When the world looked like it was heading off a cliff five or six years ago, Miami was rising through the ranks among the nation’s leading Customs districts.
Now that the global economy is largely stabilized and growing, Miami is having an off year for export-import trade. I’m not surprised — and I will tell you why in just a moment — but I would be surprised if you have noticed.
Welcome to Trade Matters, a new weekly column about how South Florida trades with the world. And trade does matter: It is a $120.49 billion business here in South Florida and a $3.85 trillion business nationally.
The Miami Herald asked me to write this column because my company, WorldCity, has been studying international trade for more than 15 years, producing not only the annual Miami TradeNumbers publication but also, over the years, TradeNumbers publications for the United States; Seattle; Los Angeles; Dallas-Fort Worth, Laredo and Houston, Texas; New Orleans, Louisiana; Georgia; Boston, Massachusetts; New York City; China; Costa Rica; and Mexico, along with the trade categories of Perishables and Technology. In addition, with some frequency, I speak or our company exhibits at leading trade-related events around the country. We also upload more than 4,000 pages of export-import trade data monthly at one of WorldCity’s websites, www.ustradenumbers.com.
So, why is it an off year for South Florida trade? Why is South Florida trade down 5.84 percent through June, to $56.92 billion? Why has Miami fallen from a record No. 10 ranking in 2012 to No. 12 so far this year?
The values of two “commodities,” or products, that were key to South Florida’s strong performance during the worst of the global economic crisis are now plummeting, albeit for entirely different reasons.
One is forward-looking, the very symbol of the technology-driven world in which we live today and will live tomorrow: computer chips. The other is backward-looking, tracing its trading roots to ancient times and symbolically expressing a yearning for a safe harbor in stormy times: gold.
Computer chip imports into the Miami Customs district are off 35.21 percent, to $1.57 billion, through the first six months of 2014, according to our analysis of U.S. Census bureau data. (Unless otherwise specified, the data in Trade Matters, and the data at www.ustradenumbers.com, is Census data that we have corralled to add meaning and value.)
There are two factors at play in this substantial decrease.
First, it is important to understand that almost all of Miami's computer chips come from the Intel plant outside San Jose, Costa Rica. It’s also important to know that the California-based manufacturer of computer chips earlier this year announced that it would be laying off 1,500 people and shifting manufacturing to Malaysia.
The impact shows up in the numbers. Miami’s trade with Costa Rica is off 22.55percent through June. U.S. imports of computer chips from Malaysia increased 25 percent. Imports into Anchorage, Alaska — a natural gateway from Malaysia — increased 94 percent.
But there is a wrinkle: Imports into Houston — an export-import competitor to Miami on many fronts — actually increased 80 percent, and it now ranks as the nation’s fourth most important gateway for computer chip imports behind San Francisco, Anchorage and New Orleans. Miami, which had been No. 3 at the end of 2013, now ranks No. 6.
The other commodity that is suffering is gold. If you did not notice that computer chip imports had fallen, it is largely because they are small and their movement isn’t likely to clog local roads. On the other hand, if you did not notice that gold imports and exports were plummeting, that is because those firms transporting it are not particularly interested in garnering publicity about their precious cargo.
Gold was the leading import into South Florida and the leading export from South Florida in 2012, the year the Miami Customs district ranked No. 10 in the nation for the first and only time. Its ascent, however, began at the depths of the economic slowdown, as investors fled to the presumed security of this precious metal and its price skyrocketed. What they planned to do with it exactly, other than hoard it, remains unclear.
Most of the gold entering Miami was coming from Mexico and Colombia, both of which were happily mining the precious metal as fast as they could, and was bound for Switzerland, long renowned for its utter discretion about its banking clients. Then, as the economy improved and gold’s luster as an investment hedge faded, Switzerland fell from Miami’s No. 3-ranked trade partner in 2012 to No. 10 in 2013. Through June of this year, it ranks No. 23. Trade is off 70 percent.
Next week, I will look at South Florida’s top trade partners, including an explanation for high-flier Hong Kong. With a little detective work, you can probably piece it together at our website.
Ken Roberts is the founder and president of WorldCity, which focuses on the impact of globalization on local communities through events, publications and www.worldcityweb.com and www.ustradenumbers.com.
Miami Customs District trade by country
|Change||June 2014||Total Miami Trade||June 2014 YTD||1-year change||1-year change||10-year change||10-year change|
|-1||4||Costa Rica||$ 3,071,158,856||-$889,579,678||-22.55%||$1,249,093,344||68.55%|
|3||6||Dominican Republic||$ 2,499,570,072||$9,110,929||0.37%||$596,626,117||31.35%|
|24||11||Hong Kong||$ 1,368,468,426||$1,039,607,971||316.12%||$1,230,598,755||892.58%|
Source: WorldCity analysis of U.S. Census data