Behind the Export Boom

April 24, 1991

Economists are pleased at the latest export figures, which show American-made goods doing increasingly well in world markets. Instead of the negative growth that greeted the start of the Eighties, U.S. exports are booming, driving a steady upcurve on analysts' charts. What is especially encouraging is the fact that the big growth has come in manufactured goods: aircraft, up 99.4 percent since 1986; electrical machinery, up 133.1 percent; cars and trucks, up 61.4 percent; computers and office machines, up 69.5 percent; and small manufactured goods, up 145.9 percent.

The fall of the dollar's value against other currencies has played a big role, to be sure. Analysts point to an even bigger role for productivity increases on America's shop floors, an improvement many observers gave up on when "trade deficit" joined the lexicon.

U.S. factory productivity grew at an average 3.6 percent a year in the 1980s, making U.S. products cost-effective even as manufacturers struggled to boost quality to match the best imports. In the auto industry, shellacked by Japanese products on one end of the market and European products at the other end, factory efficiency rose about 4 percent a year. Part of that was due to "transplants" assembling Japanese cars, but part of it was due to hard lessons learned in Detroit. Many of those autos being shipped out to foreign ports are American brands, not cars turned out by transplants.

An export boom was predicted by economists studying the specifics of the U.S. status as the world's biggest debtor. What they said during the mid-'80s was that exporting goods was the only way America could pay its bills. That export push would go beyond commodities, for either Americans would reorganize manufacturing to cut costs and boost quality, or others would come in to do it for them, using this country as a low-wage manufacturing center for the world.

American wages have gone down, compared to Europe and Japan. According to the Bureau of Labor Statistics, Americans earn $14.31 an hour in pay and benefits while workers in Germany earn $17.58 and Japanese workers earn $12.63.

Still, the success of the most sophisticated products -- aircraft, electrical machinery, cars, computers and office machines -- argues for good products, not low wages as the answer. To keep up the strength that produced this surge of exports, now is the time to invest in the kind of educational and job-training reforms urged by the American Society for Training Development in its landmark Labor Department study. Now is the time to implement "Gaining New Ground," the Council on Competitiveness' report and recommendations on industrial strategies. The consensus is in on what works. As a generation of Americans gets ready to retire, it's time to get moving on prepping the replacements for the hard job ahead.

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