U.S. foreign trade in materials used in construction

U.S. foreign trade in materials used in construction

C.B. Pitcher

This article presents U.S. export and import data with analysis

for three groupings of construction materials: nonwood, solid wood

products, and mechanical equipment (heating, air conditioning and

refrigeration). The format of the presentation is designed to help

identify trends, export potential for U.S. products, and foreign

competition in U.S. markets.

The data for non-wood products (tables I and 2) are organized by

Standard Industrial Classifications (SIC) industry designations. Data

appearing in the wood and mechanical sections (tables 3, 4 and 5) are

organized and defined in other ways that are more applicable for these

product categories.

Total U.S. exports for the three building product groupings grew

from over $11 billion in 1989 to $17.2 billion in 1996. (See cover

graph.) The export total grew about 4 percent between 1995 and 1996

while imports (not shown on the graph) increased 15 percent. Imports

reached $20.8 billion compared to $18.1 billion in 1995. The U.S.

trade deficit for the total of the three categories rose significantly

reaching about $3.6 billion, over twice the $1.6 billion recorded for

1995.

Many factors influence the U.S. and world markets for materials

used in construction, and many other factors affect the ability of such

goods to flow easily in world markets, The actual and relative levels of

domestic and worldwide construction activity is obviously the main

demand factor for construction services and construction materials,

and a major influence on the flow of such goods between countries.

The cost and availability of funding to pay for the construction and

materials is also key. Of particular importance is the overall economic

performance of a country, its foreign trade (surplus/deficit) situation,

and its relative performance compared to other potential trading

partners.

The major influences on the flow of such goods between countries

are the tariff levels and nontariff barriers. Key nontariff trade barriers

for materials used in construction include standards, building codes,

product approvals, and testing. Finding distributors in some countries

has also been a problem for U.S. firms. Trade agreements regarding

tariffs and nontariff barriers (ie., WTO/GATT), regional agreements

(i.e. EC, NAFTA), and bilateral arrangements have all tended to

increase world trade.

A very positive factor for U.S. made goods is the excellent

reputation that U.S. building products enjoy for superior quality,

endurance, and design. They are often very price competitive in

foreign markets. Our technology frequently offers products and

systems not available from domestic sources in other countries.

World market factors are playing a much greater role in

construction materials today. Although most of the more basic

materials are supplied by local sources many finishing, higher

technology, and more specialized products are now bought and sold in

the international sphere and/or are produced by multinational

companies. The internationalization of the building materials industry

has grown through both exporting and investing. Many U.S. firms

have gone overseas and many foreign firms have invested here. This

internationalization involves the purchasing of companies, plants and

equipment; licensing agreements; and by the formation of joint-ventures.

Many U.S. building material companies have strong

production involvement in other countries, particularly in Canada,

Mexico and Europe. Involvement in Asia, particularly in China, has

increased rapidly. Many U.S. firms have also targeted the developing

regions in Africa and South/Central America.

NON-WOOD PRODUCTS

Overall Trade Patterns

Tables 1 and 2 indicate the very broad range of construction

materials and products included in this category. It should be noted

that factory-built homes and buildings (manufactured homes,

panelized and modular homes, preengineered metal buildings) are

included. Notable among those products not included are paints,

coatings, sealants, caulking and electrical products.

There have been sizable swings in U.S. foreign trade in the

non-wood construction materials. The United States registered its largest

trade surplus in these materials in 1981 when exports were $740

million more than imports of the same products. With imports

generally rising and exports either dropping or rising slowly thereafter,

the situation changed and by 1987 the U.S. experienced a trade deficit

of over $2 billion (tables 1 & 2, and figure 3). By the late 1980’s the

United States construction market was beginning to slip into recession

and both materials demand and imports declined. Also, more U.S.

firms turned to overseas markets. By 1990, the trade deficit was down

to $900 million, and in 1991 and 1992 the U.S. had modest trade

surpluses in the $40 to $50 million range. The U.S. trade situation in

these materials changed again beginning in 1993 with domestic demand

improving, so that imports began to rise faster than exports. The

ensuing deficits in U.S. trade in

these products rose rapidly to $160 million in 1993, to $820 million

in 1994, to $1.37 billion in 1995, and to $1.81 billion in 1996.

[Figure 3 ILLUSTRATION OMITTED]

U.S. Exports

U.S. exports of the nonwood building materials in 1988 were 18

percent less than the peak year of 1981. Between 1989 and 1996,

however, they more than doubled to almost $5 billion (see table 1).

Exports in 1996 were 9.4 percent higher than those in 1995.

The flat glass (architectural and automotive) industry exported

the largest value of product in 1996, the first industry in this grouping

to exceed the billion dollar export mark ($1.1 billion). The next largest

export category was builders’ hardware with about $480 million, down

slightly from its 1995 pace. Other categories with sizable exports

included fabricated structural metals ($469 million), plastic pipe and

fittings ($341 million quarter billion), mineral wool ($253 million), and

prefabricated metal buildings ($233 million). Other materials with an

export volume in excess of $100 million were crushed and broken

stone/sand & gravel, other prefabricated buildings, metal doors (sash

and trim), cast iron pipe and fittings, water heaters, sheet metal work,

and other construction plastics products. Combining the four

plumbing fixtures and fittings codes gives an export total of $191

million.

The SIC industries with the fastest growth in exports over the

1989-96 period were prestressed concrete steel strand, other plastic

construction products, asphalt felts and coatings, prefabricated metal

buildings, concrete products n.e.c., prefab wood buildings, structural

clay products n.e.c., mineral wool, other prefab buildings, solid

plastics floor covering, plastic plumbing fixtures, and plastic pipe and

fittings. It should be noted that the percentage increase for some of

these categories were computed from a small base.

Canada continues as the major customer for U.S. made non-wood

construction materials. In 1996, U.S. exports of these products to

Canada totaled $1.7 billion, 35% of all such U.S. export (Figure 2).

Mexico was second with a 11 percent (compared to 17 percent in

1994). Other than the United Kingdom, all the other major customer

nations were Asian (Japan, China, South Korea, Hong Kong, and

Taiwan). These eight countries accounted for about 68 percent of all

U.S. exports of these products. Table 1 shows the leading export

customers for each of the individual SIC product codes.

[Figure 2 ILLUSTRATION OMITTED]

U.S. Imports

U.S. imports of non-wood building products have generally risen

over the last decade (see table 2). There was a temporary drop-off in

1990 and 1991 during the U.S. construction recession. Between 1981

and 1988 imports rose 194 percent, and from 1989 to 1996 they were

up another 68 percent, in spite of the major declines in the early

1990’s. The 1996 total of almost $6.75 billion was 15 percent greater

than in 1994, the fourth straight year of record levels of imports of

these nonwood building products. The 1996 total was more than

double the level 10 years earlier.

Product classifications with the largest import levels in 1996 were

flat glass, builders’ hardware, ceramic tile, cement, and cut stone

products. The imports of each of these

categories recorded over a half billion dollars. In total the imports of

these five categories was over $3.4 billion or about 50 percent of all

U.S. imports of these nonwood materials. Other major U.S. import

classifications included plumbing fixture fittings, fabricated structural

metals, concrete products n.e.c., other construction plastics products,

vitreous plumbing fixtures, plastic pipe and fittings, misc. metal work,

water heaters, and metal doors (sash & trim).

The product categories with the largest percent increases between

1989 and 1996 were asbestos cement pipe (a product no longer made

in this country), concrete block and brick, mineral wool, concrete

products, n.e.c., architectural and ornamental metal work, hard

surfaced floor coverings, gypsum products, and solid plastics floor

coverings. The percentage increases for several of these categories

were from a small base value.

Canada, Mexico, Italy, Taiwan, China, Japan, Spain, and West

Germany were the leading supplying nations for these products.

These eight countries accounted for 80 percent of total U.S. imports

of these products. Table 2 provides import statistics and lists the

major supplying countries for each of the SIC building product

categories.

SOLID WOOD PRODUCTS

Overall Trade Patterns

The trade gap between imports and exports of wood construction

materials increased significantly in 1996. This was due to an increase

in imports over 1995, lead by softwood lumber. Japan and Canada

remain our first and second largest export markets, respectively. For

imports, Canada and Indonesia remain our largest suppliers, while

Mexico became our third largest supplier of wood construction

materials.

U.S. Exports

Table 3 shows U.S. exports of wood construction materials since

1989. Exports of wood construction materials increased by 18

percent since 1989, and declined 1.0 percent from 1995. The general

increase in overall exports is driven by increases in exports of

value-added products such as panel products, fabricated structural

members, hardwood lumber and hardwood veneer. In fact, in 1996

exports of value-added construction materials (everything except logs,

chips, and poles, piles, and posts) made up 62 percent of exports of

wood construction materials. In 1989, the comparable figure was 46

percent.

Japan remains our largest market for wood construction

materials. Exports of wood construction materials to Japan were

valued at $3.27 billion in 1996. Traditionally, the bulk of these

exports have been in unfinished or semi-finished products, and

value-added products represented only a small percentage of total exports.

However, since 1990, value-added products as a percentage of total

exports to Japan have been increasing. In 1996, value-added exports

represented 32.8 percent of total exports, up from 29.0 percent in

1990. This increase can be attributed to joint efforts of the U.S.

Government and private sector and the Japanese government to open

the Japanese market for construction materials.

Our second largest export market is Canada, which in 1996

imported $1.27 billion in wood construction materials from the

United States. Value-added products make up over 83 percent of

exports to Canada. Germany, South Korea, and the United Kingdom

round out the top five markets for U.S. wooden construction

materials. These five countries account for over 74 percent of all U.S.

exports of wood construction materials.

U.S. Imports

As shown in table 4, in 1996 the value of U.S. imports were up

significantly (17.4 percent) from 1995 levels, reviving a steady

upward trend since 1989. The increase is largely due to an increase in

1996 housing starts, which were up 9 percent from 1995. The product

that makes up the largest portion of imports is softwood lumber,

which constituted 31 percent of all construction materials imports in

1996. Both the value and volume of softwood lumber imports

increased to historic highs in 1996. Volume of imports increased 4.8

percent to 42.4 million cubic meters while the value increased nearly

25 percent to $6.5 billion. These increases are primarily due to the

strong domestic housing market and despite the terms of the U.S.- Canada

Softwood Lumber Agreement.

The largest supplier of softwood lumber remains Canada,

followed distantly by Mexico (up 54.9 percent) and Brazil (up 6.7

percent). Imports from Canada were expected to decrease in 1996 due

to the limit of 14.7 billion board feet on Canadian fee-free exports to

the U.S.

Other construction materials experiencing gains in imports include

softwood logs, hardwood logs, hardwood lumber, millwork, softwood

plywood, oriented strand board, and fabricated structural members.

Overall, Canada is our largest supplier of wood construction

materials, followed by Indonesia and Mexico. Imports from Canada

were up 21.5 percent versus 1995. Indonesia shipped $452 million of

wood construction materials to the United States, down 4.6 percent

from 1995. Imports from Mexico surged 29.4 percent to $393 million.

MECHANICAL PRODUCTS (HEATING/AIR CONDITIONING/REFRIGERATION)

Overall Trade Patterns

This group of products continues to show a major trade surplus

for the United States and long term export growth is expected. At the

same time import levels have been relatively stable, displaying only a

slight upward trend.

Table 5 provides the United States trade surpluses (exports less

imports) in the mechanical products sector over the 1989-96 period.

The surplus was at an all time high of $2.53 billion in 1996. The size

of the annual trade surpluses has risen each year since 1989, with the

1996 level 614 percent higher than it was in 1989. Exports rose in

each of these years, while imports declined in 1990, 1991, and 1995.

The data for this grouping is disaggregated into three categories

(heating equipment, air conditioning & refrigeration, and other). To

help the reader understand the H/AC/R categories better, the

following briefly describes each:

Heating–radiators, non-electric heating appliances, central

heating boilers, furnace burners, mechanical stokers and

grates, air heaters and hot air distributors.

Air Conditioning & Refrigeration–some compressors, air

conditioners (window, wall, central, not year round,

heat/cool, self contained), equipment for water chillers,

condensing units, heat exchangers, centrifugal & absorption

liquid chillers, humidifiers, dehumidifiers, parts.

Other–some compressors, auto air conditioners, freezers

display units, finned heat exchangers, ice making machinery,

drinking water coolers, refrigeration condensing units, dust

collectors, thermostats & other AC/heating control

equipment, parts.

U.S. Exports

Total exports of heating, air conditioning and refrigeration

equipment rose 7.6 percent in 1996 to $5.04 billion. This was 87

percent higher than in 1989. The category covering air conditioning &

refrigeration equipment rose to $3 billion in 1996, the other category

reached $1.7 billion, and heating equipment exports rose to $328

million. The heating equipment category recorded the highest percent

increase between 1989 and 1996, but the base was much smaller for

that category than for the other two.

Canada, Mexico, South Korea, Hong Kong, Saudi Arabia, China,

Japan, and Taiwan were our major customer nations for these

products. They accounted for 62 percent of all U.S. exports of these

products. Other major customer nations were Thailand, United

Kingdom, France, Singapore, and the United Arab Republics.

Supporting U.S. exports of these products are the many U.S.

producers with state-of-the-art products and an international

orientation. In addition to exporting from the United States, some U.S.

firms also produce overseas.

U.S. Imports

Heating, air conditioning and refrigeration imports have tended to

fluctuate over the years. Since 1989 they declined in 1990, 1991, and

in 1995, but rose 8.3 percent between 1995 and 1996 to $2.5 billion.

The total in 1995 was only 10 percent above the 1989 level. In 1996,

the “air conditioning and refrigeration” category of imports was

slightly larger than the “other” category ($1.13 billion compared to

$1.10). The “heating equipment” category totaled only about $328

million.

The major supplier of these products to the United States is

Japan with about 20 percent of the import market. Mexico, Canada,

Brazil, and South Korea were the other major suppliers. These five

countries provided 68 percent of total U.S. imports of such products.

Canada, Mexico, China, West Germany, and Japan were the leading

providers of heating equipment, while the largest for air conditioning

& refrigeration were Mexico, Japan, Canada, Singapore, and South

Korea. Japan, Mexico, Brazil, Canada, and South Korea were the

largest providers of products in the “other” category.

[Figures 1 & 4 ILLUSTRATION OMITTED]

EDITOR’S NOTE: This report is the latest in a series

of analyses of U.S. construction material trade trends.

The previous article on this subject appeared in the

Spring/Summer 1996 issue of Construction Review.

COPYRIGHT 1997 U.S. Department of Commerce

COPYRIGHT 2004 Gale Group