Why Exports should be in your daily vocabulary
There is no question that Atlanta ranks among America’s leading metropolitan areas: Metro Atlanta has the 3rd largest concentration of FORTUNE 500 headquarters; it is the 9th largest population center; it is the 10th largest economy by gross metro product (GMP); and it is 13th when it comes to exports. For good reason Atlanta has emerged as the economic heart of the Southeast and a gateway for companies going global. When you consider our competitive assets – our airport, our universities, our diverse population, and our highways and railroads – it is easy to see why companies choose to do business in Atlanta.
Whether you are moving people, products, or information, Atlanta has become the place to do it. We enjoy direct access to 150 domestic destinations and more than 60 international destinations from Hartsfield-Jackson Atlanta International Airport. We have incredible connections with Savannah, the nation’s 4th largest container port. And as a testament to the wired nature of our city, 3 out of every 4 electronic payments in the U.S. are processed in Atlanta. Our companies have all the resources to be truly international. However, despite all the rankings and competitive assets, Atlanta is under exporting. The reality is we rank 75th out of the Top 100 when it comes to export intensity (9.5 percent) – exports as a percentage of our economy – putting us below the national average (13.2 percent). But why should we worry about export intensity? We exported $25.5B in goods and services in 2012, and #13 in the nation isn’t bad.
The truth is we should care about export intensity; it isn’t just another economic statistic on a page. In today’s global economy, it tells a compelling story about Atlanta. With 83% of global economic growth projected to occur outside the U.S. by 2018, 95 percent of the world’s consumers already located outside the U.S., and global middle class consumption projected to reach $35 trillion – with a “T” – by 2020, the opportunities for growth are increasingly outside the U.S. So what does our export intensity tell us? Unfortunately, it indicates that our industries in metro Atlanta are not taking advantage of global opportunities.
Exports are critical to the strength and growth of our local economy. By selling competitive products and services to meet growing global demand, our companies find opportunities to grow their business and benefit our local economy with more revenue and job growth. And more Atlanta companies are capable of exporting than you may realize. While most people think of exports as only manufactured goods, much of Atlanta’s exports come from services in sectors, such as architecture & design, consulting, engineering, franchising, legal & accounting, software, and travel & tourism.
The U.S. Department of Commerce estimates that each $1B in exports supports 5,590 American jobs. Plus, exporters tend to pay 10 – 20 percent higher wages than their domestic-focused counterparts. Furthermore, exporting companies help to connect Atlanta with the world, making us a more globally engaged and economically robust region. With reasons like these, we all should want more of our local companies to export more.
Still, less than 5% of U.S. firms actually export, and almost 60% of those firms sell to only one foreign market. So what keeps companies from exporting?
Numerous surveys have shown that many U.S. companies simply view exporting as too difficult, scary, or risky. When you have a domestic market of 300 million consumers, a solid legal system, world-class logistics infrastructure, and a stable financial system, most executives, particularly from small and medium businesses, would ask why they should venture outside the U.S. and take on the risk of exporting. It is a valid question, and it is one we hear more and more each day.
The good thing is I can point to Atlanta companies rising to the challenge every day. For instance, in the architecture & design sector, where the domestic market collapsed after 2008, we’ve seen local firms such as tvsdesign and GreenbergFarrow pursue and land deals in China and other markets after participating in trade missions with mayors and MAC. These firms show that exporting is manageable, and the risks can be mitigated. In addition, their stories demonstrate how diversifying their business through exports helps to make their companies stronger.
I recently traveled with our Global Commerce team to D.C. to receive the President’s “E” Award for Export Service from Commerce Secretary Penny Pritzker. MAC was one of 66 organizations to receive the award this year, along with local partners Global Atlanta and the Georgia Department of Economic Development. The mood was optimistic, and everyone appreciated our efforts to promote exports and engage more companies in the process. One cornerstone of why we received the award was our work with our regional partners on the Atlanta Metro Export Plan (MEP). The MEP is a truly metro initiative to engage more companies to get into exporting. One MEP focus is to establish an export culture and an export ecosystem in Atlanta that will make it easier and more common, especially for small and medium companies, to: 1) begin exporting, and/or 2) increase existing exports. After all, when our companies increase exports, we all win.