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Global Trade

June 2012 - Posts

  • The Automotive Industry and Global Trade

    In the United States, one city is typically synonymous with the automotive industry. It’s challenging to think of an American made car without thinking of Detroit, Michigan, and in recent years the financial trouble the automobile giant has endured. Though foreign manufacturers in Japan and Korea have gained strength and drivers in the US, it doesn’t necessarily mean US automakers are done. MSNBC reported in late 2011 that the Big 3 in Detroit – Chrysler, Ford, and GM – enjoyed a nearly 30 percent increase due to a demand in sports utility vehicles and trucks.

    Quick Facts About the Automotive Industry

    • Since 2000, an average of 48 million passenger cars alone have been manufactured annually around the world.

    • According to Worldometers, China produces one of every four new cars, and more than half of all cars are produced in Asia and Oceania.

    • Of the approximated one billion passenger cars on the road around the world, close to 25 percent of them are registered in the United States. (Source: International Organization of Motor Vehicle Manufacturers)

    • According to Businessweek, the top selling car in the world is the Toyota Corolla, with sales of well over 35 million.

    Major Exporters of Automobiles

    While China is one of the world’s largest producers of passenger vehicles, the country is not necessarily ranked high among top global exporters. The International Trade Centre recently put out a report on top automotive exporters, with the following leading the pack:

    • Germany – The roots of the German automotive industry date back to the late nineteenth century and the various patents owned by Karl Benz. Where in that time the country produced barely a thousand cars a year, now over five million are manufactured. Popular German brands include Mercedes-Benz, Volkswagen, BMW, and Porsche.

    • Japan – Gasoline-powered vehicles have been built in Japan early as 1907. Despite natural disasters that threatened the nation’s economy, Japan has worked to maintain its place among top car producers and exporters. Toyota, one of the top selling brands of all time, is based in Japan, as are Nissan, Honda, Mazda, and Subaru.

    • The United States – The US auto industry took a hit in recent years due to the economy. Through a combination of asset liquidation and government funding, the major brands (Ford, Chrysler, and General Motors) have worked to stay afloat. Despite this issues, the US remains a top producer with over seven million cars made on average in the country.

    • Republic of Korea – Over the last decade, South Korea has established itself as an automotive power thanks to an association between Daewoo Motors and GM, and Hyundai’s presence in the US with a major assembly plant.

    • Canada – While the country has no major native brand, Canada is important to the automotive industry by virtue of the many plants established by foreign brands, including Ford, Toyota, Chrysler and Honda.

    Major Importers of Automobiles

    While many countries produce domestic brands, automobile imports remain strong in economies that seek certain qualities, such as fuel efficiency and safety features. Among the top importers of automobiles:

    • The United States – Of the top brands sold in the US in the last year, many names bring to mind manufacturers from other lands: the Toyota Camry and Corolla, the Nissan Altima, and the Honda Civic and Accord.

    • Germany – While German brands dominated domestic sales in 2011, there is enough of a demand for foreign models to make Germany an important importer. Ford, Skoda (based in the Czech Republic), and Hyundai are popular names.

    • United Kingdom – Luxury is often synonymous with the British automotive industry. Aston Martin, Bentley, and Rolls Royce are three makes manufactured here, though Ford, Volkswagen, and the French Peugeot are seen more often on the roads.

    • Italy – Italy is known for the Fiat and Ferrari, but foreign makes like the Ford Fiesta, the French Citroen C3, and the Volkswagen Golf are also in demand.

    • France – The French appear greatly committed to domestic brands, particularly Renault and Peugeot, but foreign models from Ford, Volkswagen and the Romanian Dacia are gaining ground in the last year.

    The Aftermarket

    Equally important to the automotive industry is the manufacture and sale of auto parts and accessories, commonly known as the aftermarket. Sub-industries relevant to automobile sales may include products like tires and paint, stereo and GPS, engines and chemicals needed for operation, leather and vinyl for seating and safety features.  According to the Automotive Aftermarket Industry Association (AAIA), the aftermarket in the US alone totals over $250 billion.

    Though faltering economies and natural disasters have given the international automotive industry a number of challenges, one can conclude sales are destined to remain strong so long as the need for personal transportation remains. How and where people will by their cars may change over time as considerations for eco-friendly features grow in demand, but so long as people continue to buy automobiles the global industry will continue to gain speed.

    by Kathryn Lively

  • Facts About the Global Footwear Industry

    Depending on where you live, shoes are considered more than a necessity to protect your feet as you walk – they are viewed as status symbols. Young children wishing to emulate a favorite athlete will seek the brand they wear, and television shows like Sex and the City place emphasis on designers like Manolo Blahnik and Jimmy Choo. The global footwear industry is quite profitable and as diverse as the demographics to which it markets. According to IbisWorld, footwear accounted for over $100 billion in overall trade in 2007 and is expected to increase in the next decade.

    The health of the footwear industry is also dependent on various resources: textiles, plastics, and natural and synthetic rubber. Some companies may focus on a general product like all-purpose sneakers and athletic shoes, while others provide footwear for a specific use – dance shoes, steel-toed boots for heavy labor, and infant shoes. According to Allure Magazine, the average American woman may own as many as twenty-seven pairs of shoes, so one can argue a demand for new product will always exist.

    Quick Facts About the Footwear Industry

    According to Intertek:

    • Consumers in the United States alone purchased nearly 2.5 million pairs of shoes in 2006.
    • Of the shoes purchased in the United States, nearly 99% of them were imported.
    • As global population is expected to rise five-fold in 2050 (source: World Resources Institute), consumption of footwear will double every two decades.
    • In response to the need for sustainable and eco-friendly production, many companies have started using biodegradable materials in products and packaging, as well as recycling old shoes for new purposes.

    Major Exporters of Footwear

    As one may expect, Asia is a larger exporter of footwear. Here’s how the trade breaks down by country:

    • China – Footwear comprises a significant percentage of China’s overall $1.9 trillion export income.  While the US is a large partner in export trade, China also ships large numbers of shoes to Russia.
    • Indonesia – According to the Jakarta Post, the country’s footwear manufacturing industry has greatly boosted the economy. Over the last several years, companies have relocated to Indonesia from Taiwan and South Korea, and many hold license to popular brands.
    • Vietnam – More than ten percent of the country’s overall exports are footwear, shipped to the United States, Japan, and China.

    Major Importers of Footwear

    As noted earlier, the United States imports nearly all available shoes on the market. Other top importers include:

    • China – Despite their status as a top exporter, the Chinese also import foreign-made shoes, particularly leather styles (source: Duke University).
    • Germany – With European footwear manufacturing on the decline due to the move of companies off-shore, countries like Germany depend upon imports of shoes.
    • France – Similar to Germany and other nations in the EU, France imports a good percentage of footwear for consumption.

    The Future of the Industry

    The global footwear industry faces many challenges in terms of increasing sustainability.  According to Intertek, pollution is a problem that cannot be ignored for much longer. In China alone, more than 200 million metric tons of waste water were produced in 2009 as a result of shoe manufacturing. Research into environmentally friendly resources like vegetable-tanned leathers, natural rubber, and hemp will determine the changes that need to be made to make footwear production less toxic while maintaining integrity. As global population continues to increase, so will the demand for product.

  • The Impact of the Wood Industry on Global Trade

    Veneers, plywood, timber. Look around your home and office and you will find much of what surrounds you is made of wood. From the desk that takes up your workspace to the framework supporting your walls, the wood products used provide an important element to your existence. Around the world, many economies rely on the timber industry to maintain strong supply chains - the companies who cut and refine the timber for distribution, the manufacturers who build the product, and the retailers who sell the finished work.

    The state of the wood industry may vary according to the economy. In the United States, for example, the National Wood Flooring Association indicated that their branch suffered in conjunction with a decline in housing and construction. An economic rebound, naturally, should bring improvement. Sales of wood are often dependent upon other facets of a country's economic health, specifically real estate and commercial growth. When both are strong, consumers are more likely to spend money for new products.

    Quick Facts About the Wood/Timber Industry

    According to the Food and Agriculture Organization of the United Nations:

    • The forestry industry grossed approximately $160 billion internationally. That number is expected to double by the end of the decade.
    • Illegal logging is a major concern. It is estimated that countries lose several hundred billions of dollars a year as a result.
    • Over 13 million people work in the timber industry globally, and produce over 120 million cubic feet of wood for commercial use.

    Major Exporters of Timber/Wood Products

    Top global wood exporters vary according to product and type of wood. They include:

    • China - A leader in manufacturing, China imports raw wood primarily from Russia and exports finished product around the world, over a trillion dollars annually combined with other exports.
    • Canada - Known for its lush forests, Canada relies heavily on the timber industry but also practices sustainability in order to keep the trees growing. Where the United States was once a primary trade partner, China recently surpassed the US as top importer and helped the country create more jobs.
    • Russia - Russia exports close to a billion dollars' worth of softwood annually to Europe and China.

    Major Importers of Timber/Wood Products

    Many importers take raw wood in order to manufacture and sell domestically or abroad. They include:

    • The United States - The US imports timber from Canada, mainly softwood, and products from China.
    • Japan - With reconstruction still underway in the country following recent disasters, Japan continues to import wood for construction. Canada is one major exporter to the country.
    • Mexico - Mexico brings in more than half of its timber exports from Chile.

    The Future of the Industry

    Naturally, a major concern in the timber industry is the supply of natural resources. Trees, unfortunately, do not grow as quickly as they are cut, therefore companies continue to look into sustainability programs to take the industry into the future. In the United States, for example, companies look to softwood from younger trees as a means of meeting demand. In developing nations like Ghana, companies have met with opposition from farmers who object to growing timber and in turn depleting other resources. One must also factor natural obstacles like weather and disease to determine the future of this industry.

    As global economy improves, so will the demand for wood materials. How well the individual businesses tied to the industry do depend on solid product.