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2006
Jackson County
International
Economic Impact Study
Prepared
by:
- Joseph Novell
- Summer Intern
- Ypsilanti U.S. Export
Assistance Center
- U.S. Department of
Commerce
For
more information please
contact:
- Ypsilanti U.S. Export
Assistance Center
- U.S. Department of
Commerce
- 300 W. Michigan Ave,
S306G
- EMU – College of
Business
- Ypsilanti, MI 48197
- Voice (734) 487-0259
- Fax (734) 485-2396
Summary:
Firms
of all sizes are finding it
easier to enter the
international market as
communication systems improve
and the Internet matures. In
addition, the erosion of
barriers to trade through
agreements such as NAFTA and
the development of the WTO has
truly transformed the world
into a global marketplace.
International
business continues to play a
significant role in the
economy of Jackson County.
Traditional manufacturing
economies, such as that of
Jackson County, have the
potential to impact the
international marketplace. The
level of international
business activity can be
illustrated through an
examination of the county’s
industrial base. The Ypsilanti
U.S. Export Assistance Center
(U.S. Department of Commerce)
conducts an annual
International Economic Impact
Study with the purpose of
measuring the influence of
international business within
Jackson County. This study
looks at Jackson County’s
current international economic
impact and attempts to predict
how future international
economic trends will impact
the county. The study focuses
on the export of goods and
education via local
institutions. This report does
not reflect international
services originating within
the county due to the
difficulty in tracking such
transactions. The study also
does not attempt to evaluate
the impact of foreign
subsidiaries or franchises
abroad.
Jackson
County Overview
 Jackson
County, the thirteenth largest
county in the state, covers
707 square miles in the south
central part of Michigan. As
of July 2005, the U.S. Census
Bureau estimates that Jackson
County has a population of
163,629. [1] The population of
the county has seen an
increase of 3.1% from 2000 to
2005. [2] The City of Jackson
is the largest city in the
county with a total population
of 34,879. [3]
In 2005,
Jackson County had a labor
force of 79,889 with 74,684
employed. As of May 2006, the
unemployment rate in Jackson
County was 6.5 %, slightly
higher than the state average
of 6.0%. [4] In 2002, there
were approximately 10,875
employees in the manufacturing
industry, down from 12,248 in
1997. [5] The U.S. Census
Bureau defines the
manufacturing sector as
"establishments
engaged in the mechanical,
physical, or chemical
transformation of materials,
substances, or components into
new products." [6]
 As of
2006, the number of exporting
firms in the county is 117,
with 91 in the City of
Jackson, 3 in Grass Lake, 7 in
Spring Arbor, 2 in Concord,
and 2 in Brooklyn. [7] The
high level of exporting found
in Jackson County arises from
the unique pull through effect
of the large automotive
presence in the area.
The
Ypsilanti US Export Assistance
Center wishes to recognize the
efforts of exporting firms in
Jackson County.
The President's
"E" Award was
created by executive order in
1961 as the nation's highest
award to honor American
exporters. Companies in
Jackson County that have
received the award include
Dawn Products, which makes
donut manufacturing equipment,
and Aeroquip Engineered
Systems Group, which makes
products for the commercial
aerospace industry.
Export
Markets and Industries:
 Traditional
industrial manufacturing
sectors, such as automotive
parts, machine
tools, and general
industrial equipment make up
the top Jackson County export
markets.
Currently, there are 35
firms exporting machine tools,
24 exporting automotive parts,
and 11 exporters of general
industrial equipment. [8]
The top
export markets for Jackson
County tend to reflect
countries in which U.S.
automotive manufactures and
suppliers have active
operations.
Thus exports from
Jackson County go
overwhelmingly to Canada and
Mexico, however, recent
expansion into Brazil and
China has created new markets
for the county. We invite you
to click on any of the links
for a detailed analysis of
Jackson County's top export
markets.
Jackson
County and World Markets
The
following markets represent
the best markets for exports
from Jackson County:
Canada
 Ninety
percent of the Canadian
population lives within 100
miles of the border with the
United States.
This
results in an extensive
economic relationship unique
in the world. In 2005, total
merchandise trade between the
United States and Canada
amounted to US$479 billion, up
12% from US$428 billion in
2004, representing over US$1.3
billion a day. In fields
ranging from environmental
cooperation to free trade, the
two countries work closely on
many levels from federal to
local. U.S. exports to Canada
have exceeded exports to the
entire European Union for the
past five years, despite the
EU having over 15 times the
population of Canada. [9]
For 2005,
U.S. exports into Canada
(goods and services) totaled
approximately US$177.5
billion, up from US$160.5
billion in 2004. On a local
level, Michigan leads all
states in exports to Canada,
totaling almost US$22 billion
in 2005; Michigan is
Canada’s 2nd largest trading
partner, next to the United
States, with over 12% of U.S.
exports to Canada coming from
Michigan. [10]
Jackson
County exporters find a robust
market in Canada. Automotive
parts are the number one
potential market in Canada for
U.S. exports. According to
industry experts, the auto
parts industry is expected to
expand by over 10% per annum
by the end of the decade. U.S.
exports of automotive parts to
Canada totaled US$16.9 billion
in 2005, with US$5.7 billion
coming from Michigan. [11]
The
prospect for continued growth
of trade between Canada and
the United States looks
positive due to prevailing
factors such as proximity,
longstanding business
relationships, and cultural
ties.
For an
overview of the Canadian
market, please see Canada
WebGuide.
Mexico
 The
relationship between the
United States and Mexico is of
the utmost importance for both
countries. A mixture of mutual
interests, shared problems,
economic disparities, and a
2,000-mile border, shape this
relationship. Mexico is now
the second most important U.S.
trading partner after Canada.
The United States
exports more to Mexico than to
the rest of Latin America
combined. Since the
introduction of NAFTA in 1994,
exports to Mexico have grown
exponentially, totaling over
$107 billion in 2005. [12]
NAFTA,
coupled with their commitment
to economic integration, makes
Mexico a great destination for
Jackson County exports. The
automotive part industry is
considered one of the top
three leading sectors for U.S.
exports in Mexico. U.S.
exports of automotive parts in
2005 reached almost $6.3
billion, a slight decease from
2004. [13]
For an
overview of the Mexican
market, please see Mexico
WebGuide.
Japan
 With the world’s second largest economy, Japan is one of the largest
overseas markets for U.S.
exporters. Imports from the
U.S. totaled just over $55
billion in 2005. Japanese
consumers spend hundreds of
billions of dollars on food,
clothing, travel,
entertainment and a wide
variety of other consumer
goods and services. Japanese
firms are major purchasers of
U.S. computers, machinery,
medical devices,
pharmaceuticals, chemicals and
services. With the Japanese
economy experiencing weakness
in the past decade, Japanese
consumers have become more
willing to buy imported
products and work for foreign
firms and Japanese firms have
become more willing to accept
foreign investment and
cooperate with foreign
partners. Market barriers have
fallen across the board, and
Japan has never been more open
to foreign goods and services
than it is today. [14]
For
an overview of the Japanese
market, please see Japan
WebGuide.
Germany
 The
German economy is the world's
third largest and is the sixth
largest market for U.S.
exports. Germany is the
largest consumer market in the
European Union with over 82
million people in Germany. The
number of consumers and
Germany’s geographic
location at the heart of a
25-member European Union make
it a starting point around
which many U.S. firms seek to
build their European expansion
strategies. While U.S.
investors must cope with a
relatively high cost of doing
business in Germany, they can
count on high levels of
productivity, a highly skilled
labor force, quality
engineering, a first-class
infrastructure and a location
in the heart of Europe.
With the
automobile industry as one of
the driving forces behind
economic growth in the German
economy, there is a need for
imported automobile parts.
Because of increased global
sourcing by German
manufacturers, and a favorable
EUR-USD exchange rate, U.S.
parts manufacturers have been
able to increase their exports
to Germany. [15]
For
an overview of the German
market, please see Germany
WebGuide.
United
Kingdom
 The
United Kingdom, with the
world’s fourth largest
economy, attracts U.S.
exporters and investors as a
place to do business due to
the common language, similar
legal and business practices,
protection of intellectual
property rights and relatively
low rates of taxation and
inflation. The UK is very
receptive to U.S. goods and
services. With its $1.8
trillion GDP, the UK remains
the United States' largest
European export market and
fifth largest export market
worldwide, after Canada,
Mexico, Japan, and China. In
2005, the United States
exported $38.6 billion of
goods to the UK, an increase
of 7.4% from the previous
year.
[16]
For
an overview of the United
Kingdom market, please see United
Kingdom WebGuide.
China
 Since
acceding to the WTO five years
ago, China has experienced
extraordinary economic growth.
Many American companies have
benefited from this growth as
evidenced by sustained growth
in U.S. exports to China. In
2005, U.S. exports to China
increased by 19 percent
allowing China to surpass the
U.K. to become the fourth
largest export market of the
United States. Merchandise
exports from the United States
to China in 2005 equaled
approximately $41.8 billion.
Despite
remarkable progress and
immense potential, China
remains a developing country.
With a population of 1.3
billion and a GDP of $2
trillion, many Chinese
citizens remain impoverished,
with a large income disparity
between rural and urban
households. [17]
In 2005,
China imported approximately
$939 million in U.S. vehicles
and automotive parts. [18]
Jackson County automotive part
exporters can look forward to
reductions in automotive
tariffs, making it much more
cost effective to export.
Further, U.S. automotive part
suppliers have a good
reputation for quality and
reasonable prices and many
U.S. firms are well known in
China.
For an
overview of the Chinese
market, please see China
Web Guide.
Brazil
 Brazil
has the 12th largest economy
in the world, and represents a
strong market for U.S.
exporters.
In 2005, U.S. exports
to Brazil reached $15.3
billion (a nearly 11% increase
from 2004). [19] The United
States continues to be
Brazil’s single largest
trading partner. As Brazil
continues to industrialize,
energy and transportation
investment will offer
substantial opportunities for
U.S. exporters.
Brazil is
one of the most attractive
markets in the world for
automotive parts, the number
two export sector in Jackson
County, and the 13th leading
sector nationally. In 2005,
U.S. vehicle and auto part
exports to Brazil totaled
almost $617 million, an
increase of 12.5% from 2004.
[20]
However,
obstacles to trade, such as
high tariff barriers, a
difficult customs system, and
high taxes persist. Also, the legal system has become overwhelmed, making it
difficult to enforce contract
law. For a U.S. firm to
successfully export to Brazil,
they must have intimate
knowledge of the local
environment. [21]
For an
overview of the Brazilian
market, please see Brazil
WebGuide.
Future
and Current Trends in Local
Exports - The Survey:
As part
of the annual International
Economic Impact Study, the
Ypsilanti U.S. Export
Assistance Center surveys a
number of firms within Jackson
County that are known
exporters. The sampled firms
were asked to respond to a
16-question survey pertaining
to the impact of international
business on their firm. The
firms surveyed were those
involved in the top three
industries of Jackson County:
Machine Tools, General
Industrial Equipment, and
Automotive Parts.
The
questions were as follows:
1.
As a percentage, how much of
your business comes from
international sales?
The
average for Jackson County was
26.6%. Answers ranged from a
low of less than 2% to a high
of 100%.
2.
Are you primarily an exporter
of Goods, Services, or Both?
Reflecting
the typical industry of
Jackson County (General
Industrial Equipment,
Automotive, and Machine Tools)
all surveyed firms were
exporters of goods.
One firm did classify
themselves as both an exporter
of goods and services.
3.
Has your company entered any
new markets in the past year?
If yes, which?
More than
half of the surveyed firms had
entered a new market in the
past year. Some of the new
markets included: Australia,
Ecuador, United Kingdom, and
Poland.
4.
Has your company added
channels of distribution in
existing markets during the
past year?
If yes, which
country/channel?
About 40%
of the surveyed firms had
added channels of distribution
in the past year. Some of the
markets included: Australia
and United Kingdom.
5.
Is your company
planning on entering any
additional markets
internationally in 2006?
Two of
the surveyed firms responded
that they are planning on
entering additional markets in
2006. Destination markets
included: Central/South
America, Europe, and the
Middle East.
6.
Please estimate the
number of employees in your
firm with duties directly
related to exporting or
international trade.
The range
of answers was between 0 and
18 workers, with the average
answer being 6.6 employees.
7.
On a scale of 1 – 10
(1 low, 10 high) please rate
your optimism about future
growth of international sales
for your firm.
Typical
optimism ratings were between
2 and 9, with an average
response of 6.4.
8.
On a scale of 1 – 10 (1 low,
10 high), please evaluate the
effect (or ongoing effects) of
the following on your
business, both domestically
and abroad (in 2006):
The
War in Iraq
The
average answer was 3.2.
The
War in Afghanistan
The
average answer was 3.1.
Political
unrest in the Middle East
The
average answer was 3.2.
9.
Has the news of potential
threats to American interests
abroad influenced or inhibited
international business travel
by your firm (trade show
attendance, meetings, etc.)?
All of
the firms surveyed answered
no.
10.
Have any foreign
clients/trading partners
experienced difficulty in
obtaining visas for visits to
the U.S.?
If yes, how so?
Two firms
responded that clients had
experienced difficulty in
obtaining visas.
In the surveyed
firms, difficulties arose with
an Indian customer and
resulted from unrest in Tibet.
11.
Please estimate the total
number of days that foreign
guests have spent locally,
while conducting business with
your firm. If there was more
than one visitor on any given
day, please take that into
consideration.
(Example: 4 visitors
for 2 days = 4 x 2 = 8 days)
The
average answer was 12.3 days
with a low of 2 days and high
between 20 and 30 days.
12.
On a scale of 1 – 10 (1 low,
10 high), how much of an
impact has NAFTA had on your
sales internationally?
Typical
ratings ranged between 1 and
6, with an average for the
county of 3.8.
13.
Do you support additional Free
Trade Agreements such as FTAA
(Free Trade Area of the
Americas) or CAFTA (Central
American Free Trade
Agreement)?
Of all of
the firms surveyed, only one
firm indicated lack of support
for CAFTA/FTAA.
The majority of firms
supported the above
agreements, believing their
implementation would result in
additional sales to Latin
America.
14.
Does your firm have an
e-commerce enabled website?
One of
the firms surveyed indicated
that they had an e-commerce
enabled website with
approximately 1-20% of sales
coming from the Internet.
15.
Will you be attending a
foreign trade show this year?
If so, which show and country.
Only 1 of
the firms surveyed responded
that it would be attending
foreign trade shows. The trade
shows were located in Germany
and Mexico.
16.
On a scale of 1 – 10
(1 low, 10 high), please rate
the impact the following items
would have on your ability to
significantly increase export
sales:
Better
assistance from federal
sources in the U.S.
The
average answer was 4.4.
Better
assistance from local/state
sources in the U.S.
The
average answer was 4.2.
Better
assistance from U.S. trade
and/or business associations.
The
average answer was 3.4.
Assistance
with locating/qualifying
potential foreign customers.
The
average answer was 7.2.
Increased
international traffic for your
website (if applicable).
The
average answer was 5.4.
Education
as an Export:
Although
focusing on traditional
exports, such as automotive
parts, when assessing Jackson
County’s international
economic impact is customary,
educational institutions also
contribute to the county’s
global influence and local
economy. The U.S. Department
of Commerce, International
Trade Administration ranks
international education as the
United States fifth largest
service sector export bringing
in over $13 billion to the
U.S. economy. Michigan ranks
number eight in international
students hosting 20,879
students for the 2004/05
school year and they added an
estimated $427 million to
Michigan’s economy. The
leading country of origin for
international students in
Michigan was India, followed
by Canada, China, Republic of
Korea, and Japan.
[22]
Jackson
Community College and Spring
Arbor University are both
institutions of higher
learning with admitted
international students,
located within Jackson County.
The international students
studying at the above schools
impact the local economy by
spending money that typically
did not originate locally
within Jackson County.
Thus firms involved in
retail trade, real estate,
accommodation and food
services, entertainment, and
recreation all profit from
this unique form of exporting.
The
international students also
have a positive effect on
Jackson County employment.
Although the number of workers
dedicated to international
business is difficult to
pinpoint due to role-sharing
within departments and the
fact that many workers devote
only part of their time to
international business, the
U.S. Department of Commerce
estimates that every $35,000
worth of exports creates one
job. Thus, ignoring expenses
outside of tuition/housing,
the level of total impact is
still substantial, and
suggests international
students support a number of
workers in fields that
conventionally do not benefit
from exporting.
Significance
of International Students:
Educational Export Economic
Impact
The
economic impact of an
international student in
Jackson County is important
because it attracts
international dollars that
local retailers typically
cannot access.
Most of the money spent
by international students in
the county comes from outside
of the United States.
International students
enrolled in educational
institutions within Jackson
County provide an opportunity
for increased business through
existing sales channels.
According
to the 2005 Open Doors Report,
produced by the Institute of
International Education,
financial support from
Government for international
students must be taken into
account, an important notation
that if disregarded could
seriously inflate the net
contribution to the U.S.
economy. International
students in Michigan received
financial support from the
Federal and State Governments
for almost 1/3 of their
tuition and living expenses.
Open Doors also takes into
account the living expenses
for dependents of
international students. 11% of
international students were
married with 85% of their
spouses living in the U.S.
during the 2004/05 school
year. [23]
Spring
Arbor University had 22 (18
undergraduate, 4 graduate)
international students.
Estimates for the total
economic impact of one
international student at
Spring Arbor are $25,490 for an undergraduate, and $12,890
for a graduate student. Thus
the total economic impact from
international students at
Spring Arbor University would
be approximately $510,000.
The
available figures for Jackson
Community College show 14
international students
enrolled.
The country with the
most significant
representation was Kenya,
followed by China. Students
from Jamaica, Liberia, Mali,
Brazil, Nigeria, Canada, and
Thailand were also
represented. For
Jackson Community College the
estimated cost is $15,000
creating an economic impact of
$210,000.
This
means international students
add a total of $720,000 to the
Jackson County Economy.
Thus, based on the
U.S. Department of Commerce
estimates that every $35,000
worth of exports creates one
job, international students
studying in Jackson County
create more than 20 additional
jobs.
Future
Trends in International
Student Enrollment and
Educational Exporting
For more
than 50 years, U.S.
educational institutions have
been required to maintain data
about their foreign students
and exchange visitors.
Government records of the data
was previously inefficient and
paper driven. Due to
heightened security in the
U.S., however, Congress
mandated that by August 1,
2003, all foreign students and
exchange visitors be entered
into a central and automated
system called the Student and
Exchange Visitor Information
System (SEVIS).
The
Student and Exchange Visitor
Information System (SEVIS) has
been created by the Department
of Homeland Security (DHS) to
maintain information on
nonimmigrant students and
exchange visitors and their
dependents, and also on their
associated schools and
sponsors. SEVIS enables
schools and sponsors to
transmit information, via the
Internet, to the appropriate
government agencies throughout
a student or exchange
visitor's stay in the United
States.
SEVIS
receives electronic updates to
SEVIS records and maintains
up-to-date information about
events involving nonimmigrant
students and exchange
visitors. The information
collected includes the
nonimmigrant's name, country
of birth, date of birth,
country of citizenship,
educational background,
information on the
education/program activity for
which the individual is
seeking admittance, and
passport and visa information.
SEVIS
also maintains information on
each of the certified schools
and designated sponsors and
the SEVIS officials
administering their programs.
Certified schools must provide
specific information regarding
the school, the nature and
requirements of the
educational program, location
and contact information, and
costs to attend. Designated
sponsors must provide similar
information regarding their
exchange visitor programs.
[24]
Conclusion
As the
world becomes a global
marketplace, countries such as
China and members of the
former Eastern Bloc, once
closed to the West, are
increasingly becoming valuable
trade partners.
Though free trade
agreements and the WTO are
often demonized in the media,
our survey results indicate
that firms within the county
generally are supportive of
these agreements, and reap the
benefits of lower trade
barriers through increased
sales via exports.
Though
the largest exporting markets
for the county tend to reflect
the manufacturing sector, and
the growing global demand for
automobiles, exports of
education via local
institutions also plays a role
in the economy of the county.
With the growth of
communications systems such as
the Internet, reaching greater
numbers of individuals
globally is becoming a reality
for U.S. companies.
Reduced barriers to
trade along with growing
popularity of U.S. products
abroad should help to ensure a
healthy export market for
years to come.
Footnotes:
* This
study has benefited from
previous County International
Economic Impact Studies
- [1] http://www.census.gov/popest/counties/tables/CO-EST2005-01-26.xls
Population Division, U.S.
Census Bureau
- [2] http://www.census.gov/popest/counties/files/CO-EST2005-ALLDATA.csv
Population Division, U.S.
Census Bureau
- [3]http://www.census.gov/popest/cities/tables/SUB-EST2005-04-26.xls
Population Division, U.S.
Census Bureau
- [4] ftp://ftp.bls.gov/pub/special.requests/la/laucnty05.txt
U.S. Department of Labor,
Bureau of Labor Statistics
- [5] http://www.census.gov/econ/census02/data/metro2/M2710031.HTM
2002 Economic Census, U.S.
Census Bureau
-
http://www.census.gov/epcd/ec97/metro3/M3520_31.HTM
1997 Economic Census, U.S.
Census Bureau
- [6] http://www.census.gov/epcd/ec97/def/31-33.HTM
U.S. Census Bureau
- [7] U.S. Department of
Commerce
- [8] Ibid.
- [9] http://www.buyusainfo.net/docs/x_6432153.pdf
2006 Canada County
Commercial Guide
- [10] http://strategis.ic.gc.ca
Strategis Trade
Data Online
- [11] Ibid.
- [12] http://www.buyusainfo.net/docs/x_5300470.pdf
2005 Mexico Country
Commercial Guide
- [13] http://tse.export.gov/
TradeStats Express
- [14] http://www.buyusainfo.net/docs/x_5818157.pdf
2006 Japan Country
Commercial Guide
- [15] http://www.buyusainfo.net/docs/x_7251536.pdf
2005 Germany Country
Commercial Guide
- [16] http://www.buyusainfo.net/docs/x_8210372.pdf
2006 United Kingdom
Country Commercial Guide
- [17] http://www.buyusainfo.net/docs/x_3265405.pdf
2006 China Country
Commercial Guide
- [18] http://tse.export.gov/
TradeStats Express
- [19] http://tse.export.gov/
TradeStats Express
- [20] Ibid.
- [21]
http://www.buyusainfo.net/docs/x_2277505.pdf
2006 Brazil County
Commercial Guide
- [22] http://opendoors.iienetwork.org/
Open Doors 2005
- [23] Ibid.
- [24] http://www.ice.gov/
U.S. Immigration and
Customs Enforcement
Date
Updated: March 20, 2007
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