Trade Creates Jobs for New Jersey

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1 Trade Creates Jobs for New Jersey Creating and preserving quality U.S. jobs is a goal shared by all Americans. With 95 percent of the world s consumers living outside of the United States, it makes sense for small and large businesses to partner to build stronger trade ties with countries seeking U.S. goods and services. Trade creates jobs for New Jersey. Export growth increases jobs by generating new business for New Jersey s manufacturers, services providers and farmers. Imports support jobs and keep costs low, helping New Jersey businesses compete and saving New Jersey families real dollars at the cash register. Foreign investment in New Jersey creates good jobs across a range of sectors. MORE THAN 1 IN 5 NEW JERSEY JOBS DEPENDS ON TRADE New Jersey workers need trade to maintain and create jobs. Today, 1.1 million jobs in New Jersey depend on trade. In 2008, 22.2 percent of jobs in New Jersey depended on trade, up from 10.7 percent in New Jersey s trade-related employment grew nearly five times faster than total employment from 2004 to New Jersey Jobs Tied to Trade, 2008 Wholesale & Retail Trade 184,100 Prof., Sci., & Tech. Services 68,900 Finance & Insurance 64,000 Transp. & Warehousing 52,700 Information 32,000 Manufacturing 21,400 Small and Large Employers Partner to Export Small and medium-sized enterprises (SME) and workers in New Jersey supply goods and services to large U.S. companies in and out of the State. Those bigger companies use the SME goods and services to make other products and services that they, in turn, export to customers around the world. Trade through New Jersey ports generates billions of dollars and creates thousands of jobs. Total trade through the Port of New York and New Jersey (PNYNJ) surpassed $190 billion in Trade through the Ports of Camden and Salem, while significantly smaller than PNYNJ, created more than 24,000 jobs, $203 million in annual personal income, $161 million in business revenues, and $21 million in state and local tax revenues. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Newly exporting firms increase employment almost four times faster than non-exporting firms.

2 NEW JERSEY S INDUSTRIES, SMALL BUSINESSES AND FARMERS GROW WITH EXPORTS According to the U.S. Department of Commerce, New Jersey ranked 10 th in the United States with total exports valued at $35.6 billion in Chemicals was New Jersey s leading export product category in 2008, accounting for 22.6 percent of total exports. One of the fastest growing export categories for New Jersey is petroleum and coal products, increasing at an average annual rate of 91.0 percent since In 2008, New Jersey companies sold their products in nearly 220 foreign markets. The top export market is Canada ($6.8 billion). Other leading markets include the United Kingdom ($2.9 billion) and Germany ($1.9 billion). Italy is one of New Jersey s fastest growing trading partners. In 2008, New Jersey companies exported $1.4 billion worth of goods to Italy, an increase of 201 percent since In 2008, exports accounted for approximately 7.5 percent of New Jersey s state gross domestic product (state GDP). Since 2002, exports have increased four times faster than state GDP. Services exports are also important to New Jersey, including port services, education of foreign students at New Jersey colleges and universities, including Princeton University and Rutgers University, and spending by foreign visitors to tourist destinations in New Jersey, like Atlantic City. Services companies employ 3.9 million workers in New Jersey. In 2008, 890,000 New Jersey services jobs depended on trade.

3 NEW JERSEY S SMALL AND MEDIUM BUSINESSES PARTNER WITH LARGE BUSINESSES TO EXPORT Exports particularly benefit workers at New Jersey s small- and mid-size companies. In 2007, 14, percent of New Jersey s exporting companies were small- or mid-sized companies. Larger New Jersey companies are also important exporters. For the United States generally, half of U.S. exports are generated by U.S. multinationals. Small and medium-sized New Jersey companies also indirectly export when they supply goods and services to larger New Jersey exporters. Every job at a New Jersey worldwide company supports nearly two others at companies that are part of its supply chain. Leading New Jersey Exporters Company Products Foreign Markets ConocoPhillips (Bayonne) Oil Canada, Greece BASF Corp. (Florham Park) Chemicals, plastics Mexico, Brazil, Belgium Formosa Plastics (Livingston) PVC powders Brazil, Germany, China Honeywell Int l. (Morristown) Plastics, chemicals China, Japan, Italy Fortune Plastics & Metals (Jersey City) Mixed metals China BP Products (Bayonne) Oil UK, Netherlands Rhodia, Inc. (Cranbury) Acetates Brazil, China, Korea Becton-Dickinson Co. (Franklin Lakes) Medical supplies Brazil, Panama Johnson & Johnson (N. Brunswick) Pharmaceuticals Costa Rica, Australia, Colombia Cytec Industries (W. Paterson) Synthetic resins Brazil, Korea, Thailand

4 MORE OF A GOOD THING FOR NEW JERSEY TRADE AGREEMENTS LEVEL THE PLAYING FIELD The United States has some of the lowest trade barriers in the world. Trade agreements level the playing field by lowering other nations trade barriers and opening up foreign markets to U.S. exports. New Jersey has increased its exports to partner countries following the implementation of each of the U.S. bilateral and regional free trade agreements (FTAs), with exports to Chile experiencing the strongest growth. The United States enjoys a trade surplus in manufactured goods with its FTA partners.* U.S. Trade Balance, 2008 Services Agricultural Products Manufactured Goods: 15 FTA Partners Oil Products Manufactured Goods: Other Countries $ billions * State-specific data are not available for imports, so this chart cannot be prepared for New Jersey

5 FOREIGN INVESTMENT IN NEW JERSEY CREATES JOBS Foreign-owned companies invest significant amounts of capital to open or expand facilities in New Jersey every year. These companies employ 230,500 workers, about 7 percent of all New Jersey employees in the private sector. New Jersey ranks seventh in the United States for the number of workers employed by foreign subsidiaries. Foreign-owned manufacturing accounts 50,400 jobs, representing more than 15 percent of all manufacturing jobs in New Jersey. U.S. subsidiaries of foreign companies pay an average compensation of $68,317 per year, 32 percent higher than U.S. companies. Selected Multinational Corporations Employing Workers in New Jersey Company Industry Country Barclays Financial Services United Kingdom Bayer Chemicals Germany BT Telecommunications United Kingdom Cadbury Schweppes Food/Beverage Products United Kingdom GlaxoSmithKline Pharmaceuticals United Kingdom Honda Transportation Equipment Japan Lafarge North America Building Supplies France Panasonic Electronics Japan Volvo Transportation Equipment Sweden NEW JERSEY COMPANIES AND WORKERS USE IMPORTS TO STAY COMPETITVE In 2008, 58.5 percent of the products we imported were used by U.S. workers to manufacture goods in the United States. Lower cost inputs keep U.S. manufacturing competitive in international markets. Imports frequently contain components (like cotton or semiconductors) and services (like design) sourced from U.S. companies and farmers, including companies and farmers in New Jersey. Services, especially transportation from New Jersey s ports, finance and insurance, marketing and legal services, are needed to bring imported goods to American manufacturers and households. These importing-related services industries are vital to New Jersey s growth, account for 46.9 percent of state GDP, more than five times as much as manufacturing.

6 EXPORTS AND IMPORTS HELP NEW JERSEY FAMILIES ENJOY A HIGHER STANDARD OF LIVING Exports and imports support family incomes. Jobs in exporting plants pay on average up to 18 percent more than similar jobs in nonexporting plants. Imports help keep prices for New Jersey families down while increasing their choices for goods and services. Prices for imported consumer goods tend to drop year after year. Imports Keep Inflation Low ( ) Price Change Toys -45% Clothing -10% Household Appliances -9% Footwear -3% JOBS Trade and investment liberalization policies are worth over $10,000 per year to an average New Jersey family of four. SOURCES Laura Baughman and Joseph Francois, Trade Partnership Worldwide, LLC ( Port Authority of NY and NJ ( South Jersey Ports ( U.S. Department of Labor ( U.S. Department of Commerce ( ( ( EXPORTS U.S. Department of Agriculture ( U.S. Department of Commerce ( ( ( ( Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott ( PIERS Trade Intelligence database ( FOREIGN INVESTMENT Organization for International Investment ( IMPORTS U.S. Department of Labor ( U.S. Department of Commerce ( STANDARD OF LIVING Council of Economic Advisers ( U.S. Department of Labor ( U.S. Department of Commerce ( TRADE LIBERALIZATION U.S. Department of Commerce ( Contact: David Thomas Director, Public Policy Business Roundtable dthomas@businessroundtable.org January 2010