http://www.tradealert.org/view_art_print.asp?Prod_ID=661
Market Share Nosedive for U.S. Industries By Alan Tonelson Friday, October 11, 2002
OK, so you don't care about the trade deficit. Maybe you buy the argument, most recently made by Undersecretary of the Treasury John Taylor, that it's a sign of America's economic strength, of our longstanding ability to grow faster than our trading partners. Maybe you're impressed by the growth of the U.S. economy and its manufacturing sector during the 1990s, when both boomed even as trade deficits skyrocketed. And maybe you think that the dollar's role as anchor of the world economy will let us run ever higher deficits forever.
But here's another measure of America's trade performance that should make even you worry - the rising import penetration rates, and consequently the declining domestic market shares, of most American industries throughout the boom.
Trade deficits amount to living beyond our national means, and Americans lately have become so ambivalent about their own high indebtedness that it's no surprise to see ambivalence about the nation's red ink. But market share is much less controversial. Unlike borrowing heavily, which can and often does lead to economic success if the borrowed money is used wisely, losing market share has no present or potential upside.
Companies losing market share to competitors are never favorably regarded. Their stock prices never go up for long. Their futures are never rosy. In fact, they may not be long for this world. The same goes for a nation's industries.
U.S. government statistics on market share don't get nearly as much attention as the trade deficit numbers. They're not even kept as such. Market share figures have to be derived from Commerce Department data on industry shipments and on imports, and unfortunately, the former are not nearly as up to date as the latter (which themselves are always three months behind). But the market share figures through 2000 can be calculated, and the picture is devastating.
From 1997 to 2000, virtually no American industries gained domestic market share from foreign competitors. Indeed, most lost big time. Take the U.S. auto industry, which lobbied hard for 1990s trade agreements like NAFTA, the creation of the World Trade Organization, and normal trade with China. From 1997 to 2000 alone, the auto industry's domestic market share sank from 55 percent to just under 47 percent. For the U.S. steel industry, a major headline maker this year, the comparable numbers went from 80.3 percent to 77.4 percent.
Of course, steel and autos are widely seen, especially by globalization extremists, as losers, smokestack industries from which advanced countries like the United States should be delighted to exit in favor of high tech manufacturing and services. But is the situation any better in these latter areas? Generally, no.
For example, the United States is still a powerhouse in civilian aircraft. But in the brief 1997-2000 period, foreign market share in aircraft nearly doubled to just under 16 percent. In the broad computer and electronics products category, import market share rose from an already high 39.4 percent in 1997 to 48.9 percent in 2000. And this was before the big tech meltdown.
Within this sector, some successes were registered - principally in computer storage. And semiconductors and printed circuit boards just about held their own. But big losers included printed circuit assemblies, electro-medical devices, industrial process controls, and communications equipment.
Technology industries in other sectors fared no better. Import penetration rates rose from 19 percent to 24.9 percent in relays and industrial controls, from 12.5 percent to 16.3 percent in switchgear and boards, from 13.2 percent to 19.4 percent in pharmaceuticals and medicines, and from 36.9 percent to 53 percent in optical instruments and lenses.
Indeed, in the broad electrical equipment category, foreign market share jumped from 18.7 percent to 25.7 percent in the 1997-2000 period. And comparable losses were registered in the less glamorous but equally important machinery, chemicals, and paper sectors.
American industries also export, so the U.S. market is not the sole theater in which they compete. But it is the most important. After all, the United States is not only the world's biggest single national market, it's the toughest and the most sophisticated. Moreover, the U.S. market should be the market that U.S. industries know best. If they can't win here, it's hard to see them prevailing anywhere over time.
Although market share-loss would seem to be spin-proof, that doesn't mean efforts won't be made to put a favorable gloss on it. Imagine how much better off our economy would be, however, if the globalization cheerleaders instead devoted their considerable talents and resources to fixing its real problems.
---------------------------------------------------------------------------- ---- (c)Copyright 2001-2002 TradeAlert.org, USBICEF