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Monday, July 26, 2010

When many of us think of exports, we probably picture huge container ships plying the Delaware River, not the Chinese student walking across the Drexel University campus.

However, both are examples of exports. One is a good, the other a service.

A study by the Brookings Institution scheduled to be released Monday says that metropolitan regions would benefit greatly if homegrown businesses would export just a little bit more. It would mean more jobs, and those jobs tends to pay better on average.

The Obama administration’s goal for exports is more than just a little. The president wants to double U.S. exports in five years. But even if it proves unrealistic to go from the $1.57 trillion in exports recorded in 2009 to $3.14 trillion, it’s worth a push to get more U.S. companies thinking globally.

In its new study, Brookings said U.S. exports supported 11.8 million jobs nationally. Of those, 7.7 million jobs were in the 100 biggest metropolitan areas, which the Washington think tank ranked in terms of jobs tied to exports.

Los Angeles was No. 1 with 560,475 exported-related jobs. The Philadelphia region came in No. 9 with 201,634 jobs. I thought that sounded high, because the Philadelphia ports aren’t among the nation’s biggest and manufacturing has been in decline for more than 50 years. After all, there’s only so much scrap metal we can ship overseas.

But, as Brookings vice president Bruce Katz explained, services can be exported, and Philadelphia has built a huge concentration of higher education and health-care institutions. Here’s how the export factor comes into play:

Every time one of the local universities attracts a student from Europe or Asia, that counts as export activity - Philadelphia is exporting its higher-education expertise to a customer from a different nation.

The same is true when a Philadelphia hospital treats a patient from overseas, and the Philadelphia Museum of Art attracts international tourists for a particular exhibit. Local engineers design a bridge in Thailand? That’s an export.

As big as “eds and meds” are here, Brookings research shows that the chemicals industry remains the region’s biggest exporter. Chemicals, which involves plastics, medicine, pharmaceuticals, and other compounds, account for 18.1 percent of Philadelphia’s exports.

All of this can matter to your wallet. Brookings says that workers in exporting industries tend to earn 1 percent to 2 percent higher wages for every $1 billion increase in exports. In 2008, the Philadelphia region’s chemical industry was responsible for $5.7 billion in foreign sales and paid $94,073 in average wages. The national average wage was $45,563 in 2008.

OK, that’s the good news. Less healthy is that Philadelphia ranked 65th out of the 100 biggest metro areas in terms of percentage of export-related jobs to overall metro employment. Brookings said Philadelphia’s 7.1 percent lagged the national average of 8.3 percent. Tops was Silicon Valley with 22.7 percent of jobs there supported by exports.

So there’s plenty of room for improvement, especially when you consider that only 1 percent of all U.S. businesses actually export, according to the federal Commerce Department. Of those that do, 58 percent export to just one country.

Katz said he hoped the new study would provide more reasons for cities and states to shift away from funding “Starbucks and stadia” projects to supporting export activity.

Linda Conlin, president of the World Trade Center of Greater Philadelphia, said this region already possesses a wealth of institutions doing just that.

One example is the local International Design and Engineering Consortium, made up of 16 firms, that works to market their different skills and bid on major construction projects around the world, she said.

In 2009, the World Trade Center group worked with 270 companies in Pennsylvania and New Jersey that generated $81.9 million in export sales and created 1,050 jobs.

But our region would need to do a lot more to accomplish what Houston; New Orleans; Portland, Ore.; and Wichita, Kan., did between 2003 and 2008: double their exports.

Houston and New Orleans did so thanks to chemicals and petroleum. Portland’s Silicon Forest sprouted vibrant computer and electronics manufacturers.

But Wichita gets the nod from Brookings as the nation’s most intensive export region with 27.8 percent of its 2008 gross metropolitan product coming from exports by its concentration of aviation companies, such as Cessna and Hawker Beechcraft.

Now I wouldn’t want Philadelphia as concentrated in one industry as Wichita is. But if there was ever a time for Philadelphia business owners to learn a new language (and a new market), it’s now.

Posted by Mike Armstrong @ 1:51 PM  Permalink | Post a comment
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About Mike Armstrong
Mike Armstrong, a business editor and writer for nearly two decades, is the Inquirer's business columnist and PhillyInc blog editor. Contact Mike via e-mail or at 215-854-2980