US Dept of Commerce: Y2k and the Global Trading Systemgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread |
Lengthy but very important document.
-- regular (zzz@z.z), April 26, 1999
Excerpt:
Most large, multinational corporations around the world have been aware of the Y2K problem for several years and have taken steps to address it. The Gartner Group, a market research firm, recently reported that 83 percent of the large companies it surveyed have begun Y2K testing, and 72 percent have begun business risk assessments and contingency planning. But many small and medium-size enterprises (SMEs), defined as establishments with fewer than 500 employees, remain behind in confronting the problem and some are unaware of its implications. Therefore, a considerable share of Y2K awareness and remediation efforts should be focused on SMEs, which constitute over 98 percent of the total enterprises in most countries (see table 20) and are important to national economies.According to the table, 99.7% of businesses in the US are SME's!! I knew the figure was high, but this is astronomical! And 50% plan on doing nothing about Y2K?!
I have yet to see a satisfactory "Polly" response to this problem.
-- wow (abc@de.f), April 26, 1999.
Regular, "Lengthy but very important" accurately describes this document--thanks for locating it. Time is a precious commodity for us all but if you only read the section "Petroleum Products" you'll gain a new sense of urgency about Y2K.
-- Old Git (anon@spamproblems.com), April 26, 1999.
As the owner of a small business let me try and ease your mind a bit.My company is a manufacturing and retail concern with 3 stores and 25 employees. We use computers to do the accounting (MYOB v8 - supposed to be Y2K compliant) and to keep track of our Marketing database (MS Access - no problems, I've checked it out).
Embedded systems only come into the picture in the form of PABXs (both compliant), security systems (vendors have given written assurances as to compliance), and PCs (all BIOS and RTCs passed roll- over tests). All our manufacturing equipment is *not date sensitve*. We just need hydro (electricity) and water. [And before somebody points out that these two things are rather essential, I've checked out the utilities' progress and I am satisfied with what I have been told.]
As "small" businesses go, we are kinda of large. The vast majority of small businesses in the US and Canada employ fewer than 10 people. And as a general rule of thumb, the smaller a business is the less likely it is to be computerized. And those that are computerized can revert to working without computers fairly easily. In checking our supply chain I talked with many owners of small businesses and found this to be true. In the case of my own business we could live without our accounting software. Life would be more troublesome, but it wouldn't put us out of business.
Don't forget that most small businesses that have PCs use off-the- shelf software. "Remediating" the Y2K problems of a small business can take about a day: check version numbers of software against maufacturers' web sites, run BIOS/RTC test on PC(s), telephone switchboard vendor to find status etc. [Also don't forget that a lot of small businesses will leave it until later in 1999 to do the above. We hate spending money before we have to
.] Don't forget also that business owners/entrepeneurs tend to be a rather resourceful bunch. We are used to dealing with crises like credit crunches, bad debts, key suppliers going under with no warning, key employees quitting etc. Too many on this forum seem to subscribe to the "we'll all roll over and play dead if there is a problem" attitude. My family and I will fight every inch of the way to keep this business going (we are in our 12th year) and I can assure that most other business owners think the same way.
FWIW, and to throw the real D&G crowd a bone, I think the biggest problems will occur in companies that are a fair bit bigger than mine, are still headed by the original founder, but are small enough not to have an internal IT dep't. This type of company may have bespoke software and embedded systems, but not have the internal expertise to handle assessment and remediation. How companies fall into this zone, how bad their internal failures are, and how much of an effect on the overall economy they have is an open question.
-Keep your stick on the ice-
-- Johnny Canuck (nospam@eh.com), April 26, 1999.
Last line should read:How _many_ companies fall into this zone, how bad their internal failures are, and how much of an effect on the overall economy they have is an open question.
Gotta get a cup of coffee.
-- Johnny Canuck (nospam@eh.com), April 26, 1999.
"Financial transactions rely heavily upon computers and automated systems, which are usually components of large complex global networks. Y2K-caused errors in these highly integrated and interconnected systems could spread corrupted data (such as account information) instantaneously around the world."Alan Greenspan has said this before. Now the Dept. of Commerce says it. Are they D&Gers? The keep-it-in-the-bank crowd on this forum keeps telling us that the controls are in place and have always been in place. So why do these government bigwigs keep uttering these scary phrases? Is it because they have a legal and moral right to avoid criminal negligence?
If we all end up wandering around aimlessly in the street in January with no money, food, fuel or medicine, we can't say it's because we weren't warned. It would be because we chose to focus on how good it might be instead of how bad. (Not a prediction, just an observation.)
-- Puddintame (achillesg@hotmail.com), April 26, 1999.
Johnny, As the owner of an even smaller business trading 10 years,I agree with nearly everything you say. But & it is a big but,if nobody is buying what you & I produce,how long will we last?It is the supply chain/domino effect that we fear the most. Here in the UK,I have heard that most companies can survive 3 months at the most without decent sales.
-- Chris (griffen@globalnet.co.uk), April 26, 1999.
Excellent international supply chain report!
Diane
-- Diane J. Squire (sacredspaces@yahoo.com), April 27, 1999.
For those who dont take the time to read the report ... at least read this ...Excerpts ...
... All nations are tied into a system of global economic interdependence as part of the world trading system. Trade, which now represents over one-fifth of global output, is crucial to the economic development and growth of all national economies. ...
... International trade consists of a broad array of commercial interests and relationships that involves most product and service sectors, the orderly conduct of which depends upon a smoothly functioning trading system. This in turn relies on a global web of critical services. Disruptions in the relationships among the suppliers and customers and their overseas business partners can seriously affect the well-being of individual companies, specific industry sectors, or even economies in general. ...
... Y2K failures in electronic systems and devices have the potential to cause supply and service disruptions. This report discusses the scope of interdependence in the world trading system and the importance of trade to economic interests. ...
The Global Trading System Infrastructure
... The international trading system, with its complex web of suppliers, distributors, customers, and transportation links, is supported by a critical infrastructure of products and services. The most important components of the infrastructure are energy production and distribution facilities, transportation modes, communications channels, and financial networks. These sectors are highly computerized and interdependent and are particularly sensitive to dates for the smooth exchange of goods and services. These characteristics render them especially susceptible to Y2K-related problems. Breakdowns in any part of the trade support structure could slow or halt shipments of key imports needed to keep factories working, hospitals functioning, food in continuous supply, and people employed. ...
Energy Production & Distribution
... The reliable production of electric power and distribution of heating fuel by utilities around the world is fundamental to the trading system. Fossil fuels-coal, natural gas, and oil-are essential for the operation of most utilities. In the United States, over 65 percent of electric power is generated by coal and gas. Utilities are highly automated, with complex networks of generation plants and storage areas, transmission networks and pipelines, and distribution facilities. The ripple effects of Y2K-caused breakdowns in one part of the interconnected transmission grid could cause failures elsewhere down the line. ...
... Major long-term disruptions in fuel supplies can have serious economic implications, as demonstrated by the energy crisis of the mid-1970s. ...
Transportation Modes
... The efficient and reliable transportation of goods among countries and from port to customer within countries is critical to the trading system. The global transportation infrastructure includes airlines, shipping concerns, railroads, and trucking companies; these are operated by a wide variety of small and large entities. Especially important are the air cargo and maritime shipping sectors, which include customs facilities, cargo terminals, freight forwarders, and distributors, most of which depend on computer systems and embedded chips. Traders make extensive use of electronic data interchange (EDI) to transmit customs information, letters of credit, bills of lading, ship manifests, and other important documentation. ...
... Shipboard systems can have as many as 100 to 200 embedded microchips that control everything from navigation to refrigeration. In 1998, the U.S. Coast Guard surveyed marine manufacturers and discovered that over 20 percent of the embedded chips tested were not Y2K compliant. ...
... Key seaports, canals, and waterways with large shipping volumes represent potential transportation bottlenecks, and the effects of Y2K breakdowns in these commercial hubs could be amplified. ...
Table 2: The World's 30 Busiest Seaports* (Continental USA below)
6. Long Beach, CA, USA
8. Los Angeles, CA, USA
12. New York/New Jersey, USA
24. Oakland, CA, USA
26. Seattle, WA, USA
29. Hampton, Rhode Island, USA
[Three of the worlds top thirty seaports are in California alone ... *Sigh*]
... Air transport is another critical link in the international trading system. In the United States, the airlines now carry the same amount of exports (measured in terms of value) as maritime companies. Air transport is used particularly for the shipment of medical products, scientific instruments, telecommunications equipment, and computers. ...
See chart ... Table 3: World's 30 Busiest Airports, 1998
Passengers -- US has 18 out of thirty of the worlds busiest airports
Cargo -- US has 17 out of thirty of the worlds busiest airports
Movement -- US has 25 out of thirty of the worlds busiest airports < br>Communications Channels
... The global communications infrastructure includes the services employed to transmit voice, data, image, and video information by wire, radio (including cellular), and satellite; electronic mass media services (e.g., radio and television broadcasting and cable TV); and online computer information services, including the Internet. It also encompasses traditional mail and delivery services and the printing and publishing industries, ...
... Reliable communications services are essential to the smooth operation of the global trading system. These services are heavily used by companies that must maintain close contact with their overseas networks of subsidiaries, customers, and suppliers. This infrastructure's vulnerability has been demonstrated in the past. ...
... As the scope and number of communication channels expand, dynamic and interdependent communications technologies become more complex. There are a myriad of permutations and combinations of routing possibilities to transmit information. ...
... However, the network's complexity and size make it difficult to predict if and where Y2K-related communications disruptions could occur, and they increase the difficulty of testing networks for Y2K compliance. ...
... There are also concerns that some Internet service providers (ISPs) that use older equipment may not be Y2K-compliant. If some ISPs malfunction after January 1, 2000, this would disrupt service to groups of individuals and possibly cause load shifts that could degrade service on remaining traffic routes. ...
... Although almost two-thirds of the 24.8 million Internet hosts worldwide are located in the United States (where newer, Y2K-compliant equipment and software are more likely to be in use), there are still a number of older computers used as hosts overseas. ...
Table 4: Countries with the Largest Number of Internet Hosts (thousands)
United States 15,340,000 out of total 24,800,000 internet hosts worldwide
... Countries with high teledensity, the number of main telephone lines per 100 inhabitants, have greater volumes of communications software, switches and other equipment that could contain Y2K problems (see table 5). These are developed countries where 85 to 95 percent of the population have ready access to a telephone, as opposed to less than 10 percent typically in many developing countries. But because of the interdependencies inherent in communications systems, telephone usage rates cannot be used as the sole determinant for predicting the potential locations of Y2K-related problems in the communications infrastructure. ...
Financial Networks
... International trade and commerce depend on a smoothly functioning financial sector. In turn, the banking and financial sectors are heavily dependent upon computer networks for processing transactions and providing information. In most countries, investment services, banking, and insurance are the most advanced sectors in terms of Y2K- preparedness. Nonetheless, disruptions in the operation of banks and other financial institutions around the world could interfere with the banking system's ability to meet its obligations to customers and customers' ability to meet their obligations to banks. ...
Table 6: World's Largest Banks, 1998
[Japan has the largest number of these banks, followed by Germany, France, and Switzerland. Only two of the top twenty-five world banks are located in the United States ... surprising!]
... One potential area of concern, for example, is the fact that most financial transactions include an electronic component, such as EDI, which is used to exchange information among financial institutions, clearinghouses, vendors, and borrowers. ...
The Importance of Trade and Investment to National Economies
... The United States, Japan, Canada, and West European countries were the leading exporters. However, over one-third of world trade originated from countries outside of these areas. ...
Table 7: World's Leading Merchandise Exporters, 1997
[United States is ranked number one.]
... International trade is a key component of most economies. In the United States, for example, total U.S. exports and imports have grown from less than 10 percent of GDP in 1960 to 24 percent in 1998, and exports accounted for one-third of overall economic growth from 1987 to 1997. More than 20 percent of all goods and 36 percent of durable goods produced in the United States are exported. Exports of goods and services support over 12 million domestic jobs, and jobs supported by goods exports pay wages that are 20 percent higher than the national average. Imports play an important economic role as well, especially as critical inputs into manufacturing processes and as key elements of the economy. ...
... The recent financial crises in Asia, Russia, and Latin America have demonstrated the interdependence of the trading system. ...
... The trade deficit was driven by a decline in exports to countries with negative or slow economic growth: U.S. exports to Asia dropped sharply and exports to Europe grew at a sluggish pace. Y2K-related problems abroad have the potential to affect the commercial interests of the United States and other countries. ...
The U.S. Trade Perspective
... U.S. merchandise trade reached $1.16 trillion in 1998: exports totaled $683 billion and imports totaled $914 billion. Canada continued as the largest export market, representing 22 percent of U.S. exports, followed by Mexico, Japan, the United Kingdom, and Germany. Regionally, Europe represented 25 percent of U.S. exports; Asia, 26 percent; Latin America, 21 percent; and the Middle East and Africa, 5 percent. The top five suppliers of U.S. imports in 1998 were Canada, Japan, Mexico, China, and Germany. Regionally, Europe supplied 22 percent of U.S. imports; Asia, 39 percent; Latin America, 16 percent; and the Middle East and Africa, 4 percent. ...
Key Import Sectors: The U.S. Example
... Industrial sectors around the world are dependent upon imports of key raw materials, machines, and equipment. Among the most important are petroleum products, minerals and metals, machine tools and general components, information technology and telecommunications equipment, and scientific and control instruments. Disruptions in the supply of any of these products due to Y2K-related mishaps could affect industrial output and economic activity. ...
[They forgot to mention ingredients for medicines/pharmaceuticals.]
Petroleum Products
... The United States, like many countries, relies heavily on energy shipments. It is the largest importer of crude oil and second largest consumer of natural gas. ...
... By the end of 1999, it is estimated that the United States will consume 19.3 million barrels of oil a day, about half of which is imported. Of this amount, 51 percent is imported from countries in the Western Hemisphere, 21 percent from the Middle East, 18 percent from Africa, and 11 percent from other countries. The petroleum industry is highly dependent upon information technologies in every aspect of its business operations, including production, maintenance, finance, communications, security, safety, and delivery. Embedded microchips are widely used in the industry's distributed control systems. ...
Table 11: Largest Suppliers of U.S. Petroleum Product* Imports, 1998
... Table 11 lists the largest suppliers of petroleum product imports to the United States, which totaled $49 billion in 1998 and represented 5 percent of total imports. ( Petroleum products include crude oil, gasoline, and kerosene.) The top five countries-Venezuela, Canada, Saudi Arabia, Mexico, and Nigeria-accounted for two-thirds of this total. ...
Minerals and Metals
... The United States, also like many other countries, is heavily dependent on imports for particular minerals and metals. For example, the United States is totally dependent on imports for its supplies of 12 mineral materials, including bauxite and alumina, columbium, natural graphite, manganese, and mica. More than half of the supply of 13 others comes from abroad, including platinum, tin, zinc, tungsten, and cobalt (see table 12). Temporary disruptions in the supply of some of these materials could affect automobile manufacturing (catalytic converters and pollution control systems), the petroleum and construction industries (drill bits), and the electronics sector (cathode ray tubes and electronic capacitors). The National Defense Stockpile contains quantities of scarce minerals to cover limited shortages, which can be released under a Presidential declaration of national emergency. ...
Machine Tools and Metal Components
... Machine tools, which are used for cutting and forming metal, are fundamental elements of the industrial base and are widely used in important manufacturing industries, such as automobiles, aerospace, home appliances, and die and mold industries. Information technologies (computers, software, and embedded integrated circuits) are now integral to machine tools, enabling sophisticated electronic controls for expanding performance and flexibility. The growth in the use of personal computer-based controls has made machine tools less costly and easier to program and use. ...
... More than 50 percent of U.S. machine tools are imported. Japan is the world's leading machine tool supplier, with a market share of 25 percent, followed by Germany, the United States, Switzerland, and Italy. Collectively, European companies supply more than 40 percent of the total world output. ...
... General components and parts, such as bearings, industrial fasteners, screw machine products, gears, valves, and pipe fittings, are also critical inputs for manufacturers of machinery and equipment. Shortages can slow down or halt production lines. Today, many manufacturers depend on third-party suppliers and no longer produce their own components. ...
... The automobile industry, the largest user of general components in the United States, increasingly outsources the production of parts and subassemblies, a significant share of which are imported. As just- in-time delivery of components has become more widespread and manufacturers have reduced their parts inventories, meeting delivery schedules in a timely fashion has become ever more important for suppliers and users. ...
Information Technology and Telecommunications Equipment
... Information technology (IT) and telecommunications permeate every layer of commercial and industrial activity worldwide. ...
... Over the past several years, the growth in these sectors was responsible for more than one-quarter of real economic growth in the United States. Computer and communication equipment manufacturers are highly dependent on the global trading system for the manufacture, distribution, and marketing of their products, and large volumes of electronic components are purchased from foreign suppliers, especially in Asia. ...
... In the U.S. services sector, IT expenditures account for over three-quarters of all capital equipment investment. The information and telecommunications sectors are essential to other parts of the global trading infrastructure, including the electronic transfer of funds, the distribution of electrical power, the control of gas and oil pipeline systems, the efficient delivery of raw materials and finished goods, and the delivery of responsive emergency services. In addition, IT companies are the primary source of Y2K remediation resources. ...
... The top five countries-Japan, Singapore, Mexico, Taiwan, and China-accounted for over two-thirds of this [U.S. imports of information technology and telecommunications equipment] total. ...
Scientific and Control Instruments
... Scientific and control instruments are primary tools used by manufacturers, public utilities, and laboratories to increase productivity and product quality. The principal users of control instruments are processing industries, including food, chemicals, petroleum, and paper, as well as electric and gas utilities and water treatment facilities. Scientific instruments are mainly employed by industrial, healthcare, and institutional laboratories, while electronic test and measurement instruments are used by the manufacturers of semiconductor components and electronic equipment. Most scientific and control instruments contain embedded chips and incorporated software. ...
... The top five suppliers-Japan, Mexico, Germany, United Kingdom, and Canada-accounted for 70 percent of this [U.S. imports of professional and scientific instruments] total. Interruption of the flow of instruments and parts imports could cause supply bottlenecks disruptive to manufacturers and end users. ...
International Investment
... In addition to trade, foreign investment is important to many countries as a stimulus to employment and economic growth. International investment takes two forms, as financial instruments (bank deposits, foreign securities, etc.), and as plants and equipment located in other countries (direct investment). Financial transactions rely heavily upon computers and automated systems, which are usually components of large complex global networks. Y2K-caused errors in these highly integrated and interconnected systems could spread corrupted data (such as account information) instantaneously around the world. Direct investment is also vulnerable to Y2K-caused breakdowns. Factories, offices, and foreign affiliates owned by corporations and multinationals are susceptible to power outages and other types of local service disruptions. ...
Information Technology Resources
... The degree to which countries have integrated information technologies into their economies is an indicator of their level of exposure to Y2K mishaps, as well as of their access to resources to mitigate such problems. ...
... Economies that are highly automated and in which computers, software, and networks are in widespread use have a greater chance of experiencing Y2K difficulties. At the same time, however, these economies also have greater access to the capital and human resources necessary to remediate systems and respond to Y2K-related needs. Countries that are less IT-dependent may have less Y2K exposure overall, but their essential services, such as power utilities and communications, may be highly computerized, while the resources to address potential problems may be in short supply. ...
... IT density levels (defined as IT spending per capita) are highest in North America, Japan, and Western Europe, which account for over 90 percent of world IT spending. Developing countries have lower IT density, but are accumulating IT assets at a faster pace. ...
International Cooperation and the Y2K Challenge
... Because of the potential risks to the trading system of Y2K failures, it is important that countries work together to share information, promote Y2K awareness, support remediation efforts, and encourage contingency planning among companies and organizations. Activities such as conferences, seminars, and media events can be useful tools for disseminating the Y2K message. Some countries are just beginning to assess their Y2K status, while others lack the funds and resources even to define the extent of the problem. According to the World Bank, developing countries find it difficult to expend scarce resources on what is perceived to be an obscure and distant threat, when other social and economic problems are more pressing. Dealing with the Y2K problem is also complicated by software piracy (since vendors' "fixes" are unlikely to reach owners of unlicensed copies) and by obsolete computers and equipment (whose manufacturers may be defunct or difficult to identify). ...
... But many small and medium-size enterprises (SMEs), defined as establishments with fewer than 500 employees, remain behind in confronting the problem and some are unaware of its implications. Therefore, a considerable share of Y2K awareness and remediation efforts should be focused on SMEs, which constitute over 98 percent of the total enterprises in most countries (see table 20) and are important to national economies. ... SMEs in the United States accounted for about 30 percent of total export value. ...
... Bottlenecks, shortages, and interruptions in trading relationships have the potential to disrupt the global economy. To minimize disruptions caused by Y2K problems, it is important that countries work together to share information and cooperate in activities aimed at furthering remediation and contingency planning efforts. ...
-- Diane J. Squire (sacredspaces@yahoo.com), April 27, 1999.
Table 12 is the scariest of all and I can't bring it in here. You will have to go look, as it details the import dependence on a number of items. we are 100% dependent on imports for some of the materials that high tech and heavy manufacturing depends on to work (ex: arsenic,alumina and bauxite, manganese, rare earths (a couple)) and extremely dependent on others like Platinum-94%, tin-85%, potash - 80%, chrome 79%, tungsten-78%. The countries these come from should raise a few more alarms than I have heard.Chuck
-- chuck, a Night Driver (rienzoo@en.com), April 27, 1999.
Doesn't seem to have worked, oh well. Chuck, why does that alarm you so? Canada is a hop, skip and a jump away... So is Mexico.. I'd worry about the metals which only come from one or two places only.In many of the developing producing countries listed, it is not actually the country itself producing the mineral, but a foreign concessionaire, most likely Western, and more likely to be y2k-aware and ready. In any case, I would expect manufacturers who are dependent on timely importation of crucial mineral elements to have increased their stockpiles as a contingency plans. AT my previous employer (I'm switching companies), we double and triple-ordered raw materials which had long import lead times, like lumber, specialty gypsum, and electrical fittings. Some of those orders no doubt contributed to the increasing North American GDP, a y2k effect some economists predicted.
I'm writing a longer post on this DOC report. Stay tuned.
-- Morgan (morgan96@netscape.net), April 27, 1999.
I'm more concerned about Arsenic, Bauxite, manganese etc. which come from the rim and 3rd world countries. Most people are unaware of how much arsenic gets used in day to day metals mfging, as an example.CR
You would be surprised the number of litle shops all over Cleveburgh that have LARGE hodings in arsenic. HAZMAT Awareness 101 LOL.
-- chuck, a Night Driver (rienzoo@en.com), April 27, 1999.
Well, Chuck, I for one confess my ignorance as pertains to arsenic, I had no idea it was a mineral - more like a plant, like hemlock. And how could Honk Kong and Japan be suppliers? More like re-exporters, probably. I also hear that lace quarries in Belgium are having y2k problems (grin).
-- Morgan (morgan96@netscape.net), April 28, 1999.
(Right then, this is a longish post/rant, so If you don't want to get bored, skip it.)
I was thouroughly underwhelmed by this report and its (lack of) conclusions.
I mean what does this prove other than the fact that, YES, the USA trades with other countries? Please, give me a break.
What I saw mostly boils down to this:
"The United States economy uses WhickerWhackers. (X) countries produce WW's. Here is a table showing suppliers of WW's. Slowdowns in deliveries of WW's could might maybe potentially affect production of some manufacturers, and by extension, the economy"
And so what? This is the problem of having mediocre bureocrats meddle in areas which they have no practical experience. Any guesses on how many US commercial attaches actually ever worked in the private sector? I'd venture to say none - trust me, I've met a few. I mean, so many machine tools are imported from Japan and Germany. So what? I say that if Traub or Hitachi cannot meet delivery obligations, then other US manufacturers have a leg up on the competition - the free market at work .... (I can hear Decker perk up his ears).
This very much looks like a report issued by a junior staffer, instructed to produce "poundage". I mean, lovely that we see tables on the 30 busiest seaports or airports, or the world's largest banks - but aside from this, there are no conclusions or suggestions how certain problems may be avoided. In fact, the disclaimer at the beginning neatly sidesteps any responsibility:
I freely admit to having a gut-level, knee-jerk reaction anytime I see anything produced by the DOC. In a libertarian government (warning, semi-oxymoron!) the DOC would be one of the first to get the ax. Well, maybe not completely eliminated, but certainly trimmed from an elephant to a mouse. They do have some uses.
Like for example, digging up this little statement on Algeria's main banks: The larger banks may not be havily affected by y2k because most of the international transactions are done on paper. Yep, I can vouch for that, they do their business at the speed of paper! Our company once had to wait over 4 months to finalize an Letter of Credit with Banque d'Algerie..
Here's strictly my opinion here on the interconnectedness of the US to the world markets and US exports: Americans make lousy world traders. That's right..... not even close to 'bidnessmen' like the overseas Chinese or the Lebanese. This is not meant as a slur on American products, innovation, technology, or overall business sense. Not at all. It's just that with a $5 trillion national economy, the prevailing attitudes is "who needs to go overseas"? Full of risks, furriners, and who knows what.... (Heck, I know some people that think shipping your goods from California to New Jersey is "exporting") Our biggest trading partners? Canada and Mexico. Hardly overseas. Our other biggest trading partners? Japan and China, but mostly one way - they export into US markets, and import comparatively little in return.
The DOC can state all it wants about the increasing importance of exports, but I say this... let's take out the following:
Aircraft
Defense
Agricultural
I.T.
Engineering Services (construction, oil & gas, petrochemical)
And the export pie gets smaller, fast. It's not a matter of Mohammed going to the mountain, but very much the mountain, i.e. the rest of the world, going to Mohamed.
Let me illustrate: our company maintains two purchasing offices in the US, solely to make inquiries, purchase, and ship goods out. Why? Becuase we were having a devil of a time getting responses out of US suppliers and OEM's. I have personally tried many times to inquire with a US company, trying to solicit a quotation for exporting their products overseas. Many times, the inquiry was ignored outright. Other times, the shipment would be only to a US port, the seller would take no responsibility for shipping overseas. On one occasion (this is true!), the "export" manager of a building materials company asked me how large a 40' container was! I don't know, jack, you tell me..... This scenario is repeated by many export agents contacting US companies for exclusive agency rights for specific countries. Here in Dubai there are franchises for Subway, McDonald's and Round Table Pizza (you SF Bay Area types, can you believe that? Round Table.....). Is that because American execs came, saw and conquered? No, the other way around, some local guy went and hoofed to the US and got the franchise.
Another example on this xenophobic trade tendency: my dad used to work for IMG, a company which acted as the "export" department to several US manufacturers. These companies simply did not want to deal with customers overseas, and sent all inquiries received directly to IMG. IMG would in turn act as a middle man, at 5 to 10 percent markup, and consolidate and ship the goods abroad to the intended customer - and deal with all the headaches associated with exporting. Were it not for IMG, these manufacturers would have ignored the export market completely.
Anyways, that's it..... I didn't think much of the report, but that's just me....(and Johnny C., of course, further up....)