EoW November 2013

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Transatlantic cable
November 2013 27
† As to Microsoft’s acquisition of Nokia’s handset business,
it e ectively turns the Finnish mobile phone pioneer into
the engine for the American rm’s ambitions. But Carolina
Milanesi, an analyst at Gartner, told the New York Times that
she believed the deal could help both companies. How? By
prompting them to respond more quickly to the dynamism
of the mobile market: “They need to move faster,” she said.
(3rd September)
The advice should be useful to any phone maker seeking to
gain ground on Apple and Samsung.
Ohio redux
Led by aerospace and automotive,
the state’s exports are on pace
to set a record this year
The US International Trade Administration (ITA) on 8th August
announced that Ohio companies exported $25.3 billion worth
of goods and services in the rst half of 2013. The total is three
per cent higher than in rst-half 2012, and in fact exceeds that
of any other six-month period in state history. At this pace, Ohio
exports will reach $50 billion this year, the highest value ever.
According to the ITA, an agency of the US Commerce Dept,
transportation-related products led the way, with aircraft parts
($2.6 billion worth, or about 10 per cent of state exports) in rst
place. Cars and car parts were close behind. Ohio is also seeing
increased exports of machinery and metal fabricated goods.
Susan Whitney, director of the US Export Assistance Center
of Northern Ohio, said exports have risen steadily since 2010
to reach a record $48 billion last year. She credits the “National
Export Initiative” launched by President Barack Obama in his
2010 State of the Union address. Ms Whitney told Robert L
Smith, the economic development reporter for the Plain Dealer
(Cleveland), “Because of the recession, many companies told me
they would have had to lay people o , but for their exports.”
One of over 100 domestic o ces of the US Commercial Service,
another branch of the Commerce Dept, the centre serves
the needs of Northern Ohio companies seeking to succeed
in overseas markets. Exporters consult international trade
specialists at either the Cleveland headquarters or a satellite
o ce in Akron. The broader network includes o ces at more
than 80 US embassies and consulates worldwide.
† In an overseas initiative of another kind, Lubrizol Corp
(Wickli e, Ohio) is opening a new plant in Guangdong
Province, China, to make chemical additives for lubricants.
Primarily intended for automotive applications, the
products also will go into industrial uids, such as those
used in metalworking. Peter Krouse, who covers industry in
Northeast Ohio for the Plain Dealer, reported on 20th August
that the plant, under construction in the city of Zhuhai since
October 2010, will include a research and testing facility. It
will primarily serve the Asian market.
The Zhuhai plant is the latest investment in China for
Lubrizol, which has operations in 17 countries, 7,000
employees worldwide, and revenues exceeding $6 billion.
The company is owned by Berkshire Hathaway (Omaha,
Nebraska), the multinational holding company whose
chairman, Warren Bu ett, is renowned for his investing
acumen.
The economy
Manufacturing is on the rise in the US
and set to make a bigger contribution to
the expansion at home and abroad
A closely watched barometer of American factory activity – the
index of the Institute for Supply Management (ISM) – climbed in
August to the highest level in more than two years.
Another report showed a rise in construction spending in July to
the highest level in four years. Those outlays climbed 0.6 per cent
to a $900.8 billion annual rate, the strongest since June 2009, the
Commerce Department said.
Readings above 50 in the ISM index indicate growth. The August
reading posted by the Tempe, Arizona-based industry group was
the strongest since June 2011.
Up from 55.4 a month earlier, it took analysts by surprise. The
median forecast in a Bloomberg News survey of 85 economists
was 54.
“American producers are leading a global manufacturing
recovery that stretches from China to Europe as their economies
improve,” wrote Bloomberg’s Shobhana Chandra (3rd September).
“Resilient US demand for motor vehicles is prompting companies
such as Ford Motor Co to expand, while further strides in
construction are bolstering orders for building materials.”
Brian Jones, a senior economist in New York at Société Générale,
the French multinational bank, also saw both “a solid quarter for
US manufacturing” and a wider trend. “Businesses are expanding
production not only to meet demand but to also to build
inventories,” he told Ms Chandra. “Manufacturing worldwide is
impressing to the high side.”
The pickup in other parts of the world is substantiated by
gures cited by Bloomberg . In China, manufacturing
strengthened in August, with one gauge showing the biggest
jump in three years. Euro-area factory output also expanded at
a faster pace than initially estimated, driven by a resurgence in
Italy and Spain as the recovery in the 17-nation currency bloc
started to build momentum.
Good news could be found throughout the ISM report. The
group’s US new orders measure advanced to the highest level
since April 2011, while its gauge of export demand rose to a
ve-month high.
The index of orders waiting to be lled also climbed. At the same
time, the report showed factory inventories contracting for a
second month in August, while customer stockpiles shrank at
the fastest pace since November.
To Michael Feroli, chief US economist at JPMorgan Chase
& Co in New York, the input from the supply managers was
predictive of smoother sailing ahead. In an email to clients he
wrote, “The combination of strong orders growth with weak
inventory-building augurs well for future increases in industrial
production.”
† Automobile purchases – on track for the best year since 2007
– are also helping to power gains in manufacturing, which
accounts for about 12 per cent of the US economy.
Dorothy Fabian – USA Editor