By: Lam Thuy Vo
Via: NPR Planet Money

Source: Bureau of Economic Analysis
Credit: Lam Thuy Vo/NPR

The U.S. sells over $1 trillion worth of goods to the world every year. We also export hundreds of billions of dollars worth of services — legal and financial advice, plane tickets, etc.

After we ran the chart above earlier this year, one category in particular piqued our interest: Royalties and licensing. That category is, essentially, ideas America sells to the world.

In 2010, the most recent year for which data are available, the world paid U.S. companies $105.6 billion to use our ideas. This is why companies that rely on royalties and licensing — Microsoft, say, or Disney — are always making such a big deal about piracy and intellectual property. Here’s a closer look.

Source: Bureau of Economic Analysis
Credit: Lam Thuy Vo/NPR

Most of this is pretty self-explanatory. Software, not surprisingly, is huge. The one big jargony category is “industrial processes.” This includes patents on drugs (a big one), as well as on particular ways to make everything from chemicals to cars.

For detailed data on U.S. royalty and licensing exports to countries around the world, see this Excel spredsheet from the Bureau of Economic Analysis.

By: Diane Cardwell
Via: The New York Times

Marc Steiner for The New York Times
A Roof Diagnostics crew installing panels in Holmdel, N.J. Creative financing has set off a boom in solar installations.

HOLMDEL, N.J. — Jay Nuzzi, a New Jersey state trooper, had put off installing solar panels on his home here for years, deterred by the $70,000 it could cost. Then on a trip to Home Depot, he stumbled across a booth for Roof Diagnostics, which offered him a solar system at a price he couldn’t refuse: free.

Mr. Nuzzi had to sign a 20-year contract to buy electricity generated by the roof panels, which he would not own. But the rates were well below what he was paying to the local utility. “It’s no cost to the homeowner — how do you turn it down?” Mr. Nuzzi said on a recent overcast morning as a crew attached 41 shiny black modules to his roof. “It was a no-brainer.”

Similar deals are being struck with tens of thousands of homeowners and businesses across the country. Installers, often working through big-box chains like Home Depot or Lowe’s, are taking advantage of hefty tax breaks, creative financing techniques and a glut of cheap, Chinese-made panels to make solar power accessible to the mass market for the first time. The number of residential and commercial installations more than doubled over the last two years to 213,957, according to Greentech Media, a research firm.

Major players in the installation business, like SolarCity, Sunrun and Sungevity, are thriving even as the other side of the industry — solar module makers — has been squeezed to the breaking point by fierce competition from Chinese manufacturers. In a case to be decided later this month, a coalition of solar manufacturers has asked the United States government to impose steep duties on the imports, arguing that the Chinese companies are violating international trade rules.

“You hear a lot of the gloom and doom about the industry and, you know, ‘The manufacturers are losing jobs, they’re shutting down,’ but if you look at where the actual money is in these systems and where the jobs are, it’s really in the installation,” said Lynn Jurich, Sunrun’s president.

Big corporations like Google, U.S. Bancorp, Morgan Stanley and Bank of America Merrill Lynch see the potential for steady profits in rooftop solar projects and have been supplying the capital to help cover the upfront costs, which typically run $30,000 or more for a single-family home. The investors say they believe the returns, generally 7 to 13 percent, are relatively safe because the solar providers generally sign up only homeowners and businesses with solid credit. In addition, installers say that people tend to pay their electric bills even when facing other financial problems.

“We have customers that are foreclosed,” said Lyndon Rive, chief executive of SolarCity, one of the largest installers. “They’re still paying their electric bill so they still pay us.”

The company has raised more than $1.4 billion to finance its projects and is so confident in its future that it is planning an initial public offering of its stock. The company has declined to comment on the stock offering.

Industry executives even predict that solar leases could one day be bundled and sold as securities like mortgages and other loans.

Some analysts caution that despite all the activity, the sector still faces hurdles, like the high costs of bringing in new customers and getting financing. “It’s not clear to me that anyone yet has cracked the code of scaling the business massively,” said Dickon Pinner, co-author of a recent McKinsey report on the industry.

Solar customers can finance their systems in a variety of ways. Businesses often purchase them outright so that they can reap the savings and take advantage of tax incentives and depreciation.

But homeowners are increasingly choosing to avoid the upfront costs. In California, the country’s largest market, more than 70 percent of residential customers putting in solar this year have opted to sign a lease or power purchase agreement with someone else owning the systems, according to PV Solar Report.

The structure of the deals varies by company and state, but the overall approach is generally the same: Customers agree to pay a fixed monthly charge or rate for all the solar power produced, and the companies that finance the systems pay for the installation and take the value of any tax breaks or renewable energy credits for which the customer would ordinarily be eligible. Some companies concentrate on financing and use local contractors for sales and installation, while others do everything themselves.

Through such arrangements, industry executives say, customers can lower their power bills, escape the uncertainty of fluctuating energy costs, and avoid the complex bureaucracy of federal and local credits, rebates, grants and tax breaks.

Marc Steiner for The New York Times
The co-founder of Roof Diagnostics, Kelcy Pegler Jr., started a solar division at his father’s roofing company four years ago.

However, the approach does not work everywhere. Thus far, installation companies have been most active in states where the price of electricity from the utility is high and there are robust incentives, like California, Hawaii and much of the Northeast.

And the transactions are not without risks for both sides. If the systems do not produce the promised electricity, the agreements often require the companies to reimburse customers for what they have to buy from their utility instead. Customers are committed to a long-term contract, raising complications if they sell the house or want to get out of the deal.

Another concern is the trade case, brought by a group of manufacturers who say they cannot compete against Chinese companies able to cut their prices below their costs because of unfair subsidies from their government. The Chinese companies aim to monopolize the market and then raise prices, American manufacturers say.

“The game is simply rigged, plain and on its face,” said Ben Santarris, a spokesman for SolarWorld Industries America, which originally filed the trade complaint and makes panels in Oregon.

The Commerce Department has already imposed modest tariffs on Chinese-made silicon cells based on a preliminary finding of improper subsidies. On May 17, the department is scheduled to announce its determination of whether the Chinese companies engaged in dumping, or selling products below fair value, which could lead to steeper duties.

Those on the installation side of the business say that cheap imports benefit consumers, and they have urged the government not to penalize the Chinese manufacturers.

For now, those cheap panels are helping to keep business brisk for installers large and small across the country.

“We have our suppliers calling and dropping their prices on a daily basis to move inventory. That works in our favor,” said Heshy Katz, president of Green Power Developers, an installer in New Jersey. “We can offer our clients an installation at 30, 40 percent less than two years ago.”

Roof Diagnostics hired almost 50 new employees in March and April, said Kelcy Pegler Jr., who started the solar division at his father’s New Jersey-based company about four years ago and has expanded to Massachusetts and New York.

“We turned a roofing company that did solar into a solar company that does roofing in support of solar,” he said. “We’re really a solar company now.”

The city of Temple, Texas, is strategically located along the Interstate 35 corridor between Austin and the Dallas/Fort Worth Metroplex. In addition, it is adjacent to Fort Hood, one of the largest active duty armored posts in the US. In 2011 the Killeen-Temple-Fort Hood MSA was ranked among top five best-performing metro areas in the nation, according to the Milken Institute, which ranks metropolitan areas by how well they are creating and sustaining jobs and economic growth.

The Temple EDC wished to position the city to continue this trend through a better targeted business recruitment program. With this in mind, TIP was hired to define the top five industry categories best suited for Temple, taking into account the community’s and region’s existing assets. Additionally TIP was to provide extensive research on each target, as well as a marketing and implementation plan.

The selection of target sectors is traditionally bound to an assessment of only a few determinant factors, such as access to an available workforce, industrial sites, and incentives. Our target industry recommendations are not based solely on these issues, but also on conversations with the area’s business leaders to better understand potential opportunities and challenges that might not be readily identifiable through secondary data sources alone.

Laborshed Analysis: Employees by Zip Code
Source: TIP Strategies

To define the study area for the target industry analysis, we established the actual laborshed of the City of Temple by collecting employee zip code information from the city’s major employers. We obtained data from 11 employers on 17,958 employees or 10% of the Temple Metropolitan Statistical Area’s (MSA) non-military workforce. Employers represented various sectors including healthcare, distribution, back office, education, and manufacturing.

Using tools such as a laborshed analysis, economic base analysis, location quotients, and a shift-share analysis, a quantitative analysis was conducted to identify potential target industry sectors. The list was then filtered further using specific criteria, including location, growth, size, image, and infrastructure. The resulting list includes both existing industry clusters and aspirational targets. Each industry sector was profiled and specific niches are noted. These niches show the greatest potential for growth, pay higher than average earnings, and are sufficiently large to warrant an investment of TEDC’s resources for business recruitment. In addition, they play to Temple’s strengths and fit with Temple’s site availability.

The TEDC adopted the plan in early 2012. With the tools provided by TIP, the TEDC has augmented its marketing program, enhanced its industry research, and re-focused its business recruitment efforts.

via TMASC
Opportunity grows in the region

New TMASC report in development
On November 19, 2008, Bexar County Economic Development held its inaugural Texas-Mexico Automotive SuperCluster (TMASC) Conference in San Antonio, Texas. Bexar County created TMASC that year to leverage the changing geography of automotive assembly and automotive markets in North America. TMASC would capitalize on changes in the industrial landscape by building upon the region’s numerous global vehicle and heavy equipment manufacturers, hundreds of Tier 1 original equipment suppliers, and world-class innovative assets. This first look at the region was facilitated by an excellent benchmark study conducted by TIP Strategies, Inc.

Late last year we engaged TIP Strategies to take a look at the region again and create an updated report. The finalization of that report is currently underway. Meanwhile, here’s a snapshot of the TMASC region as we saw it three years ago.

TMASC, circa 2008
Heading into 2009, the TMASC region was home to the final assembly plants of nine global manufacturers. These plants employed more than 18,000 workers and were capable of producing almost 900,000 units per year. The region also had over 200 Tier 1 supplier plants, which employed over 133,000 workers.


TMASC, circa 2011
As of the end of last year, the TMASC Region was home to seven automotive assembly plants and parts plants, employing over 17,000 workers and capable of producing over 800,000 units. The region also contained six commercial and military vehicle manufacturing plants.

Over the last few years, TMASC’s scope has broadened to reflect the region’s additional heavy equipment and commercial vehicle manufacturing activity as well. Heavy equipment manufacturers in the region include Caterpillar, John Deere, and Manitou, which together have seven plants in the region. There are also two specialty vehicle manufacturers: Skyline, which manufactures recreational vehicles, and Frazerbilt, which manufactures emergency response vehicles.


Growth hasn’t come in the form of new plants only. In 2010, Toyota invested $100 million to add a Tacoma production line at its plant in San Antonio. Moreover, yesterday GM announced its continued expansion in the region with a new $200 million metal stamping facility at their plant in Arlington. The new operation will create 180 jobs and save GM an estimated $40 million each year is logistics costs.

Regional roll out coming later this quarter
Once the new TMASC report is finalized, we will be sharing it via the TMASC website, as well as through special presentations to selected TMASC partners throughout the region. We look forward to providing an updated vision of the region to our TMASC communities and stakeholders this quarter, and to exploring new collaborations like we did last week with the Capital Area Economic Development District committee of the Capital Area Council of Governments (CAPCOG). To schedule a presentation, please contact us. We are excited about the many opportunities 2012 will give us to increase advanced manufacturing assets and activities in the region.

By: Lam Vo
Via: NPR Planet Money

It’s a myth that the U.S. doesn’t make anything anymore. It’s a myth that we don’t export anything to the rest of the world.

Yes, we import more than we export. Our trade deficit last year was $558 billion

But we export a lot. Last year, U.S. exports were worth $2.1 trillion. Which raises a simple question: $2.1 trillion worth of what?

Mostly goods. Also, services:

Source: Bureau of Economic Analysis

Here’s a closer look at our goods exports in 2011. The two biggest categories — industrial supplies and capital goods — account for about $500 billion a piece.

Source: Bureau of Economic Analysis

Here’s a breakdown of our services exports:

Source: Bureau of Economic Analysis

Royalties and licensing includes money people pay to use American software, and to distribute movies and TV shows. It also includes wonkier stuff, like payments to use patents on industrial processes.

One interesting note about travel: When foreign tourists come to the U.S. and buy stuff, it counts as exports. This makes sense if you think about how the money flows. It’s money coming in from other countries, and being used to buy services produced in the U.S.

So who’s buying all these goods and services? Here’s the top five:

Source: Bureau of Economic Analysis

That Canada and Mexico hold the top spots is a reminder that, even in this globalized world, proximity still matters. (Also: NAFTA.)

And here’s the top goods we’re selling to each of the top five. It’s striking how varied this list is — from soybeans (China) to auto parts (Canada) to gold (U.K.).

Here’s a breakdown of our services exports:

Source: Bureau of Economic Analysis

via The Washington Post

A sliver of China’s foreign investments, totaling more than $68 billion in 2010, came to the United States, a trend the Obama administration hopes to change. Read related article.

Source: China Commerce Ministry. The Washington Post. Published on February 10, 2012, 8:28 p.m.