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Global Positioning, 2015

Indiana's Export Activity

The Indiana Business Research Center (IBRC) monitors global business activity occurring within Indiana’s borders. Click on a tab below for details about the export activity of goods and agricultural products produced in Indiana and sold internationally.

Key Findings

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In 2014, the United States exported over $1.6 trillion in goods and services. Of these exports, Indiana’s share was $35.4 billion, $1.3 billion more than in 2013.

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Relatively speaking, exports are more important to Indiana than other states. While Indiana’s economic output (GDP) ranks 16th in the country, its dependency on exports ranks eighth.

The United States, Midwest, and Indiana all saw a large increase in the annual change in exports in 2014, relative to the past two years. Indiana's exports increased 6.8 percent, which is slightly lower than the 7 percent in the Midwest, and 7.7 percent in the United States.

Figure 1: Annual Change in Exports from Indiana, Midwest and U.S.

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Transportation equipment and the life science industries (pharmaceuticals and medical instruments) are the leading export industries.

Table 1: Indiana’s Top Five Export Industries

Industry 2014 Exports
 (in millions)
Average Annual Growth Rate, 2004-2014
Vehicles and Parts (Excluding Railway) 8,378 6.3%
Pharmaceutical Products 5,910 21.2%
Industrial Machinery (Including Computers) 5,404 5.2%
Optical and Medical Instruments 2,374 7.5%
Electric Machinery 2,236 4.3%

Source: WISER Trade

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Most of Indiana’s export industries have had strong average annual growth over the last decade, especially aircraft, spacecraft and related parts; pharmaceuticals; iron, steel and related products; optical and medical instruments; and agricultural products.

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While many may look to the emerging economies for growth, there may be less potential for expanded export opportunities in the near future. For example, the BRICS countries (Brazil, Russia, India, China and South Africa) are, as a group, not turning in the rates of growth experienced recently.

If the weak (perhaps negative) economic growth that is expected in most of the eurozone continues, it will reduce demand for exports, including those from Indiana. On the upside, Canada and Mexico are Indiana’s primary markets.

Figure 2: Indiana’s Leading Export Destinations, 2014

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Global Economic and Trade Outlook

The Organization for Economic Cooperation and Development (OECD) projects lethargic growth by the eurozone countries as a whole, though Germany will likely outperform its neighbors.

Table 2: Percent Change in Real GDP from Previous Year

Actual Forecast
Nation 2013 2014 2015 2016
China 7.7 7.4 6.8 6.7
United Kingdom 1.7 2.8 2.4 2.3
Australia 2.0 2.7 2.3 2.9
Canada 2.0 2.4 1.5 2.3
United States 2.2 2.4 2.0 2.8
Mexico 1.7 2.1 2.9 3.5
Germany 0.2 1.6 1.6 2.3
Belgium 0.3 1.1 1.3 1.8
Netherlands -0.7 0.9 2.0 2.2
Euro Area -0.3 0.9 1.4 2.1
France 0.7 0.2 1.1 1.7
Japan 1.6 -0.1 0.7 1.4
Italy -1.7 -0.4 0.6 1.5

Note: This table is sorted by the actual 2014 growth rate.
Source: Organization for Economic Cooperation and Development

Since the end of the recession, foreign exchange trends have been mixed—a tug of war between monetary policy and a flight to safety into dollars.

Figure 3: Foreign Exchange Trends for Indiana's Top Trading Partners

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While a weakening dollar tends to encourage export sales, it also can increase raw commodity prices, thus discouraging demand. Across all categories in 2014, commodity prices saw either declines or no change.

Figure 4: World Primary Commodity Prices

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Canada dominates Indiana’s export market. Vehicles and parts remained Indiana’s top exported commodity to that country, increasing 6.1 percent from 2013 to 2014.

Figure 5: Value and Growth of Exports to Canada by Industry, Comparison of U.S. and Indiana

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While the traditional trading partners of Canada, Mexico, Japan and Europe are still dominant, emerging economies are becoming increasingly important.

Table 3: Trade Activity of the United States, Brazil, China and India

  Realized Average Annual Growth Rate, 2004-2014 Projected Average Annual Growth Rate, 2015-2016
Nation Imports Exports Imports Exports
United States 2.2% 4.7% 6.4% 3.3%
Brazil 9.5% 2.9% -0.5% -0.4%
China 10.0% 11.0% 6.4% 5.6%
India 11.2% 11.0% 4.4% 6.0%

Note: Data for Russia and South Africa are unavailable.
Source: Organization for Economic Cooperation and Development

China is the dominant emerging economy and has had one of the highest growth rates for both imports and exports.

Figure 6: Exports from the United States, Brazil, China and India

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Indiana Export Destinations

Canada and Mexico are Indiana’s top two export markets. In 2014, Canada captured 34.5 percent of the state’s exports, whereas Mexico accounted for 14.2 percent of Indiana’s exports.

The top 10 destinations accounted for approximately 75 percent of Indiana’s exports in 2014.

Table 4 : Indiana’s Top Export Destinations—Value and Average Annual Rate of Change

Export Destination Value of Exports (Millions of Current Dollars) Average Annual Rate of Change
2012 2013 2014 2013-2014 2009-2014 2004-2014
World Total 34,399 34,155 35,467 3.8% 8.7% 6.1%
 Canada 11,900 11,817 12,246 3.6% 7.5% 3.5%
 Mexico 3,907 4,001 5,022 25.5% 20.7% 6.8%
 Japan 1,752 1,805 1,644 -8.9% 0.2% 2.5%
 Germany 2,156 1,928 1,624 -15.8% 4.6% 3.2%
 China 1,309 1,346 1,436 6.7% 2.8% 9.1%
 France 1,767 1,387 1,354 -2.4% 9.9% 6.3%
 United Kingdom 1,199 1,038 1,197 15.3% 6.4% 14.0%
 South Korea 788 874 933 6.8% 11.2% 13.1%
 Belgium 534 449 867 93.0% 10.2% 8.5%
 Netherlands 788 1,174 844 -28.1% 13.3% 12.3%

Source: WISER Trade

Figure 15: 10-Year Export Trends Compared to Recent Performance for Indiana's Top 10 Destinations

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In Canada, France, and the United Kingdom, export growth (or export shrinkage in the case of the United Kingdom) has not keep pace with the average over the last 10 years.

Most of the countries for which Indiana exports have been declining—Japan, Germany, and the Netherlands, for example—have been experiencing overall lackluster economic performance.

Exports to Indiana’s top 10 partners have experienced some dramatic swings from year to year.

Figure 16: Annual Change in Exports for Indiana's Top 10 Export Destinations

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Figure 17: Destinations of Indiana Exports Exceeding $100 Million, 2014

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While about 200 destinations imported Indiana goods in 2014, only 33 had export values greater than $100 million. These 33 countries accounted for 95.5 percent of all Indiana exports.

Figure 18: Indiana’s Average Annual Export Growth by Destination, 2012 to 2014

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The average annual growth rate from 2012 to 2014 for countries importing over $100 million was 3.4 percent—higher than the 1.5 percent for all of Indiana’s export destinations. Import growth levels in the eurozone countries have varied considerably, reflecting the knock-on effects of Europe’s general economic stagnation.

Figure 19: Export Index for Countries Importing More than $1 Billion of Indiana Goods in 2014

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Seven destinations imported more than $1 billion from Indiana in 2014. China and Germany had the most dramatic and consistent growth over the past decade, though exports to Germany have been declining since 2012.

Looking at the top five export industries, vehicles and parts increased over $800 million from 2013 to 2014, with Canada contributing 40 percent of the increase.

Canada and Mexico trade heavily in vehicle and parts and industrial machinery—the latter industry also includes components to transportation equipment like diesel engines.

Table 5: Change in the Value of Exports by Destination for Five of Indiana’s Largest Exporting Industries, 2013 to 2014

Destination Vehicles and Parts (Excluding Railway) Pharmaceutical Products Industrial Machinery Optical and Medical Instruments Electric Machinery
World Total 817.5 -393.7 127.4 -92.2 95.5
Canada 331.9 36.8 -19.0 --51.8 -37.4
Mexico 163.4 29.4 350.4 68.1 99.9
Japan -5.5 -54.1 -37.8 -99.8 -10.9
Germany 12.7 -325.0 5.4 -68.2 1.1
China -29.6 40.2 21.1 -9.4 35.0
France -4.0 3.2 11.1 12.1 16.3
United Kingdom -12.5 6.9 -8.5 5.4 5.4
South Korea 13.4 12.3 17.9 -6.4 4.2
Belgium 56.1 370.3 -5.0 -8.2 -5.1
Netherlands -0.4 -412.2 -46.0 89.9 1.8

 Note: Values are in millions of dollars.
Source: WISER Trade

Figure 20: Indiana Exports to Canada by Industry

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In 2014, the top 10 Indiana shipments to Canada increased by $330.3 million, or 9.8 percent.

Figure 21: Indiana Exports to Mexico by Industry

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The top 10 Indiana exports to Mexico increased by $962.5 million in 2014, with nearly all of the top 10 exporting industries to Mexico experiencing an increase. The only exception was in iron, steel and related products. Optical and medical equipment exports to Mexico increased significantly, by about $68 million, from 2013 to 2014.

Figure 22: Indiana Exports to Japan by Industry

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Nearly half of Japan’s imports were in pharmaceuticals. Indiana’s top 10 exports to Japan dropped by $174.1 million (9.5 percent) from 2013 to 2014. Optical and medical equipment exports contributed mightily to that decline, decreasing about $100 million.

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Indiana Export Industries

Table 6: Indiana's Top 10 Export Industries

Exports (in millions) Average Annual Growth Rate
2014 2013-2014 2004-2014
Vehicles and Parts (Except Railway)  $8,378 10.8% 4.3%
Pharmaceutical Products  $5,910 -6.2% 18.1%
Industrial Machinery (Including Computers)  $5,404 2.4% 4.0%
Optical and Medical Instruments  $2,374 -3.7% 7.1%
Electric Machinery  $2,236 4.5% 3.6%
Plastics and Related Products  $1,330 4.8% 5.6%
Iron, Steel and Related Products  $1,244 0.5% 6.8%
Aircraft, Spacecraft, and Related Parts  $1,024 -8.6% 7.6%
Organic Chemicals  $969 18.8% -4.5%
Miscellaneous Chemical Products  $816 10.9% 2.0%

Note: Industries are defined by the Harmonized System of Commodity Classifications.
Source: WISER Trade

Vehicles and parts are the perennial top as Indiana’s largest export industry in 2014, with a slight increase in export value this past year. Pharmaceutical products maintained its number two spot ahead of industrial machinery despite a small decline in 2014.

The top 10 export categories constitute 83.7 percent of all exports out of Indiana.

Figure 23: Indiana's Top 10 Export Industries and Their Growth

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Since 2004, only one of Indiana’s top 10 industries has had double-digit average annual growth (pharmaceutical products, 18.1 percent), as shown in Figure 23.

Vehicles

Canadian purchases of vehicles and parts have slowly rebounded since the downturn in 2009. The share of vehicles and parts earmarked for Canada has slowly dwindled from 58 percent in 1999 to 37.8 percent in 2014. Mexico—America’s second-largest trading partner—has seen a slight decrease in its share of vehicles and parts, commanding 15.6 percent of U.S. exports in 2014, down from 16.1 percent in 2013.

Figure 24: Destinations for U.S. Exports of Vehicles and Parts (Excluding Railway), 2014

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Michigan is the leading source of U.S. vehicle and parts exports with a 16.3 percent share, followed by Texas at 8.9 percent. In 2014, Indiana ranked sixth at 6.2 percent.

Figure 25: Share of U.S. Vehicle Exports (Excluding Railway), 2014

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Figure 26: Leading States in the Export Industry of Vehicles and Parts (Excluding Railway)

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All of the top 10 vehicle and parts exporting states had positive growth rates in the past decade, with Alabama and California leading the pack at 12.3 percent and 10.2 percent, respectively. Indiana’s export value (approximately $8.4 billion) is on par with Ohio, California, Alabama and Illinois.

Figure 27: Leading States in Export of Motor Vehicle Parts and Accessories

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Indiana’s top exported commodity or product within the broadly defined vehicles and parts industry was motor vehicle parts and accessories. Michigan was the leader in terms of sales volume of this commodity ($10.7 billion) followed by Texas ($6.6 billion).

Pharmaceuticals

For the country as a whole, pharmaceutical products were the 9th largest exported commodity; however, in Indiana, it’s the second-highest-valued exported commodity. Indiana has been the top exporting state in pharmaceuticals since 2009.

Indiana’s 18.1 percent average annual growth rate surpassed all other top 10 exporting states except Delaware, explaining its growing share of the nation’s exports in this category.

Figure 28: Leading States in the Export of Pharmaceuticals

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Figure 29 presents the top five export destinations for Indiana’s pharmaceuticals in 2014. Japan imported the most from Indiana at the country level, but as may be expected, Europe is a far larger market when taken as a whole.

Figure 29: Indiana's Top Five Export Destinations for Pharmaceutical Products

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Industrial Machinery

Figure 30: Leading States in the Export of Industrial Machinery

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Among the states, Indiana ranked 13th in industrial machinery exports in 2014, the same spot as last year. Texas and California continue to dominate the market. In 2014, Indiana’s export of industrial machinery was worth $5.4 billion and had experienced a 4.0 percent average annual rate of growth.

Figure 31: Indiana's Top Five Export Destinations for Industrial Machinery

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Mexico and Canada are clearly Indiana’s primary export markets for industrial machinery.

Optical and Medical Instruments

Except for 2011, optical and medical instrument exports to Germany have grown quickly, with an average annual growth rate of 26.0 percent in the past decade. The Netherlands and Belgium both had growth over 25 percent in the past decade.

Figure 32: Indiana's Top Five Export Destinations for Optical and Medical Instruments

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Electrical Machinery

Indiana’s electrical machinery industry again saw strong growth in 2014. Canada dominates the Indiana export landscape for this industry.

Figure 33: Indiana's Top Five Export Destinations for Electrical Machinery

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Plastics and Related Products

Figure 34: Indiana's Top Five Export Destinations for Plastics and Related Products

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Since 2004, Indiana exports of the plastics industry has expanded steadily, at an average annual rate of 5.6 percent. Canada is by far the leading market, capturing 33.6 percent of Indiana’s plastic exports.

The Remaining Top 10 Exported Industries

Figure 35: Top Five Destination Countries of Indiana’s Remaining Top 10 Export Industries

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Within the iron, steel and related products industry, Canada and Mexico remained the top two importers, with Canada purchasing 70.2 percent of Indiana’s exports and Mexico purchasing 15.9 percent.

Within the aircraft, spacecraft and related parts industry, Canada was the leading importer with France close behind. Together these two countries were responsible for more than a third of all imports within the aircraft, spacecraft and related products industry.

Growth in the organic chemicals category has declined by 10 percent (at an annual average rate) since 2004. France is Indiana’s largest trading customer in this category, purchasing $338.7 million in organic chemicals in 2014. The United Kingdom fell to second place in 2014 while importing $206.9 million, despite increasing trade by $20.5 million from 2013.

 Indiana exports of miscellaneous chemical products are growing slowly when compared to other top 10 industries, recording a 9.4 percent average annual growth rate since 2004. However, this represents a positive growth compared to the decline in organic chemicals.

Agriculture

Agricultural products also make a substantial contribution to the state’s exports. Unfortunately, due to the homogeneous nature of agricultural commodities, it’s nearly impossible to trace an individual agricultural product to its particular provenance, or, for that matter, determine the commodity’s foreign destination. However, the U.S. Department of Agriculture (USDA) uses U.S. farm cash-receipts data to allocate export shares by state.

Figure 36 : Indiana’s Largest Agricultural Exports

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In 2013 (the most recent year available), Indiana exported $4.8 billion in agricultural products, ranking it eighth among all states. In Indiana, soybeans remained the top agricultural exported commodity at $1.75 billion, followed by feeds and fodder at $514 million. Together these two commodities accounted for nearly half of the state’s agricultural exports.

 Table 7 : Share of U.S Corn and Soybean Exports, 2013

Corn Exports
(in millions)
Share of U.S. Soybean Exports
(in millions)
Share of U.S.
Illinois 802.8 12.6% 3,068.6 14.2%
Indiana 409.6 6.4% 1,746.0 8.1%
Iowa 1,116.5 17.5% 2,712.3 12.6%
Minnesota 828.7 13.0% 1,762.4 8.2%
Nebraska 765.7 12.0% 1,625.1 7.5%

Source: USDA Economic Research Service

Iowa and Illinois were the top two exporters of corn and soybeans in 2013, while Indiana ranked fifth in corn and fourth in soybeans.

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Note: This analysis covers the most recent export data as of August 2015 from WISER Trade, the Organization for Economic Cooperation and Development, the Federal Reserve and the U.S. Department of Agriculture. The most current year varies by data source.