27% 29% 16% -8% 2009 21% -16% -18% -11% 9% -30%
Inland Empire Exports to NAFTA and Asia: History and Forecasts 3,500 (levels, millions of dollars) 3,000 2,500 2,000 1,500 1,000 Asia 1,860 NAFTA 1,449 3,068 2,562 500 0 2005 2006 2007 2008 2009 2010 2011 2012 Cal State 2013 Fullerton
Inland Empire Exports to European Union: History and Forecasts 2,400 (levels, millions of dollars) 2,000 1,600 1,200 800 831 1,290 1,402 1,665 1,827 2,077 400 0 2005 2006 2007 2008 2009 2010 2011 2012 2013
Inland Empire Exports by Sector
Inland Empire Exports by Sector (2009 levels, millions of dollars) Computer & Electronic Product Miscellaneous 1,062 1,042 Transportation Equipment Other Sectors Machinery Chemical Fabricated Metal Product Food Electrical Equipment & Appliance Primary Metal Plastics and Rubber 411 373 284 234 173 162 142 644 704 Beverage and Tobacco 89 Apparel 35-200 400 600 800 1,000 1,200
Inland Empire Sector Exports are Similar to CA and are Concentrated in Manufactured Equipments (2010, millions of dollars) COMPUTER AND ELECTRONIC 43,064 MACHINERY TRANSPORTATION EQUIPMENT CHEMICALS MISCELLANEOUS AGRICULTURAL FOOD WASTE AND SCRAP ELECTRICAL & APPLIANCES 14,492 12,964 11,574 11,507 9,354 7,375 5,376 3,976 CA Exports by Sector PETROLEUM & COAL 3,686 FABRICATED METAL 3,564 PLASTICS & RUBBER 2,461-5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000
1,500 Inland Empire Exports Top 5 Sectors (millions of dollars) 2007 2008 2009 1,200 900 600 300 710 1,215 704 951 1,062 1,042 825 1,052 1,042 327 375 373 462 470 411 0 Transportation Equipment Computer & Electronic Product Miscellaneous Chemical Machinery
Inland Empire Exports Growth by Sector (percent change, y-o-y) Year Transportation Equipment Computer & Electronic Product Miscellaneous Chemical Machinery Beverage and Tobacco 2007 16.8% 21.0% 20.1% 19.8% 8.5% 21.1% 21.2% 2008 71.0% 9.6% 27.4% 14.5% 1.8% 2.0% 1.2% 2009-42.0% 1.9% -0.9% -0.4% -12.6% 18.9% 20.3% Year Fabricated Metal Product Electrical Equipment & Appliance Apparel Plastics and Rubber Products Primary Metal Other Sectors Food Inland Empire Total 2007 17.9% 17.7% 20.3% 19.2% 15.7% 22.6% 18.6% 2008 32.0% 34.2% 9.1% 19.8% 53.8% 18.5% 25.6% 2009-21.2% -23.4% 7.4% -7.3% -40.4% -16.8% -14.2%
2,000 1,800 1,600 1,400 1,200 1,000 800 600 Inland Empire Export Forecasts Top Sectors (level, millions of dollars) Transportation Equipment Computer & Electronic Product Miscellaneous Manufacturing 1,062 1,042 704 1,766 1,717 1,316 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013
2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 910 Inland Empire Export Forecasts Top 5 Sectors 1,717 1,766 2010 2011 2012 2013 1,316 1,213 1,196 687 606 483 428 Transportation Equipment Computer & Electronic Product Miscellaneous Chemical Machinery
Methodology e( x) = ( b a = ( b xa) e( x) = b xa i i T 2 i x) 2 ( b xa)
Methodology Regional, State, National International data Exchange rates Labor productivity U.S. growth (RGDP) Foreign growth (RGDP) Exports by industry Statistical & econometric modeling Nonlinear regression System of equations Model validation
Measures of Trade Data Origin-of-Movement (OM) Based on Origin State merchandise starts its journey to the port of export Exporter Location (EL) (1993-2002 previous data) Based on zip code of the exporter & captures company headquarters, wholesalers, brokers, and freight forwarders Customs District and Port Data Measure goods leaving district or port (regardless of where good originated in U.S.)
International Trade Administration U.S. Dept. of Commerce Data Availability Individual countries Trade and economic groups Geographic regions Product type and industry National Trade Data 1989-2010 State Export Data 1999-2010 U.S. Metro Area 2005-2009
Questions? Mira Farka efarka@fullerton.edu Adrian Fleissig afleissig@fullerton.edu