It’s a perfect time to invest in market capacity

Last updated on May 3rd, 2022 at 07:12 pm

As the economic and political situations seem to become more uncertain, Wisconsin companies are wondering about the near-term outlook.

The good news

According to the Wisconsin Economic Development Corporation, Wisconsin’s exports grew by 7.9 percent through the second quarter of 2012 compared with 2011, with increases in exports of industrial machinery, agricultural products, vehicles and medical and scientific instruments. Wisconsin exports totaled $11.7 billion in the second quarter of 2012, which comes on top of the 11.4 percent rise in 2011.

“Exports of Wisconsin’s industrial machinery and transportation vehicles like firefighting equipment, concrete mixers and tractor parts showed some of the biggest gains in the second quarter of the year…While exports to top exporting countries of Canada, Mexico and China increased, we also saw strong growth in India, Russia, Australia and Japan,” said Paul Jadin, outgoing CEO and secretary of the WEDC.

Medical and scientific instrument exports increased 6 percent in the first half of the year, with Japan, China and Canada the top markets for medical/surgical/dental instruments, magnetic resonance imaging devices and ultrasonic scanning apparatuses.

Industrial machinery exports, the top product Wisconsin exports, increased 13 percent, driven heavily by exports of parts for ship derricks, mobile lifting cranes and trucks with cranes. Over one quarter of the state’s industrial machinery exports go to Canada.

Transportation equipment exports continued to show significant increases, up 36 percent through the first half of the year, with increases in exports of firefighting equipment, concrete mixers and trailers and semi-trailers. Canada, Mexico and Australia were the top three markets for these products. If your business is planning to invest in new machinery or equipment, you may need heavy equipment transportation services to move these equipment to your facility or business site.

Wisconsin exported $1.5 billion of agricultural products to over 132 countries in the first half of 2012, an increase of 5 percent during the first six months of 2011. Overall, agricultural exports from the United States during this period totaled $77 billion, a decrease of four percent over the first half of 2011. Wisconsin exports of dairy-related products, including cheese, milk, whey and butter, increased 27 percent during the first six months of 2012. The most valuable agricultural export categories for Wisconsin in the first half of 2012 include: beverages (ethanol), miscellaneous food products, dairy-related goods, raw furskins and baking-related ingredients.

The top five markets for Wisconsin agricultural products are: Canada, Mexico, China, Korea and Japan.

Japan and Australia rounded out the top five export destinations after Canada, Mexico and China. Notable was that Wisconsin exports to Japan increased 23.6 percent and Australia increased 48.9 percent in the second quarter compared to last year.

The bad news

In terms of China, Wisconsin’s third-largest export destination, overall growth was only 3 percent.

Electrical machinery exports were down 8 percent in the first half of the year, to Mexico, China and Japan, but higher to Canada. Electrical machinery exports include electrical transformers, telecommunications equipment and arc welding and electric lasers for metal fabricating.

Focus on China

According to’s review of the data put out by the National Bureau of Statistics of China, China’s exports grew less than expected in August, while imports declined unexpectedly, indicating weak private consumption in the economy, according to the latest figures from the General Administration of Customs.

China’s exports rose 2.7 percent year-over-year in August to $177.97 billion, slightly weaker than expected. However, the rate of growth improved from 1 percent recorded in July. Meanwhile, imports fell 2.6 percent year-over-year to $151.79 billion against anticipations on the contrary. The outcome was in contrast to July’s 4.7 percent growth.

The trade balance for China showed a surplus of $26.66 billion compared to expectations for a surplus of $19.5 billion. In July, the trade surplus was $25.1 billion.

China’s trade with the European Union, its largest trade partner, dropped 1.9 percent year over year in the January-August period to $365.05 billion, figures show.

During the period, trade with Japan dipped 1.4 percent from a year earlier to $218.7 billion.

Meanwhile, trade with the United States, China’s second-largest trade partner, climbed 9.6 percent year over year to $312.97 billion in the first eight months, according to the GAC.

From China’s perspective, slowing exports and imports seem to be due to weakening internal demand and stagnant demand from developed countries.

So what does this mean for Wisconsin’s companies?

Global natural disasters will push demand and prices for agricultural products across the board. Imports from China and other emerging nations will remain high as consumers and companies look for low-cost alternatives. Industrial products and heavy machinery will continue to decline, as commodity prices remain low and production capacity high.

Mining suppliers and steel companies in China and worldwide have been experiencing sharp slowdowns. Expect more consolidations in the heavy machinery industry. The recent acquisition of Bucyrus International Inc. by Caterpillar Inc. leaves Joy Global Inc. of Milwaukee as an open target for acquisition.

Global unrest in the Middle East, Africa and Asia will push defense-related industries like Oshkosh Corp. Specifically, in terms of China, a failure by our preoccupied leaders to accurately judge China’s rising nationalism could result in an armed confrontation. This would add a stiff tail wind to the world’s already fragile economy.

The other side of this coin is that U.S. companies will have a leg up on their Japanese competitors for quite a while, assuming we do not get heavily involved, otherwise the advantage will go to the Europeans.

But, as they say, in the midst of confusion lies opportunity. Wisconsin companies should be looking to buy market and capacity as the economic cycle remains in the trough. Those that do so now will be poised for success latter. Keep a flexible sales strategy and be ready to sell to or through European companies, if international issues heat up.

Remember, quantitative easing is just another term for inflation. It could help U.S. exports as the dollar drifts lower and decrease the real value of fixed interest debt. Keep in mind, low-cost/tech will continue to be the domain of emerging economies and that your strategy should focus on products and services where you have a protectable edge.

Einar Tangen, formerly from Milwaukee, now lives and works in Beijing, China. He is an adviser to Heilongjiang Province, Hebei Province QEDTZ,, China International Publishing Group, Beijing Baotong and DGI DESIGN. He is also a weekly public affairs commentator for CCTV News’ Dialogue and the author of “The Kunshan Way,” an economic development history of China’s leading county level city. While in Milwaukee, he was a partner at Jackson, Morgan and Tangen, president of E-Tech and a senior vice president at Stifel Nicolaus. He chaired various boards in Milwaukee and was a member of the Federal Home Loan Bank of Chicago. Readers who would like to submit questions or suggest areas of interest can send an e-mail to

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