VIRGINIA SEEKS TO DIVERSIFY EXPORT GOALS AFTER '92 SLIP

VIRGINIA SEEKS TO DIVERSIFY EXPORT GOALS AFTER '92 SLIP

Virginia is working to diversify its export market targets, following a slip in 1992 exports to traditional European Community and East Asian countries.

Led by traditional tobacco and coal products shipped to traditional markets in the EC and Asia, Virginia's 1992 exports were off by 2.6 percent, slipping to $10 billion, according to a recent assessment by Larry Forbes, a senior trade economist at Virginia's Department of Economic Development.While that slip mirrored the slower growth in these markets, Virginia's export development officials are not satisfied, since some 70 percent of all exports go to these traditional markets.

So, Virginia is aiming to diversify its exports further geographically, with several potentially high-growth regions of the globe, including Africa, Latin America and China, according to Ralph Graner, the director of the DED's Division of Export Development.

At the same time that the state is broadening its export destination targets, it will emphasize a variety of less traditional products, Mr. Graner said. Geographically, the greatest flow of Virginia's exports move to Belgium and Luxembourg, which serve as the primary distribution centers for the state's products in the EC. Together, the two countries accounted for $ 1.24 billion out of the state's 1992 total exports of $10.0 billion.

Japan is Virginia's second largest buyer of goods, importing $1.21 billion worth. Canada is the state's next largest buyer, taking some $850 million last year. The next tier of importers include Germany at $676 million; the Netherlands at $541 million; the United Kingdom at $460 million; France at $372 million; Brazil at $346 million; Korea at $298 million; and Italy at $285 million. All others import $3.6 billion worth.

The largest country gain among the top importers was Korea, which bought 23.7 percent more goods, followed by Canada, buying 10.2 percent more goods, and Germany, buying 4.1 percent more goods.

While the 1992 results were off, Virginia has clearly emphasized exports over the recent past, with growth of 38.7 percent over the five-year period since 1988, U.S. Commerce Department figures show.

Over that period, export growth among the top buyers was led by Korea with a 137.2 percent gain, followed by the Netherlands with a 108.1 percent gain, and Japan with a 75 percent gain.

In terms of export products, Virginia's top export dollar earner is tobacco, which racked up $2.6 billion in 1992. Similarly, coal represented $1.7 billion worth of exports last year. Unfortunately, tobacco exports were off 4 percent and coal was off 14.6 percent, adding significantly to the overall export drop of 2.6 percent.

Industrial machinery was the state's third largest export, bringing in $1.3 billion last year, followed by chemicals, worth $774 million; transportation equipment, worth $671 million; grain, crops and seeds, worth $452 million; electronic components, worth $406 million; fabricated metal products, worth $313 million; medical or optical products, worth $192 million; textiles, worth $122 million; and all other products, worth $1.5 billion.

The largest gain in sector exports last year was from grains, crops and seeds, up 7 percent, followed by industrial machinery, with a slim 0.5 percent increase. Over the five-year period, however, fabricated metal products showed a 309 percent gain, followed by tobacco, with a 73.1 percent gain, and transportation equipment, with a 62.2 percent gain.

Continued growth in Virginia's tobacco and coal exports, which represent 56.9 percent and 40.5 percent of all U.S. exports of these products, respectively, means greater competition with other U.S. states. But growth in the state's 30 next most valuable export products means increasing Virginia's share of the U.S. total exports from a typical 1 percent or 2 percent Virginia share.

Thus products like medical equipment, computer equipment, telecommunications equipment and transportation equipment represent strong potential for increased Virginia export volumes. Further, by increasing the focus on less traditional markets both to Virginia and the United States as a whole, these products are expected to show strong growth over the next five years, state officials said.

It is notable, Mr. Forbes said, that the economic impact of export growth in Virginia promises to increase relative to the increase in more non- traditional exports. Since tobacco and coal lead state exports, the number of jobs tied to these low-value-added products is lower at 13,000 per billion

dollars of exports than the U.S. average of 19,100 jobs per billion dollars of exports.

Overall, some 1,633 Virginia companies were counted as exporters in 1987, the most recent year for which data is available. But an extrapolation of export value growth in the state since then suggests that some 2,200 companies now may be exporting.

Mr. Forbes also noted that Virginia exports of services likely would add 25 percent to 33 percent more value - or about $2.5 billion to $3.3 billion - and jobs to the states cumulative export activity.