Emerging U.S. Export Engine: Trends in Small Business Exports

The Census Bureau has released new data on the profile of U.S. exporters. Business data has its lags, and these latest data are preliminary estimates for 2012. What they reveal is the critical importance of small and mid-size enterprises (SMEs), companies with fewer than 500 employees, in U.S. exports. SMEs make up 98 percent of U.S. exporters and record 35 percent of U.S. exports. Through my companies TradeUp and Nextrade Group, I wanted to offer a distilled review of these trends (below); for more insight, read our updated TradeUp White Paper.

SMEs: 98% of U.S. exporters and record 35% of U.S. exports

SMEs are the backbone of the U.S. economy, and make up 98 percent of the 304,867 U.S. exporters (figure 1). Just like in other economies, overall U.S. trade is still driven by large companies and multinationals, but SMEs have in the past few years gained ground and now make up over a third of U.S. exports (figure 2).  Overall, U.S. SMEs are still focused on serving the domestic market only: merely 5 percent of the 6 million employment-providing SMEs export (and only about 1 percent of all 29 million SMEs). However, there is variation across sectors: for example, almost 40 percent of computer and electronic product manufacturers and of electrical equipment and appliance manufacturers export.

Figure 1 – Number of U.S. Exporters in 2012, by Company Size and Broad Sectors 

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Source: Author on the basis of U.S. Census Bureau (2014).

Figure 2 – Value of U.S. Exports in 2012, by Company Size and Broad Sector (in $ billions)

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Source: Author on the basis of U.S. Census Bureau (2014).

 

Most SME exporters are small: almost half of U.S. exporters, or 146,296 companies, have fewer than 50 employees (figure 3). Only 2.2 percent of U.S. exporters and 3.4 percent of U.S. manufacturers exporters are large companies, or firms with more than 500 employees.

Figure 3 – Number of U.S. Exporters in 2012, by Firm Size Category

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Source: Author on the basis of U.S. Census Bureau (2014).

Particularly these smaller SME exporters are undiversfied, exporting to only 1-2 markets. Indeed, most SME exporters are still rather undiversified – some 59 percent of exporters export to just one market and 83 percent export to 1-4 markets (figure 4).

Figure 4 – % of SME Exporters in 2010, by Number of Export Destinations

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Source: Author on the basis of U.S. Census Bureau (2014).

 

SMEs Prominent also among Diversified Exporters

SME exporters make up the majority of the number of exporters, and also a rather substantial share of the highly diversified exporters. SMEs make up 44 percent of the 6,692 companies exporting to 50 or more markets (figure 5). The rest, or 66 percent, of these companies exporting to 50 markets or more are large companies (companies with over 500 employees). This is hardly surprising, given that company size correlates with export diversification. SMEs make up nearly 60 percent of U.S. firms exporting to 25-49 countries. Larger companies also play a more pronounced role in the export value (figure 6). Notably, though, SME exporters make up the bulk of exports generated by exporters that ship to 1-49 countries. It is the U.S. multinationals that ship to over 50 countries that dominate the aggregate export data.

Figure 5 – Share of SME Exporters of the Number of U.S. Exporters in 2012, by Exporter Size Categories and Number of Export Destinations

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Source: Author on the basis of U.S. Census Bureau (2014).

Figure 6 – Share of SME Exports of All U.S. Exports in 2012, by Exporter Size Categories and Number of Export Destinations

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Source: Author on the basis of U.S. Census Bureau (2014).

Tables 1-3, based on year 2000 data, illustrate these patterns further. Most U.S. exporters ship 1-2 products to 1-2 markets: 56.7 percent of exporters are of this kind. These companies make up a small share of U.S exports. However, they employ a substantial 11.5 percent of workers employed by exporting companies. In other words, although SMEs have yet to catch up with large companies’ export volume, they represent a significant share of the number of exporters and of employment offered by exporters.

Table 1 – Distribution of Exporters and Export Value by Number of Products and Export Destinations in 2000: Share of Exporting Firms

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Source: Bernard et al. (2012).

Table 2 – Distribution of Exporters and Export Value by Number of Products and Export Destinations in 2000: Share of Exports

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Source: Bernard et al. (2012).

Table 3 – Distribution of Exporters and Export Value by Number of Products and Export Destinations in 2000: Share of Employment

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Source: Bernard et al. (2012).

SMEs Export to Canada, Mexico, China, and UK

SMEs’ export destinations reflect overall U.S. trade patterns, with Canada, Mexico, and China as the leading markets by export volume. Most SME exporters are also focused on these markets, as well as on UK, Germany and Australia (figure 7). Regionally, most SME exporters are in California, Florida, New York, and Texas (figure 8, appendix table I). These states also make up the bulk of the value of U.S. SME exports. At TradeUp, we are working with SMEs across the U.S., to keep their ranks and exports growing, and help U.S. businesses to realize their full potential in international markets. We also believe these companies have the greatest shot at growing into large businesses, creating jobs, and boosting America’s economic growth and competitiveness.

Figure 7 – Number of SME Exporters and Value of Exports in 2012, by Export Destination by State

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Source: Author on the basis of U.S. Census Bureau (2014).

Figure 8 – Number of SME Exporters and Value of Exports in 2012, by State of Origin Image

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