EXPORTS:THE NEXT HARDWOOD BOOM?EXPORTS:THE NEXT HARDWOOD BOOM?10 MAY 2010 HARDWOOD MATTERS WWW.NHLA.COM
Photo Courtesy of Kuehne + NagelBy Tracy PowellIn his State of the Union address in January, PresidentObama pledged his support of free-trade agreementsand to double American exports over the nextfive years, a new effort to boost employment. Theambitious plan is certainly needed: Exports fell from$1.8 trillion in 2008 to $1.5 trillion in 2009, due to theglobal recession. Doubling exports would constitute ajump that would push U.S. overseas sales to $3 trillionannually and, the White House says, create two millionjobs. Whether these numbers are realistic is currentlydebated, but exports do seem bound to grow – theworld is growing faster than America and the dollar isweak, although the currency is beginning to rebound.President Obama pledged hissupport of free-trade agreementsand to double American exportsover the next five years...Signing the “<strong>National</strong> Export Initiative” executive orderin March, the Obama Administration proposes spurringan overhaul of the Commerce Department's tradefunctions similar to the Department of Agriculture'sForeign Agricultural Service, which is superior in everyrespect when it comes to helping U.S. companiescompete abroad. Here at home, the administrationis trying to get more companies to export; less than1 percent currently do so, and of them 58 percentexport to just one country. One way the governmentplans to encourage increased export activity isby subsidizing exports by those companies thegovernment deems worthy of subsidies. The qualifierswere unknown at press time.The Commerce Department and the other federalagencies involved in the Export Promotion Cabinet, whichwas also announced in March, have until August 2010 tosubmit plans showing how they will double exports.How this new initiative will affect the hardwoodindustry is still to be seen. In response to PresidentObama's goal to open up foreign markets, theDepartment of the U.S. Trade Representativetasked the International Trade Commission to doan investigation on the challenges that small tomedium size exporters’ experience, and the <strong>Hardwood</strong>Federation was asked to testify.“Many in the industry are in export,” noted <strong>Hardwood</strong>Federation Chairman Jameson French. “In 2009,exports were 10 percent of total market share. [Yet,]every major product saw export drops. In firstquarter 2009, hardwood lumber exports were down35 percent from first quarter 2008 and 53 percentfrom the first quarter 2006 peak.”Stumbling blocks in export have included the fact thatmany competitor nations import raw materials dutyfree, while protecting domestic value-added industries.Red tape also adds delays and costs that are difficultfor small- and medium-sized businesses to cope with,noted French, one big headache being the requirementfor permits for some species but not all, involvingexpensive product tests that can only be performed incountry, resulting in high duties.“Some environmental procurement policies thatcould be required by other countries are not realisticfor the American hardwood industry and will beextremely difficult or impossible to meet,” Jamesonsaid of the ongoing challenges. “In addition, smallbusiness loans and credit lines have dried up becauseof the close association of the hardwood industryand the struggling housing market.”The hope is that such issues will be addressed as theinitiative matures. In the President’s proposed 2011budget, more money has been included to guaranteeexport-related small-business lending.Pessimists of Obama’s plan note that the world’sother major economic powers – Germany, Japan, andChina – are attempting to export themselves back toprosperity, too. What America has that many othercountries do not, however, is high-grade hardwoods.Thus the initiative bodes best for the hardwoodsindustry. The Middle East and North Africa remainsa key destination for American hardwoods amidstthe increasing demand within the region's furniture,interiors and flooring sectors, according to theAmerican <strong>Hardwood</strong> Export Council (AHEC),Hakan Ekstrom, president of Wood ResourcesInternational, recently noted in The Oregonian: "Somecountries in Asia are beginning to wake up a little. Youwill see them looking for more lumber."WWW.NHLA.COM MAY 2010 HARDWOOD MATTERS 11
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