CHAPTER IV U.S. INTERNATIONAL COMPETITIVENESS Overview The United States is the world's largest producer of paper machinery, with annual shipments exceeding $1.3 billion. Canada, with an industry about one-fourth the size of the United States, Finland, and West Germany, similarly sized, are the next leading worldwide producers. The United Kingdom follows with France and Italy somewhat smaller in size. Sweden, Switzerland, Brazil, and Japan form a lower tier, although Japan and Brazil are rising rapidly. These and other nations producing paper machinery supply a world market for these products valued at around $2 billion annually during 1981-85, as shown in Table 19. The remaining discussion and tables in this section as well as share of world market data in later discussions of individual nations are based on the Standard International Trade Classification which differs from the U.S. Standard Industrial Classification used elsewhere in this report. The value of world exports of paper machinery declined to a low of $1.8 billion in 1983. By 1985, however, shipments to markets abroad had recovered to $2.4 billion and were slightly above the 1981 level. Exports of cutting, bag-making and box-making machinery accounted for about one-third of the value of these exports followed, in order of value, by machinery for making or finishing paper/paperboard, and machinery for making cellulosic pulp. International trade of machinery parts was also substantial, valued at over $800 million in 1985. West German producers were the dominant exporters over the entire period, supplying about one-fourth of the world market for paper machinery. In 1985, West German exports, valued at $644 million, exceeded those of the United States, Italy, and Japan combined. U.S. manufacturers consistently held on to a distant second place with a declining share trend, 10 percent in 1985 compared to nearly 15 percent in 1981. At the end of this period, U.S. exports partially recovered to $241 million, about two-thirds of the value at the start of the period. Italian and Japanese exporters improved their market positions impressively the former from ninth place in 1981 to third place (8.3 percent in 1985) and the latter from eighth to fourth place (7.7 percent in 1985). Finnish producers ranked fifth in 1985 compared to third in 1981. Table 20 shows that most countries, other than the United States, Canada, and the United Kingdom, have maintained favorable trade balances in paper machinery during recent years. Trade has grown World Market West Germany mil.$ * mil.$ * mil.$ % mil.$ % mil.$ * 2329 100.0 2099 100.0 1828 100.0 1989 100.0 2410 100.0 593 25.5 529 25.2 499 27.3 543 27.3 644 26.7 341 14.7 301 14.4 195 10.7 254 12.8 241 10.0 5 Nation 413 60.8 1275 60.8 1048 57.4 1287 64.7 1447 60.0 Total NOTE: U.S. export values may differ from data reported by the U.S. Bureau of the Census. Source: Organization for Economic Cooperation and Development (OECD), Micro Tables, Series B, Annual Foreign Statistics by Country, 1981-1985. over the period, and data for 1986 and 1987, which are not available for all countries, show a continued growth in trade. Most of the industry's trade is between developed countries of Europe and North America. However, although the volume of trade is much smaller with developing nations, trade in paper machinery spans the globe and major markets exist outside the European and North American continents. Chapter V provides a discussion of highlights of each individual country's paper machinery industry. Leading markets for the major exporting nations vary, in part, according to economic size and proximity. For example, in 1985 the United States was the leading market for exports from Canada, West Germany, Switzerland, Italy, and Japan. The United States is also a primary market for relatively new competitors such as Brazil. Table 21 shows trends in the market shares of the top 10 foreign suppliers to the U.S. market. -52 Source: U.S. Department of Commerce, International Trade Administration internal documents. Trade data drawn in part from foreign government sources may not be consistent with U.S. Government data. Indonesia was Japan's leading export market in 1985 for machinery for making or finishing paper/paperboard; the United States was the next most important export market for this Japanese product. South Korea and Taiwan were also significant markets for Japanese paper machinery products. For the United States, foreign markets formed a different picture, as indicated in Table 22. In 1985, Canada was the primary market for U.S. exports of machinery for making or finishing paper/paperboard and for machinery for making cellulose pulp. However, Canada and Mexico were second and third, respectively, to Japan as markets for U.S. cutting, bag-making and box-making machinery. In the past, Australia, New Zealand, Venezuela, Chile, and Colombia have been good export markets for U.S. paper machinery. Competitive Factors This section identifies key competitive factors, ranks their importance, and indicates for each competitiveness factor how the U.S. paper machinery industry compares to foreign competition. A firm competes in terms of price-related and nonprice factors. Though all factors are important, leaders of the paper machinery industry have specified the exchange rate value of the U.S. dollar as probably the most influential competitiveness factor. Supporting analysis in a later section shows a strong correlation between the variation in exports of this U.S. industry and the variation in the value of the dollar. Availability of competitive export financing may be the next most important factor affecting the price and eventual outcome of a sales effort by the paper machinery industry. The U.S. Export-Import Bank (Eximbank) has taken steps to meet especially tough competition from French and Japanese credit agencies. |