Exports have been an American success story lately. This is
corroborated by the U.S. trade deficit falling from 6% of Gross
Domestic Product (GDP) in 2006 to the neighborhood of 4% lately.
A weaker dollar, in conjunction with stagnant wages at home, has
improved American competitiveness vis a vis China where pay
scales have moved up.
More recently, in September 2012, the U.S. Census Bureau and the
U.S. Bureau of Economic Analysis revealed that American exports
stood at $187 billion and imports at $228.5 billion, yielding a
monthly trade deficit of $41.5 billion, down from $43.8 billion
in August. Stronger exports led to the narrowest trade deficit in
a while. Both merchandise and service exports have been on the
Not only have exports boomed but the basket of exports has
evolved over time. Formerly, the export limelight went to the big
corporations such as The
). Today, a multitude of small and large companies are enjoying
success in overseas markets. The services sector, a traditional
American strong point, is doing even better. We believe that
companies operating in global markets enjoy diversified revenue
streams which may cushion them from shocks.
Of late, U.S. engineering companies have staged a dramatic
comeback. Several companies based in the Mid West, such as
), are building Asian and other economies. In the process, they
are creating jobs back home. In conjunction with cheap shale gas
from fracking, this export- led boom may be a second chance
towards industrialization for the Rust Belt of the U.S.A.
Based in Canton, Ohio, Timken uses its understanding of
management of friction, materials and transmission of power to
enhance the performance of machinery used in industrial settings.
The company operates in four segments, namely, steel, aerospace
and defense, mobile industries and process industries. It had
sales of about $5,200 million in 2011. At Timken, almost
one-third of sales were outside the U.S. Emerging markets
accounting for close to $900 million of the company's revenues.
Its sales in Asia climbed 21% year over year.
Headquartered in Columbus, Indiana, Cummins designs, produces and
sells engines. It had sales of $18,048 million in 2011, up 36%
year over year, and generated 54% of its revenues outside U.S. in
the most recent four quarters. Its far-flung operations across
China, Brazil and India partly insulate it from a slowdown across
industries or geographies.
Toro, based in Bloomington, Minnesota, has its centennial coming
up in 2014. It is a provider of landscape maintenance and turf
equipment as well as irrigation systems. The company has a solid
following among golf courses through out the world. Toro had
sales of $1,884 million in fiscal 2011 and derived about
one-third of its revenues from international markets. Most of its
export-driven production takes place in America.
The services line item is showing buoyancy and not just in
traditional plain vanilla activity such as travel and tourism.
Instead, we see broad-based, value-added exports, in such spheres
such as consultancy, design, engineering and financial services.
Many of these knowledge-based companies may be unlisted. Two
prominent service providers doing well overseas are
Advertising and public relations major Omnicom Group has
benefited from the boom times in Asia. The company reported sales
of $13,873 million in 2011 of which it derived 49% from ex-U.S.
markets. It generated revenues of $3,017 million outside the U.S.
and Europe, up 30.7% year over year.
The success of Walmart International, a part of Wal-Mart Stores,
in China is well known. The company is now a major retailer in
that country and able to take on well- entrenched competitors
despite allegations regarding the lack of a level playing field
for foreign retailers. Walmart International's net sales,
including foreign exchange and takeovers, rose 15.2% to $125.9
billion in fiscal 2012 (ended January 31, 2012). During the
fiscal, the company opened (including acquisitions) 1,094 stores
and added 42.2 million square feet of space. It is slated to add
30 to 33 million square feet of area in fiscal 2013.
Prominent education and financial data company,
The McGraw-Hill Companies
) with leading brands such as Standard & Poor's Rating
Services reported flattish sales of $4,248 million in the U.S. in
2011. Its revenues from Asia jumped 11.6% to $557 million with
Europe also doing well, up 11.5%, at $1,101 million.
We may be witnessing a resurgent America with broad-based success
in the critical export markets of Brazil, Russia, India and China
and South Africa aka BRICS. However, many battles lie ahead for
U.S. exporters. Proprietary technologies in bio tech are expected
to play an increasingly greater role. We watch
) effort to shore up growth with greater penetration in the vast
Chinese market. In the end, the U.S. trade deficit is expected to
remain high partly on account of dependence on imported
APPLE INC (AAPL): Free Stock Analysis Report
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CUMMINS INC (CMI): Free Stock Analysis Report
MCGRAW-HILL COS (MHP): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
OMNICOM GRP (OMC): Free Stock Analysis Report
TIMKEN CO (TKR): Free Stock Analysis Report
TORO CO (TTC): Free Stock Analysis Report
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