By
Timothy Boone
New Orleans
ranks among the top quarter of the largest U.S. cities for exports, a recent
report from the Brookings Institution Metropolitan Policy Program found.
The city was
responsible for $14.6 billion in exports during 2012, putting Baton Rouge in
23rd place out of the country’s 100-largest metro areas. New Orleans, which
also had $14.6 billion in exports was ranked 22nd. Both areas’ figures are
dominated by petrochemicals.
Ryan Donahue,
one of the authors of the Brookings report, said the report looks at the value
of exports that are produced in a metro area, and are not just shipped out of
the area. The U.S. Census Bureau and other federal agencies look at where an
export is leaving, not where the product originates.
This approach
has led to some distortions. Texas is considered to be the country’s leading
exporter, but Donahue said California produces more export products. Texas is
ranked No. 1 because it shares a long border with Mexico.
The Brookings
study found e xports made up 30.5 percent of all goods and services produced in
the Baton Rouge area. No other large U.S. metro had exports account for so much
of the gross domestic product.
Jay Hardman,
director of the Port of Greater Baton Rouge, said he sees a potential for the
Capital Region to increase its exports.
Last week the
port dedicated a $150 million expansion and modernization of the grain
facility.
The
investment by Louis Dreyfus Commodities means the port will go from handling
750,000 metric tons of grain a year to 5 million metric tons. Louis Dreyfus has
further improvements planned that will bring the capacity to 6 million metric
tons. The majority of the soybeans and grains that will be exported overseas
will come from Louisiana farmers.
“We’re going
to go from 20 ships a year to 100 ships a year,” Hardman said.
Some of the
ships may be coming into Baton Rouge empty or with small amounts of cargo that
can be loaded onto other ships, so there will be opportunities for increased
activity at the cargo docks. This will also lead to more fuel sales and
ancillary business.
“This gets to
be a pretty good impact,” Hardman said.
While Baton
Rouge may have the biggest share of its local economy come from exports, New
Orleans has seen exports grow faster than any other city. From 2009 to 2012,
the annualized real output growth rate increased by 6.3 percent annually.
During that same period, the annualized real output growth rate in Baton Rouge
grew by 5.5 percent a year, the third-fastest rate.
Basic
chemicals accounted for the biggest share of exports in Baton Rouge, at $4.7
billion, followed by petroleum products at nearly $4.1 billion. Resins and
synthetic rubbers, which accounted for nearly $2.4 billion in 2012, were the
only other category locally to top an export value at over $1 billion.
Ample
supplies of cheap natural gas and America’s new role as an oil exporter have
benefitted Baton Rouge- and New Orleans-area chemical and petrochemical plants.
“The chemical
industry is a big exporter driving the increases,” Donahue said. “Baton Rouge
and New Orleans are doing extremely well. But there’s a high industry
dependency that makes it subject to volatility.”
The lofty
export rankings for both cities aren’t surprising. A recent report from the
U.S. Foreign-Trade Zones Board to Congress showed that the Marathon Petroleum
refinery in Garyville, located in the New Orleans metro area, was the nation’s
second-biggest manufacturing facility in terms of exports from a designated
Foreign Trade Zone that receives special customs treatment. Exports from the
refinery were valued at between $1 billion and $5 billion a year.
Only the BMW
manufacturing plant in Spartanburg, S.C., which makes all of the BMW X3 SUVs
and X6 sport coupes in the world, ranked higher.
ExxonMobil’s
Baton Rouge refinery was ranked 14th in the nation, with a value of exports
between $1 billion and $5 billion coming out of a Foreign Trade Zone.
The national
average for export composition is 71 percent of revenue coming from goods, 29
percent coming from services, such as royalties on technology developed in a
city. But Baton Rouge and New Orleans greatly differ from that ratio.
According to
the Brookings report, 88 percent of Baton Rouge’s export revenue comes from
goods and 12 percent comes from services, while New Orleans sees 83 percent of
its export money come from goods and 17 percent from services.
“Services
aren’t a huge factor in either metro area,” Donahue said. “It’s largely
overlooked, but it makes up a significant amount nationally.”
Brookings
conducted the export report in an effort to get cities thinking about how they
could increase exports and any public policy steps they could take to get more
local companies to do business overseas. In some cases, that might mean smaller
manufacturers trying to play off giant companies like ExxonMobil or Marathon,
Donahue said.
The value of
U.S. exports is growing at a double-digit pace, thanks to fast growing
countries such as China, India and Brazil and the rise of a global middle
class. The International Monetary Fund said 85 percent of the world’s gross
domestic product growth will come from outside the U.S.
“Getting more
firms involved in exporting and helping them get a share of that growth should
be a focus of mainstream economic development activity,” Donahue said.
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