Many of the best markets for companies exporting through the New York/New Jersey Port Authority are located in northern Europe. Whether the goods are shipped by sea or air, the United Kingdom and Germany are top export destinations. This is fairly representative of exports departing from New York State, New Jersey, and the United States as a whole.

Western Europe's period of slow economic growth and recession has ended. Revised figures released from the European Commission in November 1994 project gross domestic product (GDP) of the European Union (EU) to have reached 2.6% in 1994, 2.9% in 1995 and 3.2% in 1996. This is up from -0.4 for 1993 and is good news for New York/New Jersey Port exporters to the EU.

Recent growth in the European Union has already had a positive effect on some U.S. exporters. Stated by Timothy Casey, Traffic Manager for J&J Log and Lumber Corp. based in Dover Plains, New York, "Our exports to the European Union have increased markedly in the past few months." He continued, "With stronger economic growth, we anticipate selling more to the region." About 85% to 90% of J&J's exports depart from the NY/NJ port.

Steve Shyne, International Traffic Manager for Pfizer, Inc., a manufacturer of pharmaceuticals and food chemicals headquartered in New York City, said that it has become difficult getting space on vessels destined for Europe. This is a pretty good indicator of the greater demand for U.S. products.

The Commission sited several factors for the EU's improved performance. These include the passage of the GATT Uruguay Round, an upswing in the U.S. economy, an anticipated decline in EU interest rates and a restoration of business and consumer confidence.

The EU accounts for 40% of the world's GDP. Germany, the largest EU economy, accounts for 24 percent of the EU's GDP. The UK, the United States' biggest European market, accounts for 16%. Per capita income for the EU is roughly $20,000. Former West Germany, the Netherlands and Denmark have the highest per capita incomes, reaching 135% of the average.

Gary Zwiercan, Vice President and Manager of the food products division of National Starch & Chemical Co., is bullish about his company's export prospects to northern Europe. The food products division of the Bridgewater, New Jersey-based manufacturer produces specialty food starches used in food processing. Stated by Zwiercan, now that the recession has ended, "We're very excited about the opportunities in northern Europe." Zwiercan pointed out that both the UK and Germany are major markets for his company.

The Single Market Has Created Opportunities — and New Risks

The European Single Market of 370 million consumers, officially established on January 1, 1993, has significant implications for U.S. companies. The elimination of many EU internal trade barriers has enabled EU-based firms to operate relatively freely, thereby achieving economies of scale and a higher degree of competitiveness. European mergers and acquisitions, and the rationalization of industrial production and distribution systems have enhanced this.

The ongoing harmonization of product standards, labeling, testing and certification requirements simplifies U.S. exporters' ability to offer products throughout the Union, while reducing costs. This also allows U.S. firms to achieve economies of scale and greater competitiveness in Europe, along with other non-EU countries and U.S. competitors, such as Japan, Taiwan, South Korea, Hong Kong and Singapore.

The possibilities always exist that the European and North American trade blocs will become embroiled in trade disputes, the EU will establish protectionist measures or through trade diversion U.S. exports there are curtailed. Trade diversion occurs when members of a trade group buy more goods from each other, due to the elimination of internal trade barriers, displacing non-member goods. As a result, a sound export strategy may involve the eventual targeting of a diversity of markets on global basis.

1994 Exports to the United Kingdom — Our Top European Market — Topped $26.8 billion

The UK economic recession, which began in the third quarter of 1990 and was the UK's longest recession since the 1930s downturn, is over. During the recession, widespread business failures occurred, both blue and white collar workers became unemployed, and consumer and business confidence was undermined. And many of the jobs lost may never be replaced as enterprises adjust. The UK, however, has emerged from recession with leaner, more competitive industries.

In 1992, UK GDP expanded by 2%. It is projected by the European Commission to have reached 3.8% in 1994, to increase by 2.7% in 1995 and 2.8% in 1996.

The UK is the largest importer of U.S. products in Europe. Last year the United States ran a trade surplus with the UK of $1.8 billion, and again ranked as our fourth largest export market after Canada, Japan and Mexico. Given its size and growth potential, the UK represents an extremely important overseas market. Over the next few years, new and current U.S. exporters to the UK can expect to find exceptional trading opportunities.

UK Sectors Present Opportunities for NY/NJ Port Shippers

Britain's telecommunications sector is the most liberal among European countries and offers increasing opportunities for U.S. equipment manufacturers. Although equipment for basic voice services is largely reserved for EU companies, power utilities, transport utilities, and cable TV companies have new transmission equipment requirements that U.S. exporters can fill.

Computer software is one of the fastest growing British market sectors. After the British, U.S. companies are dominant and likely to remain unchallenged by third-country suppliers. The activities of the major U.S. vendors of computers and operating systems software have created a fertile secondary market for applications programs that require little or no adaptation to be acceptable to British users.

The UK health care market is dominated by the state-funded National Health Service (NHS). However, NHS management is becoming decentralized. As a result, Regional Health Authorities are taking on procurement responsibilities. Managerial and financial autonomy is also being granted to many hospitals and general practitioners. With increasing emphasis on cost containment, U.S. suppliers of medical equipment are likely to benefit.

A growing public awareness of environmental pollution and the return to economic growth in the UK is expected to reinvigorate the environmental technology and pollution control equipment market. U.S. advancements in this field have positioned U.S. firms at a competitive advantage.

U.S. consumer goods, especially those considered representative of the American lifestyle, are held in high esteem in the UK. The upturn in consumer spending will present greater opportunities for U.S. suppliers of children's wear and nursery products, sporting goods and exercise equipment designed for the home, garden and outdoor leisure equipment, and general fashion accessories.

Other profitable export markets include auto, electronic components and test equipment, aircraft and parts, computers and peripherals, oil and gas field machinery, hotel and restaurant equipment, biotechnology, apparel, drugs and pharmaceuticals, building products, and security and safety equipment.

U.S. Exports to Germany — the Largest European Economy — Last Year Reached $19.2 Billion

The bonanza that German unification brought to the country's western producers came to an end in early 1992. The surge in product demand in former East Germany dropped and the global economic slowdown negatively impacted the heavily export-oriented economy. In 1993 the bellwether automobile industry, for example, said to account for one in seven German jobs, hit its worst slump in years.

German GDP is projected by the European Commission to have reached 2.5% for 1994, and to increase to 3% in 1995 and 3.4% in 1996. These figures are a vast improvement over Germany's -1.2% GDP incurred in 1993. The growth and sheer economic size of the economy makes for a very profitable export market. And some observers anticipate that eastern Germany may become the fastest growing economy in Europe.

Growing German Sectors Will Benefit NY/NJ Port Exporters

The industrial process controls sector covers measurement and control instrumentation and equipment, counting and recording instruments, testing and monitoring equipment, numerical controls and programmable controllers. German growth estimates for 1995 are favorable. U.S. producers of these products have an excellent reputation in Germany and already account for a sizable portion of imports to Germany.

The majority of German computer distributors and users perceive U.S.- made computer products as of high quality and leading edge technology. The market is growing and presents sound opportunities for U.S. producers. A large number of independent software vendors with small local operations maintain about 85% of the sector. With a 22% share of the European software and services market, Germany is the largest and fastest growing European market for software.

In 1993, the United States ranked fourth among Germany's leading chemical suppliers, after France, the Netherlands and Belgium/Luxembourg. German imports of photochemical and pharmaceutical products from the United States have been strong. According to the U.S. Department of Commerce, the 1993 industry market size of $80.5 billion is expected to grow to $87.2 billion this year.

The German market for high quality, advanced medical equipment is exciting. U.S. producers of innovative technologies such as laser optics, new diagnostic devices, as well as new artificial implants and components should find opportunities in Germany. Innovative devices used in micro-surgery, biomedicine and radiology are also in demand.

Other major German markets where U.S. producers stand to benefit include aircraft, motor vehicles and parts, telecommunications equipment, electronic components, and audio/visual equipment.

This article appeared in VIA Magazine, a division of The New York Times, May-June 1995
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, emerging risks, and the latest economic trends. He's also founder of both the ManzellaReport.com and Manzella Trade Communications, Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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