Trade Trajectory: A deeper look at Utah’s 2016 export numbers
From celebrating World Trade Center Utah’s (WTC Utah’s) 10-year anniversary to exploring the possibility of getting an inland port to completing countless trade missions, Utah saw a lot of international business activity in 2016.
While many companies took the leap into exporting last year, recent numbers obtained from the U.S. Census Bureau show total Utah exports declined from $13.3 billion in 2015 to $12.1 billion in 2016. I would like to use this month’s article to provide context for these numbers.
Metals made up more than 40 percent of Utah’s total export value in 2016. The metals export category includes coal, petroleum, metal ores, nonmetallic minerals, aluminum, iron and steel. Because metals make up a large proportion of Utah’s exports, their highs and lows greatly influence year-end numbers.
In 2016, metal exports decreased by 16.2 percent. This can be attributed to a number of factors including a decrease in commodity prices. Iron ore, steel and coal experienced decade lows in prices during the year. Uncertainty with the 2016 U.S. presidential election and a reduction in foreign customers’ confidence may have also played a role.
One of Utah’s largest producers of metals and minerals is Rio Tinto Kennecott. Since Rio Tinto is a member of the WTC Utah board, I spoke with board member Geoff Green to learn how the company has been affected by lower metal prices. Green said Rio Tinto Kennecott has experienced a reduction in exports due to decreased production and lower prices.
Green noted that despite unpredictability in market factors, the outlook for the mine is positive, saying, “the medium- and long-term outlook for our products is very strong. We continue to work on extending the life of the mine to 2030, with potential optionality even going out beyond that. We are investing in accessing ore in the south wall of the mine right now, and that is going to take us out for more than another decade.”
To cope with the cyclical nature of the mining business, Rio Tinto Kennecott is thinking outside of the box. The company is utilizing resources to generate business from other mines. For example, Rio Tinto Kennecott has started processing third-party copper concentrates to improve utilization of its smelter and is investing in and utilizing new technologies to make its business safer and more efficient.
While metals exports are an important part of Utah’s economy, they are unpredictable. Gov. Gary Herbert recognized this challenge and set a goal for the state to increase value-added exports to add stability.
The value of “value-added” exports
Value-added exports in Utah can be defined as all exports minus metals and minerals. Over the last 10 years, value-added exports have grown by more than 75 percent. Top value-added exports in Utah include the following: computer and electronics, chemicals, food products, transportation equipment and miscellaneous manufactured commodities.
Though value-added exports saw a slight decline in 2016, export growth in this category has been relatively constant throughout the years. The good news is value-added exports continue to make up a larger share of Utah’s exports. In 2015 value-added exports made up roughly 55 percent of total exports, whereas in 2016 that number grew to nearly 59 percent.
WTC Utah helped hundreds of Utah companies in the “value-added” category grow globally in 2016. One of these companies was Jaseboards USA, Inc.
Jase Bennett, president of Jaseboards USA, Inc., got the idea for the company after accidentally running over his friend’s longboard while living in Hawaii. As he worked to reconnect the severed pieces, he decided he wanted to build boards that were resilient enough to withstand humidity and strong enough they could be run over without breaking.
Bennett created a one-of-a-kind product and immediately began the process of trying to find where to sell it. His big break came through Costco when he was invited to sell his boards on a 10-day roadshow. This endeavor was successful and led to more opportunities with the warehouse giant. Eventually, the opportunity came to sell Jaseboards in Costco stores in the mainland. Bennett selected Utah as the location for his trial run and ended up tripling the sales he had in Hawaii.
As demand grew, Bennett knew it was time to relocate. He picked up his family and business and headed to the Beehive State. Two years later Jaseboards now has 10 full-time employees and many more part-time workers and contractors. The company has expanded its global reach and can now be found in markets in Europe, Asia and South America.
When an opportunity arose to attend a WTC Utah and Utah Governor’s Office of Economic Development led trade mission to Mexico in March 2016, Bennett signed up. He believed Latin America might hold big opportunities for Jasboard, and he wasn’t wrong. As a result of the trade mission, Jaseboards made connections with one of the largest distributors of sports and recreation goods in Latin America.
Despite the rhetoric on the national level about the negative impacts of international trade, thousands of Utah companies know better. Thanks to the continued support from the private and public sector, the outlook for 2017 looks positive. In 2017 WTC Utah will work to connect even more companies to resources that will help them “think, act and succeed globally.”