* More disposable cash for high-tech goods in emerging
* Most companies think Obama export target can be met
* India, Middle East, Africa to lead high-tech product
By Lynn Adler
Oct 1 Most U.S. high-tech companies expect to
export more cell phones, tablets and other electronics over t he
next two years to growing middle-class populations in developing
nations, citing free trade pacts and rising labor costs abroad,
a survey found.
About 85 percent of U.S. high-tech executives polled said
the Obama administration was somewhat or very likely to meet its
goal of doubling exports by 2015. Just 40 percent of executives
were as optimistic two years ago after the export target was
The third annual survey was conducted by IDC Manufacturing
Insights for United Parcel Service, the world's largest
package delivery company.
"It's really being driven by this emerging middle class that
have more disposable income and a heavy appetite for technology
products like cell phones, tablets and laptops," Ken Rankin,
high-tech marketing director at UPS in Atlanta, said in a Friday
interview with Reuters.
Scott Davis, UPS chief executive officer, is on the
President's Export Council and has touted free trade agreements
as critical for boosting U.S. exports and the economy.
A free trade agreement between the United States and Panama
will soon go into effect, U.S. Trade Representative Ron Kirk
said on Friday. The U.S.-Colombian agreement went into force in
July, after the U.S.-South Korea pact in March.
Only 23 percent of the companies said they had export growth
over the past two years, but 74 percent now expect to export
more over the next two years, Rankin said.
"Despite all of the short-term talk of economic weakness and
the dreaded fiscal cliff, the high-tech executives that we
talked to really had a bullish outlook in the next two to five
years when it comes to export growth for their products," he
The fiscal cliff refers to the year-end deadline for about
$500 billion in expiring U.S. tax cuts and automatic spending
cuts set for next year unless Congress can compromise over
lowering the budget deficit.
The survey of 125 high-tech manufacturers included senior
supply chain and logistics executives in consumer electronics,
semiconductor, communications equipment and electronic
High-tech product sales and shipments are expected to grow
the most, by 22 percent, in India, the Middle East and Africa,
over the next three to five years, the survey said.
Increases are expected to range from 18 percent in Brazil
and 19 percent in the rest of South America to 15 percent in
Eastern Europe, 13 percent in Korea and 8 percent in China and
in other Asian nations.
Lingering barriers to boosting exports include the
difficulty of managing spread-out global inventory, unstable
global suppliers and security concerns, the survey found.
"Additional progress in free trade agreements would be a big
winner, not only for the high-tech space but for all U.S.
industry," Rankin said.
The high-tech companies that were surveyed sell and ship 97
percent of their products in North America. Within three to five
years, that percentage will decline to 90 percent as demand
mounts in emerging markets for their products.
"Winners will be those companies that successfully leverage
the emerging market growth with strong products and executive
import/export excellence," said Rankin.
As for moving the goods, 70 percent of the executives said
they are planning to modify their distribution networks to
handle more volume at East Coast ports once a wider Panama Canal
is opened to bigger ships around 2015.
More than one-third of those polled said they planned to
shift from air to ocean freight when that happens.
In anticipation, East Coast ports are heavily investing in
dredging and other projects to be able to accept bigger ships.
Companies such as Federal Express and UPS have already seen
a shift in demand for shipping products more cheaply, such as by
sea, rather than premium-priced express air services, because of
the weakening global economy.