U.S. foreign trade in materials used in construction

Construction Review, Fall, 1997 by C.B. Pitcher, Chris Twarok

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.