What a difference a generation can make.
Thirty years ago, Pennsylvania was synonymous with the collapse of American industry, the rust belt and economic despair. Today, the Lehigh Valley is one of the fastest-growing regions in the U.S.
When heavy industry was closing shop and factories were being made idle, few could have foreseen that today Pennsylvania would find itself in a “sweet spot” driven by robust growth in New York/New Jersey, Philadelphia and Pittsburgh, an energy boom triggered by the vast resources of the Marcellus Shale and a renaissance in global trade.
Pennsylvania is on track to produce some three trillion cubic feet of natural gas in 2013, roughly 10 percent of U.S. annual consumption. The oil and gas industry directly employs more than 28,000 Pennsylvanians, with another 203,000 employed in ancillary industries. And the natural gas industry showers the state with some $500 million in annual royalty payments.
To accommodate this economic phenomenon, Pennsylvania’s recently signed transportation bill will pump more than $2 billion into the state’s highways, bridges and mass-transit systems.
But the Pennsylvania story today is about far more than natural gas and infrastructure. A series of new technologies, economic policies and trade banking enhancements have converged to produce an export boom.
According to the U.S. Department of Commerce, U.S. Commercial Service, more than 70 percent of global purchasing power is located outside the U.S. Our export of goods and services exceeded $2 trillion in 2011, accounting for 13.8 percent of U.S. gross domestic product.
To unlock this vast market, proliferating global trade agreements and “next generation” trade banking have increased international market access with robust economic impacts.
Companies of all sizes want to head overseas because exporting firms, on average, enjoy higher revenues, faster growth rates, higher-levels of job creation and higher salaries than do nonexporting firms. And companies that sell to global markets enjoy distinct risk advantages.
For example, in recent years while the U.S. struggled in the financial crisis and Europe faced sovereign debt issues and persistent recession, exporting firms could engage robust economies in East Asia, the Middle East and in Latin America.
Pennsylvania today is exporting a wide range of goods and services. According to the U.S. Department of Commerce, International Trade Administration, export-supported manufacturing jobs account for 4.6 percent of total Pennsylvania private sector employment and nearly one-fifth of manufacturing jobs.
Nearly 16,000 Pennsylvania firms exported nearly $90 billion worth of merchandise in 2011; fully 89 percent of these companies are small and medium-sized enterprises with fewer than 500 employees.
Many Pennsylvania companies, particularly small and medium-sized firms with annual revenues of less than $50 million per annum, would like to engage in global trade but lack experience in overseas markets and in the risk management protocols essential for servicing them. But this deficit should be no barrier to entry.
The bridge that links local business to global markets is trade banking. While nominally occupied with the nuts-and-bolts of standby, import and export letters of credit, export and import documentary collection, management of export receivables and lending, industry-leading trade bankers are providing initiation and reporting services through Internet portals and databases.
As a partner in a growing company’s efforts to expand globally, a trade banker can connect businesses to experienced domestic legal, accounting and insurance resources, as well as proven experts in geographic markets around the world. Putting the right team in place is a prerequisite for successful global trade.
Traditional trade bankers plumbed their Rolodexes to match exporters and importers. New trade bankers provide deep reserves of market and economic intelligence, up-to-date statistical research, industry analyses and even political insights that were once the reserve of specialist consulting firms.
International banks with multi-market expertise fully staffed worldwide offices and seamlessly linked trading desks can overcome many of the risks associated with trade in countries where the cultures, regulations and modes of payment may seem foreign to U.S. businesses.
As Pennsylvania doubles down on globalization – pulling in worldwide investment in the energy sector and nurturing its robust export sector – next-generation trade banking is rising to the fore.