Daniel Gross comments in strategy+business:
We have met the global supply chain, and it is us.
Here’s how a lot of people think about global supply chains. Companies in the developed world, eager to source products and services in places where labor costs are low, have pushed jobs and, in some instances, entire industries offshore — textiles to Asia, call centers to India, auto parts to Mexico. If corporate leaders were to start promoting policies or practices that encourage shorter, less-global supply chains, this process might reverse itself. Rather than importing certain goods and services, the thinking goes, we should be thinking more deeply about how we could produce more of them at home.
As we consider this prospect, we should consider another fact of life in the global economy. Many of us are part of long, global supply chains — even if we work in the U.S., and even if we work in industries that we don’t think of as being engaged in export.
One of my favorite data points is the Commerce Department’s monthly report on trade in international goods and services (pdf). Each month, it offers proof that the U.S. is doing much better at exporting than the conventional wisdom holds. The U.S. doesn’t produce anything the world wants — except for the US$190.7 billion in goods and services it exported in December. For the year, exports stood at $2.2 trillion. That’s less than then amount of imports ($2.71 trillion), which is why the U.S. has a trade deficit. But it’s still a lot of exporting. Many of the exports are manufactured goods. Boeing, for example, makes very expensive planes, the overwhelming majority of which are sold to overseas airlines. It is the largest single exporter in the U.S. Anybody working for the company, or one of its many local suppliers, is part of a global supply chain.
Oh, and cars are among one of the U.S.’s major exports too. German and Japanese car companies have been locating their auto plants inside the U.S. to avoid tariffs and currency risk, and to have greater proximity to the large U.S. market. But some of the plants, such as the BMW factory in South Carolina, have emerged as significant exporters. As IndustryWeek reported, “In 2015, more than 280,000 vehicles were exported from its Spartanburg County, S.C., plant, over 70 percent of the plant’s total volume.” In 2014, some 2 million cars were exported (pdf) from the U.S overall.
The country may not be fully independent when it comes to energy, but an increasingly large share of the fossil fuels produced domestically is being exported. Coal miners in Kentucky, natural-gas drillers in Louisiana, oil refinery workers in Texas — they all are key components of global supply chains that funnel crucial energy to consumers and businesses around the world.
In the U.S., services account for about 80 percent of economic activity. And few people realize that the country actually exports a lot of services: some $750 billion in 2016. What’s more, the U.S. has an annual trade surplus in services of $250 billion. Thanks to the global supply chain, U.S. service workers are carrying out activity that theoretically could be done in international locations.
Every time one of the 77 million people who visited the U.S. from another country in 2015 conducted a financial transaction, the U.S. national accounts racked up an export. That means people who work at airports, or hotels, or at theme parks, or who drive a taxi, are part of the global supply chain for travel services. And because the number of people visiting the U.S. annually is significantly higher than the number of Americans visiting foreign countries, the U.S. has a significant trade surplus in travel: In 2016, exports were $208 billion, while imports were $121 billion.
People who work at airports, or hotels, or at theme parks, or who drive a taxi, are part of the global supply chain.Employees of universities and colleges are also participating in the offshoring of supply chains. In academic year 2015–16, more than one million international students studied at U.S. universities. Every dollar of tuition paid by these students — and the rent they pay, the meals and books they buy — is an export. (International students’ annual economic impact is estimated at $32.8 billion.) Even teachers at public high schools are getting in on the act: The New York Times Magazine reported last week about the rising phenomenon of high school students from China paying tuition to attend public American high schools.Supply chain participants reside on all rungs of the income ladder. When U.S.-based hedge funds and other institutions attract investments from individuals in Europe, companies in Asia, or sovereign wealth funds in the Persian Gulf, they’re exporting services. In 2016, U.S. imports of financial services (American entities patronizing non-U.S. entities) were a mere $24 billion; exports of financial services were $95 billion.
Finally, some of the few professionals who earn even more than hedge fund managers are part of the U.S.-heavy global supply chain for content, entertainment, and sports. When foreign rights are sold to Hollywood films, when actors like George Clooney appear in ads for foreign brands — those are exports. And when LeBron James and Steph Curry compete in the NBA Finals, they’re creating a product that is exported instantaneously. As Cleveland’s Plain Dealer reported, the broadcast for the 2015 NBA finals was shipped from a truck sitting outside the arena to 215 countries and territories.
Americans tend to think of globalization as a process in which good jobs go overseas as companies hunt for low-cost labor to create the goods and services Americans want to consume. But globalization isn’t a one-way street. We have met the global supply chain, and it is us.