Western New York businesses are already demonstrating their prowess in international trade, but the companies need to start shifting more to emerging markets such as Brazil, China and India instead of focusing on Canada, Mexico and Europe, a local economist said Wednesday.
Businesses in the Buffalo Niagara region have been outdoing their peers across the country for three straight years, sending more goods overseas as a percentage of overall local production than the country as a whole, according to the U.S. Census Bureau.
Most recently, in 2008, exports represented 11.8 percent of Buffalo Niagara's gross domestic product, compared with an average of 9.8 percent for the 50 largest metropolitan areas that export and 9 percent nationally. That ranked Buffalo 20th nationally among the Top 50 metro areas.
But more than half of those local exports -- 54.2 percent -- went to Canada and Mexico, with an additional 19.5 percent to European Union countries. Only 16.2 percent went to Asia and 2.4 percent to South America.
Yet those are the regions that are projected to have the fastest growth rates in coming years, and they are the ones with the biggest increase in U.S. exports, according to census and International Monetary Fund figures.
Western New York needs to tap into that to "get a piece of the action," said Gary D. Keith, M&T Bank's regional economist, who cited those figures in a presentation at the Buffalo Club.
"It's becoming a bigger part of America, in terms of our economic prosperity, to really look at these offshore markets," Keith told several dozen lenders and business executives. "These are the growing parts of the globe. If we don't take advantage of it, we're missing out."
Keith and Richard M. Deitz, regional economist for the Buffalo branch of the Federal Reserve Bank of New York, spoke during a forum sponsored by the World Trade Center Buffalo Niagara. The two prominent local economic experts discussed the local, national and global economy, highlighting trade.
"We can sell things," Keith said. "The success is there, and we need to build on it. There are a lot of opportunities that we have in terms of moving our economy forward."
Overall, Keith said, the country has "managed to survive" a whipsaw recession that saw a 4.1 percent contraction in national GDP, the worst since 1946. The economy has since had five straight quarters of growth, but "we still have progress to make if we're to make it back up to the peak," he said.
"We're moving in the direction we need to move, but we still have hurdles," Keith said.
New manufacturing orders are up but are still nearly 9 percent below the pre-recession peak, and excess production capacity means that companies haven't had to hire yet. So even though layoffs are down, the unemployment rate of 9.4 percent remains near a 26-year high, and paychecks haven't moved up.
That's why Americans still feel like they're in the recession, even though it was technically over a while ago.
"There's a significant amount of stress at the household level," Keith said.
Still, both noted that Western New York fared well in the recession, having avoided the boom-and-bust and business stress that hammered much of the country.
"If there's an ace in the hole, it's that businesses have been nimble enough to keep the lights on, generate some profits and be in a position to hire again," Keith said.
Even though the state economy is weakening, that's due to "what's going on in the New York City area," Deitz said. "Like much of upstate New York, the Buffalo economy has proven to be quite stable."
As a result, they said, Buffalo Niagara businesses emerged in an unusually good position compared with their competitors nationwide, creating an opportunity to jump ahead.
"We have a great opportunity in front of us," Keith said. "Historically, recessions have not been kind to Western New York. We've been knocked so hard on our back by the downturns that it's taken us years to start moving forward again.
"We don't have that this time. It's the first time in any cycle that we can point to that we are in as equal shape coming out of a recession if not better than the rest of the country, and I hope we can take advantage."
And that's not limited to larger firms.
Keith noted that 94 percent of exporters in the state -- more than 25,000 firms are small and mid-size companies with fewer than 500 workers.
"Exports are a business Buffalo is good at," he said. "We can sell. We can offer things to the rest of the globe. Moving forward from here and getting competitive is what we have to do."
Looking forward, Keith said consumers' new attitudes -- saving more and reducing their debt -- will put them in better position to start spending again, which is a critical part of getting the economy moving.
He said, "We still have a hill we have to climb up," but "we've had a good fourth quarter," with more optimism, so "that sets us up for a nice 2011."
"We're looking at 2011 as being another positive year," he said, predicting 3 percent growth.
"After some real back-and-forth sledding, 3 percent is what this economy needs now. I'm bullish on the next few years."