Wisconsin's exports, from paper products to massive shovels used in coal mines, appear headed for their sharpest yearly decline since at least the 1980s - the latest indicator that the economic slump has been as wide as it is deep.
Foreign demand for made-in-Wisconsin goods declined 21.5% in the first six months compared with the same period a year ago, paralleling a 23.8% national decline in U.S. exports, according to the U.S. Census Bureau.
Exports from the state previously had grown every year since at least 1987, except for three minor declines in the period from 1998 to 2001, according to state and federal records.
The decline so far this year has been unusually severe, in Wisconsin and globally.
"This is by far the deepest decline in world trade since the 1930s," said Bernard Hoekman, director for international trade at the World Bank, a multinational lender to developing nations.
Cross-border trade always has been a lubricant of global growth, but the World Bank expects the overall volume of international trade to retreat by 9% to 10% in 2009. That, in turn, has gummed up global economic output, which is expected to decline in 2009 for the first time since World War II, the World Bank said.
Foreign demand for industrial machinery from Wisconsin - the state's single biggest export category - fell 24%, to $1.4 billion, in the second quarter from the same period a year ago.
The impact on southeastern Wisconsin is acute, said Tim Sullivan, president and chief executive officer of Bucyrus International Inc., the Milwaukee-based maker of mining equipment. Most jobs at Bucyrus in the Milwaukee area - where it employs more than 1,300 people, out of a global workforce of 7,200 - "are very dependent on foreign business," Sullivan said.
Of the $1 billion a year in parts and equipment that Bucyrus ships from metro Milwaukee, 75% goes overseas, Sullivan said. That could climb to 80% next year as the company continues to seek business abroad to offset weakness in its North American markets.
The company's traditional export markets - Australia, South America and southern Africa - have all seen orders fall by double digits in the first half of the year, Sullivan said. But Bucyrus has stabilized itself by working off a strong order backlog that it accumulated last year, which has kept production at last year's level.
Also, new markets including China, India and eastern Europe have continued to expand. "Those markets are carrying us right now," he said.
In recent weeks, there have been indications that foreign markets have hit bottom, Sullivan said, echoing a recent analysis by the World Bank.
Gamut of goods
In addition to the drop in exports of industrial machines during the first half of this year, declines were spread among a gamut of Wisconsin-shipped goods: plastics, down 15%; paper goods, down 26%; and medical instruments, down 27%.
Declines also were evident among many of the state's major export destinations, from Mexico to Canada to Germany.
Declines in exports to China, the No. 3 buyer of goods from both Wisconsin and the U.S., were less severe.
"Mexico has slowed down, and so has all of Latin America," said Bill Niehaus, chief financial officer of Medica International Ltd., a Port Washington firm that acts as the export arm for U.S.-based pharmaceutical makers that aren't large enough to have their own international logistics staff. Medica offset the international slowdown by adding new clients, Niehaus said.
GE Healthcare Ltd. said its exports from Wisconsin have fallen in 2009 but wouldn't give precise figures. The medical technologies division of General Electric Co., which has a big base of manufacturing in southeastern Wisconsin, has been focused this year on turning around a slump in sales. Late last year, GE began cutting jobs in Wisconsin, where it employed nearly 7,000 workers before the downturn began.
The government does not track imports on a state-by-state level. Wisconsin is the nation's No. 27 export state, in the middle of the national rankings, census numbers show.
In 2005 and 2006, Wisconsin accounted for 1.7% of the nation's total exports. That slid to 1.6% in 2007 and 2008.
Slow recovery
Even as economists talk hopefully of a turnaround, however, sluggish international demand could mean the U.S. recovery will be slow to gather momentum, Hoekman said. Growth in trade volumes is expected to resume next year, but Hoekman said there's too much uncertainty to offer a more precise outlook.
Pockets of growth remain, although they are easier to find in China and India than in North America and western Europe. The Asian Development Bank last week said it expects China to post 8.2% economic growth this year, while India clocks in at 6%.
Around the world, exports are the locomotive that pulls other cars on the economic train, analysts argue. Just as a household needs income to pay bills, national economies need exports to afford imports and accumulate the national currency reserves to drive new investment and growth. Jobs created through foreign demand rank at the top of the economic food chain because they import new income into a region.
"Exports equals jobs; that's about as basic as it gets," Hoekman said.
That raises the stakes for the United States. As a nation, the U.S. buys more than it sells and borrows more than it lends. A drop in exports only widens those gaps and makes the U.S. more reliant on foreign loans, Hoekman and other economists note.
China ranks as the No. 1 supplier of U.S. imports. For every dollar of made-in-America goods sold in China, the U.S. purchased $4.84 in made-in-China goods. In 2008, the U.S. ran a record $268 billion trade deficit with China, which also ranks as the biggest trade deficit between any two nations in history.
To pay for imports, the U.S. borrows funds, often from the central banks of China, Japan and the Middle East.
"The U.S. is building up a pretty large pile of debt," Hoekman said.
By John Schmid of the Journal Sentinel
