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A U.S. Department of
Commerce
Ypsilanti Export Assistance
Center Study
- 2001 Washtenaw County
- International Economic
Impact
- Export Markets and
Educational Institutions
The Washtenaw County
International Economic Impact
Study was complied by Jim
Secreto, Intern with the
Ypsilanti Export Assistance
Center, with assistance from
Paul Litton, Director. This
report is sponsored by the
Ypsilanti Export Assistance
Center, the Center for
International Business
Education at the University of
Michigan, and the Eastern
Michigan University College of
Business.
For more information please
contact:
- U.S. Department of
Commerce
- Ypsilanti Export
Assistance Center
- College of Business
Eastern Michigan
University
473 Owen Building
Ypsilanti MI 48197
Voice (734) 487-0259
- Fax (734) 485-2396
As Washtenaw County's
economy increases in size and
scope, so does its impact on
the global economy. While it
easy to assume U.S.
international business is
limited to highly developed,
urban centers like New York
and Los Angeles, such an
assessment does not account
for the strong connections
smaller economic area can
develop to the global
marketplace. Washtenaw County
is no stranger to
international business, and
various characteristics of the
area make Washtenaw's
international economic impact
even stronger.
This study attempt's to
gage Washtenaw County's
current international economic
impact and predict future
trends in international
business that will impact the
county. The study focuses on
both exports and education via
local institutions. This
report 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 Washtenaw County
firms enter into the first
domestic slowdown in the past
seven years, this study
foresees little if any impact
on international sales or
international student
enrollment. As export markets
and the need for technology
product abroad continue to
grow, exports from the county
will increase as well. Local
firms who are flexible,
versatile, and able to
leverage past export
experience across a range of
markets are likely to succeed
in international marketplace.
Washtenaw County
Overview
Located 40 miles outside of
Detroit, Michigan, Washtenaw
County is the sixth largest
county in Michigan. As of July
2001, the U.S. Census Bureau
estimates Washtenaw County has
a population of 332,895, and
the county's largest city, Ann
Arbor, has a population of
114,024. Since 1990, the
county grew 14.1 percent in
size.1 More than
half of Washtenaw County's
total population lives within
the City of Ann Arbor and
Ypsilanti township, and almost
70 percent of the population
lives within four
jurisdictions: the City of Ann
Arbor, the City of Ypsilanti,
Ypsilanti Township, ad
Pittsfield Township. The
Southeastern Michigan Council
of Governments' (SEMCOG)
predicts that this population
growth will continue through
2020, with the 55 and older
age group increasing by 95
percent.2
As of May 2001 Washtenaw
County has an active labor
force of 177,650 people with
35,590 employed in
manufacturing related
positions.3 For the
year 2000, the county had one
of the lowest unemployment
rates in Michigan - at
an average of 2.0 percent,
well below the state and
national average. In terms of
international trade, Ann Arbor
is the 4th largest
exporting area in Michigan and
within the top 100 in the U.S.
with export value totaling
over 1.75 billion dollars.4
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
substantially greater. Due to
the manner in which the Census
Bureau records software
shipments, they are
underreported by 92 percent.
Out of a total of 612
manufactures and software
publishes identified in the
2002 U.S. Economic Census, 55
percent or 338 firm are known
exporters, which is higher
that the average for both
Michigan and all firm
nationally, 20 and 8 percent
respectively.5(see
figure 1.1) Part of Michigan's
and Washtenaw County's high
level of exporting comes from
the unique, pull-though effect
of the large automotive
presence in the area. Ann
Arbor has the highest number
of exporting firms in
Washtenaw County with 265,
followed by Dexter with 27 and
Ypsilanti with 23. (see figure
1.2) According to a study of
Washtenaw County companies by
the Ypsilanti Export
Assistance Center, an average
of 15 percent of a firm's
revenue was attributable to
exports. Additionally, the
percent of revenue
attributable to exports was as
high as 47 percent in some
cases.
There are also a number of
Washtenaw County firms that
have won the President's
"E" or "E
Star" Awards for
Excellence in Exporting. The
"E" Award was
created by executive order in
1961 as the nation's highest
award to honor American
exporters. Companies in
Washtenaw County that have
received the award include
Mechanical Dynamics, Inc.,
American Broach and Machine
Company, Pahl Gelman Sciences,
Sycor (purchased by Nortel
Networks,) Sarms (now Terumo
Cardiovascular Systems, and
Whatman.
Export Markets and
Industries
The top Washtenaw County
industries for export consist
of computer software and
hardware, automotive parts,
medical equipment, machine
tools, and laboratory
scientific equipment.
According to the Ypsilanti
Export Assistance Database,
computer software and hardware
firms make up the largest
number of exporters with 116
firms, and auto parts and
services comes in second with
32 exporters. Medical
equipment, Machine tools, and
Laboratory equipment have 26,
19, and 12 firms respectively.
(see figure 1.3) More than 55
percent of the exporters are
technology related.
The top export markets for
Washtenaw County differ
slightly than the export
markets for the U.S. and
Michigan. Exports from the
U.S. and Michigan go
overwhelmingly to Canada and
Mexico, and other  technologically
rich countries of the European
Union and Japan. While Canada
and Mexico are very large
export markets for the county,
Washtenaw's exports markets
also include China and India,
relatively technologically
poor countries. The reason for
this difference in export
markets is the high level of
computer technology products
from Washtenaw County,
particularly from Ann Arbor.
There is also a smaller yet
substantial volume of
automotive parts entering
foreign markets from the
county.
Figure 1.1 Percent of firms
exporting in Washtenaw County.
Figure 1.2 Top three
Washtenaw County cities by
number of exporters.
Figure 1.3 Top five
exporting industries in
Washtenaw County by number of
firms.
Canada
The proximity of Canada
coupled with the increasing
openness to foreign investment
and decrease in tariffs due to
the North American Free Trade
Agreement (NAFTA) makes it
understandable why it is the
primary host for Washtenaw
County exports. Geographic
proximity, cultural and
historical ties, and strong
awareness of business and
technological developments in
the United States are key
factors in the enormous volume
of sales of US goods and
services in the Canadian
market. Additionally, the
Detroit-Windsor border
crossing is one of the busiest
in the U.S. and largest in
terms of export shipments to
Canada. The US exported more
to Canada in 2000 ($178
billion) than to its number
two and three export markets
(Mexico and Japan) combined.
Since Canada has an affluent,
high-tech industrial economy
that closely resembles the
United States in its per
capita output, market-oriented
economic system, and pattern
of production, it is often the
easiest international market
for Washtenaw County exporters
to enter.
Mexico
A mixture of mutual
interests coupled with shared
problems, growing
interdependence, and different
national perspectives shape
the relationship between the
U.S. and Mexico. Still, which
the advent of NAFATA, Mexico
is increasingly the
destination for Washtenaw
County exports. Mexico's
characteristics combined with
increasing demand for computer
software and other
technology-based products
suggest a continuing market
for the county. Mexico
averaged roughly 4.8 percent
growth and the U.S. Department
of Commerce predicts the
economy will continue to grow.6
China
For over two hundred years
foreign firms have been
entranced by the enormous
potential of the China market,
a potential that remains
largely unfulfilled. In its
position as the world's most
populous country that is
relatively technology-poor,
China's increased economic
development has positive
effects for Washtenaw County
exporters. While the thrust
toward modernization and
privatization over the past
two decades has increased the
opportunities for Washtenaw
County business, China remains
a difficult market to work
with. However, China's recent
entrance in to the World Trade
Organization (WTO) will also
improve the country's business
climate by 1) open more
domestic markets to foreign
firms and lowering tariffs, 2)
provide stronger protections
for intellectual property, and
3) afford foreign firms the
same rights and privileges and
domestic firms.
India
As the world's second most
populous country, India also
serves as a large marketplace
for Washtenaw County exports.
Economic reform and
liberalization of trade policy
since 1991 have increased
opportunities for foreign
investment, and growth in
technology and automotive have
a positive impact on the
county. Specifically,rigorous
enforcement of copyright laws
and a historically stable
economy provide a favorable
business climate. Yet,
political conflicts, like
India's nuclear weapons
testing and failure to sign
international
non-proliferation treaties
remain points of contention
with the U.S. Although these
conflicts tend not to
influence existing business
relationships between the
countries, the conflicts
distinguish countries like
India and China from more
developed U.S. relations with
Canada and Mexico.
Expected trends in
exports
From 1993 to 1995, the Ann
Arbor area saw its value of
exports drop almost 50
percent, from roughly 2.2
billion dollars per year to
1.1 dollars per year in 1995.
(see figure 1.4) The decrease
in exports was attributed to
the closing of the General
Motors Assembly Division at
Willow Run and the bankruptcy
of the General Automotive
Corporation. However, since
1995, export sales have
increased steadily to 1.75
billion dollars in 1999, the
last year for which figures
are available.7
Generally, the U.S. Department
of Commerce predicts
international trade will grow
at a rate of seven percent by
2002, and in the long term
Washtenaw County's
international economic impact
will continue to grow.
Of the firms responding to
the Washtenaw County
International Economic Impact
Study most were moderately
optimistic about future of
their firm's international
sales. Firms were asked to
access how the current
economic slow down impacting
their level of exporting on a
scale from one to ten, with
one representing a significant
decrease and ten representing
and significant increase. The
average firm response was 5.1,
suggesting the current
domestic economic slowdown
will have little if any
expected impact on exporting.
Firms were also asked to rank
their own potential for
international business in the
future, with one representing
a significant decrease and ten
representing a significant
increase. The average firm
response was 6.6, suggesting a
small trend toward increased
international business from
Washtenaw County.
Finally, a strong U.S.
dollar will continue to have a
negative impact on exports.
While U.S. consumers benefit
from a strong dollar, a strong
dollar means U.S. goods and
services are more expensive
for foreign consumers and
business that, as a result,
tend to buy fewer U.S.
products. Still, an
appreciation for the quality
or characteristics of U.S.
good can mitigate the negative
effects of a strong dollar,
and this is likely for exports
from Washtenaw County. Since a
large number of the county's
export are technology related
and a large number of these
exports go to technologically
poor countries, the increased
price caused by a strong
dollar may not have as large
an impact. Often buyers from
technologically poor countries
lack a suitable domestic
alternative for a technology
product, and seek exports like
those from Washtenaw County
with less regard to price.
While there are 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 2001.8
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.
Figure 1.4 Ann Arbor area
value of exports from 1993 to
1999 in billions of dollars
There is no secret to
successful exporting, but as
more Washtenaw County firms
become active exporters, it is
important to understand why
some succeed and others do
not. As the old adage goes,
"Technology Sells."
Due to the Washtenaw's high
concentration of technology
companies, the county is well
positioned for success in the
international economy.
Educational Institutions
Education as a reverse
export
Although focusing solely on
traditional exporters like
manufacturing when accessing
Washtenaw county's
international economic impact
is the norm, 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
U.S. fifth largest service
sector export. Universities
and colleges in Washtenaw
bring in a large amount of
economic revenue through
international students, which
in turn benefits business 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
this unique form of exporting.
Overview of
international students in
Washtenaw County
Washtenaw County has two
public universities (the
University of Michigan and
Eastern Michigan University)
and one community college
(Washtenaw Community College,)
as well as two, smaller
private colleges (Concordia
College and Cleary College.)
According to a survey
conducted by the Ypsilanti
U.S. Export Assistance center,
these educational institutions
have a combined enrollment of
5,548 full-time international
students.9 The
University of Michigan has the
largest number of
international students with
4005 undergraduate and
graduate students, and Eastern
Michigan University comes in
second with 1231 undergraduate
and graduate students.
Notably, the University of
Michigan- Ann Arbor's
international student
enrollment is the highest in
Michigan, as well as the
seventh largest in the nation.10
The total money spent by
each international student
(including tuition and living
expenses) at all educational
institutions in Washtenaw
accounts for an estimated
$151,338,042. International
students spend the most money
to attend the University of
Michigan at $31,759 per
students, for a total of
$127,194,795. Those at Eastern
Michigan University come in
second with $17,037 per
international student, for a
total of $20,972,547. While
the bulk of that money goes
directly to the educational
institutions in the form of
tuition, an average of 40
percent, or a total of
$59,358,736, goes into the
local economy.11
Again, the University of
Michigan- Ann Arbor had the
highest economic impact from
international students in
Michigan.
Figure 2.1 Enrollment of
international students in
Washtenaw County educational
institutions.
International students
attending educational
institutions in Washtenaw
County overwhelmingly come
from Asia. China has the most
students studying in Washtenaw
County with 683 students, and
India and Korea are next with
561 and 539 student
respectively. The only
non-Asian country with
students in the county within
the top eight is Canada, which
comes in fourth with 300
international students. The
top countries of origin for
international students I
Washtenaw County corresponds
with the top countries of
origin for the entire U.S.
Significance of
international
students/educational export
economic impact
The economic impact of
international students is
significant in Washtenaw
County because it connects
business that would not normal
have international perspective
to the global economy.
International sales can be
difficult if not impossible to
small retailers and service
provides. Yet, the substantial
number of international
students enrolled in Washtenaw
County educational
institutions provides 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 Washtenaw County.
The large number of
international students also
has a positive effect on
Washtenaw County employment.
The U.S. Department of
Commerce estimates that every
$35,000 worth of exports
creates one job. Because the
University of Michigan is the
county's largest employer with
over 25,000 employees, it is
likely that a number of jobs
in the educational field are
supported directly by
international students. While
it is difficult to estimate
the impact of international
students' additional expenses
outside of tuition on
employment, the high level of
total economic impact suggests
international students support
a number of workers in fields
that traditionally do not
benefit from exporting.
Expected trends in
international student
enrollment/educational
exporting
International student
enrollment in Washtenaw County
is expected to remain high and
increase slowly over time.
While statistics on Washtenaw
County are not available,
international student
enrollment has increased
nationwide since World War at
an average rate of 3.7 percent
between 1960 and 2000.12
Surprisingly, international
student enrollment appears to
be immune to either domestic
or international economic
crisis. While the Asian
finical crisis did effect the
counties of origin of
international students in
Washtenaw County, it did not
effect the overall number of
international students
enrolled.13 Still,
the perceived value of an
education in the U.S.
outweighs many considerations
international students might
face at home.14
Logically, situations like the
current strong U.S. dollar
would make education in
Washtenaw County more
expensive for international
students. And although the
U.S. has is down to 30 percent
from 40 percent of the total
international student market,
the actual numbers of students
continue to increase steadily.
Figure 2.2 Economic impact
of international students in
Washtenaw County by school.
Figure 2.3 Percent of
international students from
country of origin in Washtenaw
County
Figure 2.4 Number of
international students in
Washtenaw County by country of
origin.
Figure 2.5 International
Student Enrollment in the U.S.
from 1960 to 2000
 Finally,
developments in the largest
countries of origin for
international students in
Washtenaw County suggest
increased 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, will now
allows sponsored to remit
expenses toward educational
cost, making it easier for
India students to study in the
U.S.. Actions by the U.S.
Department of Commerce
recently to encourage
international students to
study in the use will have a
positive effect on enrollment
in Washtenaw County.
1 U.S. Census
Bureau, Census 2000
Redistricting Data (P.L.
94-171)
2 SEMCOG
Regional Development Forecast,
1996
3 Michigan
Department of Career
Development Monthly
Statistics, May 2001
4 2000
Metropolitan Area Exports
Study, U.S. Department of
Commerce
5 Data complied
from 1997 Economic Census and
the Ypsilanti Export
Assistance Center Data Base.
The number of software
publishers used differs from
the economic census and is
estimated at 200 by the
Ypsilanti Export Assistance
Center due to the industries
volatile nature.
6 Country
Commercial Guide Mexico, U.S.
& Foreign commercial
Service and U.S. Department of
State, 1999
7 2000
Metropolitan Area Exports
Study, U.S. Department of
Commerce
8 National
Association of Purchasing
Management New Export Orders
Index
9 All
educational institutions in
Washtenaw County were sent a
survey requesting their number
of international students
enrolled for the 2000-2001
academic year, average tuition
student paid, and the number
of international students from
each country. Admissions
departments at each
institutions were then asked
to estimate the total amount
an international student would
pay to attend the school,
including lodging, food,
books, and miscellaneous
expenses. Where information
was unavailable, $5,000 was
estimated for lodging, $2,000
for miscellaneous expenses,
and $500 for books.
10 "Open
Doors," Institute of
International Education, 2000,
http://www.opendoors.org
11 Estimated
total to attend school minus
tuition
12 "Open
Doors," Institute of
International Education, 2000,
http://www.opendoors.org
13 International
Center, University of Michigan
14
"Students Seeking Foreign
Education, India,"
International Marketing
Insight, U.S. Foreign
Commercial Service and U.S.
Department of State, 2001
Date
Updated: March 20, 2007
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