Recently a
report came out by HSBC bank outlining how Midwest companies who participate in
international trade fair against those companies that do not. The findings were
not surprising knowing that companies who trade often reap many benefits. The
study showed that companies in the Midwest that traded saw an average of 6
percent higher profit margins than companies that did not trade. Companies that
traded in the Midwest also had an almost 1 percent higher profit margin than
national companies that traded. These results were true against all sectors of
trade including; health care, consumer goods, industrials and information and
communication technologies. Most surprising though was how these
internationalized companies faired during the great recession. During this time
internationalized companies never saw there profit margins dip below 7%, where
as domestic companies were averaging negative profit margins right before the
end of the recession. In 2012 Iowa alone raised over 12 million in GDP through
exported goods.
This isn’t
a surprising result. We know companies trade for a magnitude of reasons
including new markets, different production methods and to reduce costs. With
these reduced costs and specialization methods companies are able to keep profit
margins higher. This is especially apparent that companies who traded were able
to weather the recession storm better than domestic companies.
It does not surprise me the Midwestern companies who trade internationally are doing better profitably than companies who do not. It would be interesting to see the profit margins of the Midwestern companies that offshore labor compared with domesticated labor. It does surprise me, however, that the Midwest is trading internationally at this magnitude. Even though transportation has been much easier for many years but since there is only one waterway surrounding Iowa and only few rivers around the Midwest, I would think the eastern or western sides of the country would contribute more to GDP. They have better, possibly cheaper transportation costs than the Midwest. It may be irrelevant but I predict the international trading firms on the coasts would contribute more to GDP and have higher profit margins.
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