IU study: Indiana exports reached a record $22.6 billion in 2006
Oct. 23, 2007
BLOOMINGTON, Ind. -- Exports from Indiana to foreign countries reached a record $22.6 billion in 2006, up 5.3 percent over the previous year.
A new study, conducted for the Indiana Economic Development Corp. (IEDC) by the Indiana Business Research Center (IBRC) at Indiana University's Kelley School of Business, also suggests that Indiana exports will grow at a faster pace in 2007.
In the first six months of 2007, Indiana exported $12.9 billion worth of goods, for a year-over-year increase of 10.6 percent.
"The reports for the first half of 2007 seem to indicate that exports from Indiana may have rebounded," said the 20-page report. "If the second half of 2007 matches the performance of the first half, 2007 will prove to be a banner year for Indiana exports. At the current rate, the value of exports in 2007 will exceed last year's value by about $3 billion."
Indiana's rate of export growth has greatly exceeded its overall economic growth rate since 2001, noted Tim Slaper, IBRC director of economic analysis and author of the report.
"Indiana's economy is inextricably linked with the global economy. Increasing sales to other countries has propelled our state's economic growth over the past several years," Slaper said.
One in every six Indiana manufacturing jobs is devoted to exports, according to the study.
"Our efforts to 'in-source' jobs and build relationships with businesses around the globe, combined with our continuing strength in exports, are creating more jobs and economic opportunities in Indiana," said Nathan Feltman, Indiana Secretary of Commerce and chief executive officer of the Indiana Economic Development Corp.
The report said the weakened U.S. dollar should help Indiana exporters, but notes that it also will be an impediment to robust business profitability.
"The buoyant world economy, led largely by China's feverish growth, has dramatically increased the cost of inputs," the report said. "Except for raw agricultural materials, raw material prices from oil to copper have more than doubled since the economic downturn in 2001 and 2002. While a weakening dollar makes U.S. goods cheaper in world markets, the rising cost of inputs will tend to put a profit squeeze on producers."
In 2006, Indiana exports grew to all but two of the state's top 10 trading partners. Canada was the state's top export destination by far, buying nearly $10 billion in goods and services from Indiana companies, for a gain of 5.2 percent. Mexico held on to second place at $2.4 billion, but sales to Mexico were down 7.5 percent compared to a year earlier.
Exports to the United Kingdom grew at a fast 22 percent pace in 2006 to retain third place on Indiana's list of trading partners, while exports to fourth-place France slipped by 6.2 percent.
Rounding out the top-10 destinations for Hoosier products were Japan, with exports of $830.9 million; Germany, $733.5 million; China, $559.2 million; the Netherlands, $472.9 million; Australia, $397.4 million and the Republic of Korea, $325.8 million.
Indiana exported goods to 196 countries in 2006, but only 22 nations purchased Hoosier exports exceeding $100 million, accounting for 92.8 percent of the state total.
Vehicles and parts, along with industrial and electrical machinery, remain Indiana's top exporting industries, accounting for 45 percent of all exports from the state. Export growth in these industries in 2006 was relatively slow, in the 2-to-3 percent range.
Indiana's pharmaceutical industry, however, raced ahead in 2006, exporting 16.9 percent more goods than in 2005. Indiana ranks third among all states in the value of pharmaceutical exports. The exports of optical and medical instruments also have registered a healthy annual average growth rate of 10.3 percent between 2001 and 2006.
"There is, by all appearances, great strength in the European market for Indiana pharmaceuticals," the report said. "The United Kingdom, France and Germany account for an $852 million increase in Indiana exports from 2001 to 2006 in pharmaceuticals alone.
"There is a note of caution: the demand and sales for these products can collapse almost as quickly as they surge," Slaper added in the report. "Spain, for example, imported $13 million worth of Indiana pharmaceutical products in 2001. By 2004, that total had reached $159 million. In 2006, the total value of Indiana pharmaceutical exported to Spain returned to $13 million."
The full report, titled "Indiana's Global Exports: Report for 2007," is available online at www.ibrc.indiana.edu/international/pdf/exports_2007.pdf.