2002 Jackson County International Economic Impact Study
Prepared by:
- Rachel Cooper
- Eastern Michigan University Masters Candidate
Executive Summary
As Jackson County’s economy increases in its size and capacity, so does the
county’s impact on the global economy. It is easy to assume that U.S.
international business is limited to highly developed metropolitan areas, but
many people don’t realize that the impact of traditional economies such as
that of Jackson County’s can still make a significant difference in the
international marketplace. An examination of the county’s industrial base
illustrates its level of international business activity.
This study is an attempt to gage Jackson County’s current international
economic impact and predict future trends in international business that will
impact the county. This study focuses on both exports and education via local
institutions. The international economic impact study does not account for
international service from the county because of the difficulty in tracking such
transactions. The study also does not attempt to gage the impact of foreign
subsidiaries or franchises abroad.
While Jackson County firms are currently experiencing a domestic slowdown,
this study predicts that international relationships and global expansions will
continue to make a significant impact on the county. Local firms who are
flexible, versatile, and able to leverage past export experience across a range
of markets are likely to succeed in the international marketplace.
Jackson County Overview
 Covering
707 square miles in the South Central part of Michigan, Jackson County is the
thirteenth largest county in the state. As of June 2002, the U.S. Census Bureau
estimates that Jackson County has a population of 159,665, with Jackson being
the largest city in the county having a total population of 36,700 for the year
of 2002. The county grew 5.9% in size since 19901.
As of 2002 Jackson County has an active labor force of 80,600 with an
unemployment rate of 6.4% higher than Michigan’s average unemployment rate of
6.6 percent. As of 1999 there were 12,455 employed in the manufacturing
industry. The U.S. Census Bureau defines the manufacturing sector as the
"comprised establishments engaged in the mechanical, physical, or chemical
transformation of materials, substances, or components into new products."
Establishments in the manufacturing sector are described as "plants,
factories, or mills, and characteristically use power-driven machines and
materials-handling equipment" 2. In terms of international
trade, Jackson is the ninth largest exporting area in Michigan and 203 in the
United States with export values totaling over 159.7 million. However these
statistics do not include the value of software or services exported from the
county, and if included with the Census figures, the value would be greater3.
 Out
of a total of 351 manufacturers in the most recent and available study in the
1997 U.S. Economic Census, 30 percent or 102 firms are known exporters4.
These numbers are higher than the average for both Michigan (20 percent) and all
firms nationally (8 percent). Part of Michigan and Jackson County’s high level
of exporting comes from the unique, pull through effect of the large automotive
presence in the area. According to a study of Jackson County companies by the
Ypsilanti U.S. Export Assistance Center, an average of 12 percent of a firm’s
revenues was attributable to exports.
 The
Ypsilanti U.S. Export Assistance Center wishes to recognize the efforts of the
Jackson County Exporters. The Presidents "E" Award was created in
December of 1961 by Executive Order, to afford suitable recognition to persons,
firms, or organizations which contribute significantly in the effort to increase
United States exports. The Presidents "E Star" Award, which began in
August 1969 by the Secretary of Commerce, affords continuing recognition of
noteworthy promotion efforts. There have been two companies in Jackson County
who have received these awards. Dawn products, which makes donut manufacturing
equipment, has received The Presidents "E" Award, and Aeroquip
Engineered Systems Group, which makes products for the commercial aerospace
industry, has received both The Presidents "E" Award, and The
Presidents "E Star" Award.
EXPORT MARKETS AND INDUSTRIES
 The
top Jackson County export markets consist of the traditional industrial
manufacturing sectors, including automotive parts and machine tools,
metalworking and general industry equipment. According to the U.S. Ypsilanti
Export Assistance Center database, machine tool and metalworking firms make up
the largest number of exporters with 34 firms, automotive parts manufacturers
have a total of 21 exporters, and general equipment industry has 17 exporters.
The top export markets for Jackson County tend to reflect countries in which
U.S. automotive manufactures and suppliers have active operations. As the
automotive industry continues to expand abroad, Jackson County exports
consistently follow automotive manufacturers into new international territory.
While exports from the U.S. and Michigan go overwhelmingly to Canada and Mexico,
exports from Jackson County also find a home in these countries because of the
strong U.S. automotive presence. However, recent expansion into Brazil and China
has resulted in Jackson County exports going to less traditional automotive
destinations as well.
Brazil
 Brazil has
the 9th largest economy in the world and represents a substantial
market opportunity for United States exporters.5 In addition, Brazil
and the United States share strong business relations with an expanding market.
Due to the energy crisis and the severe economic recession in Argentina, the
Brazilian economy has slowed dramatically over the past year, but is expected to
recover within the next two years. In spite of the economic slowdown, the United
States has remained Brazil’s largest single trading partner, with nearly
one-quarter of its products exported to our country6. Brazil is one
of the most attractive markets in the world for automotive parts, which is
Jackson County’s number two exporting sector. There are currently an estimated
fifteen major auto makers with production facilities in Brazil including GM,
Ford, and Chrysler. The automotive sector ranks number 6 for the most profitable
market sector in Brazil. Coming in at number 16 for "leading sectors for
U.S. exports and investments" in Brazil is metalworking machinery, which is
the number one sector for exports in Jackson County. Industry sources estimate
that as of 2002 the market machine tools will increase by 5% per year through
20055. Despite the vast opportunities Brazil has to offer, there are
still substantial obstacles for U.S. exporters such as high tariff barriers, an
extremely difficult customs system, high tax burdens, and inefficient seaports.
Canada
 The bilateral relationship between
the United States and Canada is perhaps the closest and most extensive in the
world. It is reflected in the incredible volume of trade (over $1 billion a day)
crossing the U.S. Canadian border. In fields ranging from environmental
cooperation to free trade, the two countries have set the standard by which many
other countries measure their own progress. Over 80% of 1998 Canadian exports
went to the United States and over 75% of 1998 Canadian imports came from the
United States.7 The U.S. exported more to Canada in 2000 ($22,046,144
billion) than to its number two and three export markets combined (Mexico
$16,491,118 billion, and Japan $1,393,223 billion).8 Canada’s
importance to the United States is not just a border-state phenomenon: Canada is
the leading export market for 35 of our 50 states9. This coupled with
the decrease in tariffs due to the North American Free Trade Agreement (NAFTA),
the increasing openness to foreign investment, deep cultural and historical
ties, and strong awareness of business and technological developments in the
United States, makes it clear as to why it is a the primary host for Jackson
County Exports as well as the rest of the United States.
Mexico
 The relationship of the United
States with Mexico is of utmost importance for both countries. A mixture of
mutual interests coupled with shared problems, growing interdependence, and
different national perspectives shape the relationship between the U.S. and
Mexico.10 In 1999, the United States accounted for 88 percent of
Mexico’s exports and provided 74 percent of Mexico’s imports. Mexico has
experienced an astonishing increase of 37.11% of U.S. exports.10 The
United States exports more goods and services to Mexico than it does to all
other countries in Latin America combined. Due to NAFTA and the fact the Mexico
remains committed to the path of economic integration, Mexico is increasingly
the destination for Jackson County exports. The automotive industry is
considered one of the fastest growing sectors in Mexico. The United States
contributed two-thirds of all imports with 20 percent of the total market with
Jackson County accounting for close to 18 million of those dollars.
China
 China is a market with immense
potential. Foreign trade has grown from $38 billion in 1980 to over $361 billion
in 199911. For over two hundred years foreign firms have been
entranced by this vast potential of the Chinese Market, yet it remains largely
unfulfilled. China is the world’s most populous nation, however the Chinese
market is small and concentrated in a few areas. Not only is this country
overpopulated it is technology-poor as well, although China’s increased
economic development has positive effects for Jackson County exporters. While
the thrust toward modernization and privatization over the past two decades has
increased the opportunities for Jackson County business, making it the number
one destination for machine tools and metalworking exports in the county,
however China remains a difficult market to work with. Chinese people can be
extremely hospitable and kind, yet everyday discourse in China is rude and
confrontational and the China market is full of cheats and swindlers.11
Although most Chinese firms remain relatively small, under-capitalized and
poorly managed, there are pockets of excellence. Chinas’ recent entrance into
the World Trade organization (WTO) will allow for more open domestic markets to
foreign firms and lower tariffs, as well as provide for a stronger protection
for intellectual property rights. The entrance into the WTO is also believed to
help with foreign firms earning the same rights and privileges to domestic
firms.
Current and Future Trends in Local Exports
 From
1993 to 1999, the Jackson County area saw its value of exports increase 67
percent, from roughly 95.5 million dollars per year to 159.7 million dollars per
year12. The estimated employment attributable to exports is 4,562
jobs, based on the U.S. Department of Commerce’s assessment of $35,000 in
export sales supports one U.S. job. This increase in exports is credited to the
general expansion of the automotive industry into foreign markets, as well as
increased understanding of international sales. Generally, the U.S. Department
of Commerce predicts international trade will grow by 7 percent, and in the long
term Jackson County’s international economic impact will continue to grow as
well.
Firms in Jackson County who are involved with international exporting were
asked to participate in a Jackson County International Economic Impact Study
devised by the Ypsilanti U.S. Export Assistance Center, U.S. Department of
Commerce. Samples of various firms were asked to respond to a series of 10
questions pertaining to international business. Where applicable, all firms were
asked to respond on a sliding scale of 1 – 10, with 1 being the weakest and 10
being the strongest. The top three industries responsible for international
trade in the county include Machine Tools and Metalworking, General Industry,
and Automotive Parts, hence these are the industries that were sampled.
 When
asked the question "Are you optimistic about the future of your firms
international exports?" the average response was a 4.25, meaning that the
firms are modestly feeling the effects of the current economic slowdown.
The companies were then asked "Has September 11, 2001 caused a
significant decrease in your firms business domestically, and
internationally?" The reply was a 4.9 for domestic business and a 4.3 for
international business, remaining constant with the previous response; again
firms in Jackson County seem somewhat affected by the current recession.
The survey then proceeded to ask "Has September 11, 2001 inhibited
international business travel with your firm, such as trade shows, meetings,
etc?" Firms replied with a 2, meaning there had been little if any
limitations on travel due to the recent tragedies.
 The
Ypsilanti U.S. Export Assistance Center, U.S. Department of Commerce then posed
the question "Have you exported to new markets within the past year?"
33 percent of firms participating answered yes, with new markets such as
Australia, Scotland, Thailand, and Brazil among the responses.
The survey than asked, "Do you have an e-commerce website?" An
astonishing 83 percent of firms in the county have an e-commerce-enabled website
and of those 83 percent, 50 percent of the firms’ customers are easily able to
do business online.
The survey than proceeded with the question "As a percentage, how much
of your business comes from International Sales?" Firms responded that an
average of 13.8 percent of their business comes from international sales, and
due to this, an average of 2.2 persons sole purpose in the company is related to
international business.
Finally, The Jackson County International Business Survey asked "What is
the number of business visitors from overseas who visit yearly, and what is the
average length of stay?"
The average number of business visitors from overseas who visit yearly
amounts to 10.3 and the average length of stay per firm is the duration of 3
days. It is estimated that each international visitor had a $200 per day
economic impact on Jackson County.
Finally, a strong U.S. dollar will continue to have a negative impact in
exports. While U.S. consumers benefit from a strong dollar, U.S. goods and
services are more expensive for foreign consumers and businesses.
Therefore, they
tend to buy fewer U.S. products. Still the value of American products, coupled
with an appreciation for the quality or characteristics of U.S. goods can
reverse the negative effects of a strong dollar, and this is likely for exports
from Jackson County. While there a limited number of statistics to track the
effect of dollar value on exports, the National Association of Purchasing
Management’s New Export Orders Index showed little to no growth in exports for
the beginning of 2001. This index combined with the dollar’s 15-year peak in
value in 2001, suggests that exporters are feeling the effects of the strong
dollar, at least in non-technology related industries.
While there is no secret to successful exporting, Jackson County exports will
continue to follow the automotive industry abroad. In addition, as Jackson’s
manufacturing base continues to diversify into non-automotive sectors,
international markets will become increasingly important.
Educational Institutions - Education as a Reverse Export
Although focusing solely on traditional exports like manufacturing when
accessing Jackson County’s international economic impact is standard,
educational institutions also contribute to the county’s global influence and
local economy. The U.S. Department of Commerce’s International Trade
Administration ranks international education as the United States fifth largest
service sector export bringing in $11 billion to the U.S. economy. Universities
and colleges in Jackson County bring in a small amount of economic revenue
through international students, which in turn benefits businesses that would not
normally profit from international sales. Industries such as retail trade, real
estate, accommodation and food services, and entertainment and recreation all
profit from the unique form of exporting.
Overview
of International students in Jackson County
 Jackson County has two educational institutions with international students,
a private Free Methodist school, Spring Arbor University, and one community
college, Jackson Community College. According to a survey conducted by the
Ypsilanti U.S. Export Assistance Center, U.S. Department of Commerce, these
educational institutions have a combined enrollment of 51 international
students.13 Spring Arbor has the largest enrollment with a total of
29 international students and Jackson Community College is not far behind with
an international student population of 22.
The total money spent by each international student (including tuition and
living expenses) at all educational institutions in Jackson County accounts for
an estimated $1,421,973.12. International students spend the most money at
Spring Arbor with an average of $21,300 per student, which totals to $1,235,400
when multiplied by the number of current international students. While the bulk
of that money goes directly to the educational institutions
in the form of tuition, an average of 40 percent goes into the local economy.
International students attending Jackson County Community College spend an
estimated $9,264.4 per year or $208,216 total for all international students.
International students attending educational institutions in Jackson County
overwhelmingly come from Canada, although there are students attending from
diverse backgrounds and many different countries ranging from Africa to the
Middle East. The Immigration and Nationalization service requires that each
student, spouse, and family member to have $5000 in cash upon arrival to meet
anticipated annual costs, further adding to the local economic impact.
Significance of International Students/educational
Export Economic Impact
 The economic impact of international students is significant in Jackson
County because it connects businesses that would not normally have international
perspective to the global economy. International sales can be difficult if not
impossible to small retailers and service providers. Yet, the substantial number
of international students enrolled in Jackson County educational institutions
provide an opportunity for increased business through existing sales channels.
Additionally, most money coming from international students into the county
comes from offshore, which means the money spent was not generated inside of
Jackson County.
Expected Trends in International Student
Enrollment/educational Exporting
International
student enrollment in Jackson County is expected to remain steady and increase
slowly over time. While statistics on Jackson County are not available,
international student enrollment has increased nationwide by a record total of
547,867 international students on U.S. campuses and enrollment rose at a rate of
6.4%. This was the largest increase since 1980 according to Open Doors 2001, the
annual report on international education published by the Institute of
International Education with the support from the State Department’s Bureau of
Educational and Cultural Affairs.14 While, a  number of colleges
nationwide have experienced a dramatic increase in the enrollment of domestic
students due to a decrease in jobs and our current recession, the population of
international students have seen no change other than the average yearly
increase of students. When asked to respond to the question "Are you
optimistic about the future enrollment of international students?" Jackson
Community Colleges response was exceptionally positive. Their College is
anticipating a 59 percent increase in the next year and Spring Arbor is
expecting to remain the same. The Department of Commerce also surveyed the
effects that September 11, 2001 may have had on the enrollment with
international students. In spite of recent tragedies, September 11 seemed to
make no impact on the number of international students attending Spring Arbor
and unexpectedly, Jackson Community College experienced a high increase of
students.
Finally, developments in countries such as China and India suggest an
increase of enrollment in the future. For instance, in August 2000, the Bank of
China opened a loan program for students to study overseas, which should mean
easier access to education. Similarly, the Federal Bank of India, which had not
previously allowed foreign exchange to be remitted for educational expenses, now
allows sponsors to remit expenses toward educational cost, making it easier for
Indian students to study in the United States. Likewise, actions recently taken
by the U.S. Department of Commerce through the "Study USA Program"
encourage international students to study in the United States by offering
several programs in all 50 states for undergraduate, graduate and high school
international students. This program will promote a positive effect on
enrollment in Jackson County due to a gain of new cultural perspectives for the
county and a sense of stronger bonds within the county and the country of
origin. Foreign exchange is also believed to promote a better knowledge of other
societies along with building better relationships between countries,
governments, and peoples.
Footnotes
1 U.S. Census Bureau, Census 2000 Redistricting
Data (P.L. 94-171)
- 2
Economic Census Reports – Manufacturing, US Census Bureau
-
- 3
2000 Metropolitan Area Exports Study, U.S.
Department of Commerce
-
- 4 Data compiled from 1997 Economic Census and the Southern Michigan
Export Assistance Center.
-
- 5
Brazil County Commercial Guide FY 2002, U.S.
Foreign Commercial Service and U.S. Department of State.
-
- 6 Brazilian Embassy in Washington, "Brazil
Economic Briefing"
-
- 7
Background notes: Canada, August 1999, US
Dept. of State.
-
- 8
Michigan’s Role in International Trade, http://www.exportmichigan.com/michigan.htm.
-
- 9
Background notes: August 1999, US Dept. of State.
-
- 10 Country Commercial Guide Mexico, U.S. &
Foreign Commercial Service and U.S. Department of State 2001.
-
- 11
Country Commercial Guide China, U.S. &
Foreign Commercial Service and U.S. Department of State 2001
-
- 12
International Trade Administration http://www.ita.doc.gov.
-
- 13 All educational institutions were contacted and
asked a series of questions pertaining to the population of international
students attending each school and average money spent by each of those students
for tuition and yearly expenses.
-
- 14 Institute of International
Education "Open Doors" http://www.opendoorsweb.org
Date
Updated: March 20, 2007
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