Survey Finds More Businesses Engaged in International Trade
This morning, CBIA released the 2013 International Trade Survey of Connecticut Businesses, which illustrates the increasingly important role exporting plays in the state's economy.
CBIA surveyed 1,188 Connecticut businesses most likely to be involved in exporting, including manufacturers, technology and R&D companies, wholesalers, retailers, agricultural business, and larger insurance and financial services providers.
Nearly three-quarters (71%) of respondents say they are engaged in exporting, up 36 percentage points from 2007.
The rise in Connecticut exports mirrors a national trend. For the first time since 2007, growth in U.S. exports outpaced the growth of imports in both dollar and percentage terms in 2012, a pattern that continued into 2013.
Most exporters surveyed (87%) entered foreign markets to increase their company sales and profits. More than half entered to follow their clients or to diversify their business and offset domestic economic cycles. Exports account for a sizable share of companies' gross income: 28% of Connecticut exporters attribute at least 26% of their revenues to exports. Of those, about 44% say exporting accounts for more than 50% of their company's revenues.
"Developing overseas markets is a business strategy that has clearly demonstrated its worth to many firms: -including smaller companies-: enabling them to diversify their customer mix and smooth out some of the troughs that occur in the domestic economy," says CBIA president and CEO John Rathgeber.
"Because their markets are more diverse, companies that export can offset domestic economic cycles in the same way individual investors can protect against downturns in any one financial sector by diversifying their portfolios."
Indeed, 56% of companies surveyed maintained that their exporting activities helped them weather the economic slump and position their businesses for a stronger recovery.
The largest foreign markets for exporters surveyed are, in order, North America (Canada/Mexico), western Europe, and northern Asia/Pacific Rim: China, Japan, and Taiwan. But respondents expect that distribution to shift over the next three years, putting northern Asia in the top spot.
Manufacturers account for the vast majority (72%) of the state's exporters. Of these, the greatest share are in the aerospace industry. Other industry types within manufacturing include medical/health, information technology, environmental, and electronics. Companies engaged in services (11%), wholesale trade (4%), construction (3%), retail (2%), and consulting (2%) are also represented in the survey.
"Manufacturing is still king in Connecticut, with aerospace and medical devices finding the greatest number of export markets," says Anne Evans, district director of the U.S. Department of Commerce International Trade Administration.
"But we are also seeing software and services finding global customers, and much of this software is security-focused."
More than one in four Connecticut companies not engaged in foreign trade (27%) say they would like to be, and 23% believe their current staff capacity would make it possible.
"Our survey shows greater interest and involvement in international trade among Connecticut companies," says CBIA economist Pete Gioia, "but it also points to cost constraints and a need for more information and awareness about export assistance, trade agreements, and foreign markets. These are areas where government agencies, along with international trade consultants, can really help."
CBIA's 2013 International Survey of Connecticut Businesses was sponsored by HSBC and McGladrey LLP, the nation's leading provider of assurance, tax and consulting services focused on the middle market.
CBIA is Connecticut's largest business organization, with 10,000 member companies.