Understanding Our Export Economy
During 2015, regional business, civic, and government leaders launched the Greater Philadelphia Export Initiative with an in-depth market assessment of Greater Philadelphia’s export economy, its strengths and weaknesses, and opportunities for growth. The assessment drew upon extensive data analysis, a survey of area firms, and interviews with exporting companies and economic development experts.
The market assessment was conducted by the Economy League of Greater Philadelphia with assistance from Drexel University’s LeBow College of Business and the World Trade Center of Greater Philadelphia and with oversight from the Greater Philadelphia Export Plan Steering Committee. This comprehensive analysis yielded the following key findings that helped guide the development of this export plan.
With goods and services exports generating $31.7 billion in revenues for Greater Philadelphia firms in 2014, the region ranks as the 10th largest export economy in the U.S. The region’s top five industries by export value are chemical manufacturing ($4.7 billion), followed by financial services ($3.9 billion), travel and tourism ($2.9 billion), the technology sector ($2.1 billion), and transportation equipment ($1.9 billion). The diversity of Greater Philadelphia’s export economy mirrors the diversity of its overall economy, helping to protect against global economic shocks and decline in particular sectors.
Over the past decade, exports in Greater Philadelphia have grown almost three times as fast as the region’s economy, with an annual export growth rate of 2.5% compared to annual gross metropolitan product growth of 0.9%. This stronger relative performance points to the importance of exports in shoring up economic growth for our region. However, even with this steady increase in export activity over the past decade, Greater Philadelphia has not kept pace
with other metros, ranking 82nd out of the 100 largest regions and last out of the 10 largest for annual export growth since 2003.
GREATER PHILADELPHIA EXPORT VALUE (2003-2014)
While Greater Philadelphia has, like other major metros, experienced a decades-long decline in manufacturing employment, the region maintains specialized manufacturing strengths. Analysis of recent export performance and trends reveals that several established or emerging specialized manufacturing industries in Greater Philadelphia appear well-positioned for increased export activity. Export industries showing promise for growth include precision instruments (analytical instruments, medical devices, environmental controls, navigational and measuring instruments); aircraft products and parts; communications and electrical equipment; and medical equipment and supplies. The region’s export growth potential with respect to health care-related manufacturing across pharmaceutical, medical devices, and medical supplies is notable alongside the region’s health services strengths.
GREATER PHILADELPHIA'S LARGEST EXPORT INDUSTRIES (2014)
The total value of services exported from Greater Philadelphia surpassed that of goods exported from the region for the first time in 2013. This continues
a dramatic trend over the past decade that has seen flat overall numbers for manufacturing exports, reflective of both growth and decline across
particular manufacturing industries, alongside a near doubling in services exports from $8.6 billion to $16.4 billion. Three services sectors rank among
both the top 10 in export value as well as among the 10 fastest growing between 2008 and 2014 for Greater Philadelphia—financial services ($3.9
billion, 7.3% annual export growth), the technology sector ($2.1 billion, 7.0%), and management and legal services ($1.2 billion, 2.7%).
An array of services sectors in the region display strong export growth potential, including R&D services, education, health care, telecommunications, legal, management and consulting, software/IT, computer services, advertising, and architectural and engineering services. While Greater Philadelphia has seen employment and export growth across these industries, several—such as computer services and management and consulting—have been growing
at a slower rate and are at risk of losing ground to competitor metros if stronger connections are not made to promising foreign markets.
GREATER PHILADELPHIA'S FASTEST-GROWING EXPORT INDUSTRIES (2008-2014)
Small- and medium-sized enterprises (SMEs), defined as those with fewer than 500 employees, are a major driver of the Philadelphia region’s
diverse economy, accounting for 97 percent of all businesses in Greater Philadelphia and almost half of the region’s employment base. Both survey results and interviews with leaders of these companies indicate that many are unaware of their export potential. There is also a widespread lack of awareness among area SMEs of support organizations and services at their disposal to assist with export strategy and counseling, though firms that have worked with local export service providers report very high satisfaction. Local economic development and trade experts indicate that more proactive and
coordinated outreach will be needed to engage SMEs that currently do not export but are in a position to grow by going global.
The quality and range of export assistance provided to firms in the region is strong. Leading export support and business development players include public agencies such as the U.S. Commercial Service, U.S. Small Business Administration, Pennsylvania Office of International Business Development, New Jersey and Delaware Departments of State, and local economic development agencies, as well as nonprofits including the World Trade Centers of Greater Philadelphia and Delaware, DVIRC, and small business development centers, among many others.
However, market assessment interviews indicated that export service providers and economic development organizations could generate greater impact by collectively developing a more seamless set of information and services. Although there is cooperation among top service providers, it remains informal and opportunities exist to address gaps in service provision and better leverage and scale successful efforts. Such an approach is all the more important in light of constrained regional resources to support export growth.