As dollar weakens, exports strengthen

Its name suggests a company that makes tubs, faucets or tile. Instead, Cyril Bath Co. in Union County represents a Carolinas exports boom.

While the weak dollar has helped drive oil prices to historic highs and curbed overseas vacations, it also has boosted exports, with almost $40 billion in goods heading from the Carolinas to other countries last year, according to U.S. Department of Commerce data.

That's an increase of almost 64 percent in the past five years.

In a football-field-sized building near the Monroe Airport, Cyril Bath makes machines that make parts for aircraft fuselages and frames.

The 80-year-old company has a sister company in France, but more and more European customers are placing orders here, where they get a discount by spending euros to buy products priced in dollars, said Michael Zimmer, the company's president.

As a result, Zimmer said, annual sales are up from about $40 million five years ago to $70 million. Cyril Bath's biggest contracts are with Airbus and Boeing, he said, both of which use machines and parts in foreign plants to build the newest widebody jets.

“That alone,” Zimmer said, “has the potential to increase our exports by 100 percent.”

Products made in the Carolinas now go to more than 200 countries, from nearly $9 billion in goods to Canada last year to less than $3,000 to the Solomon Islands.

Exporters range from operations with a few employees – such as Caromex International of Fort Mill, S.C., which makes waxes and chemicals for use in candles and other products – to Fortune 500 corporations such as Charlotte-based steelmaker Nucor. Another big company, Merck & Co., announced last week it will again expand its Durham plant, investing $300 million and adding up to 180 jobs as it makes vaccines for sale worldwide.

Earlier this year, BMW announced a major expansion in South Carolina. The German automaker originally built its Spartanburg County plant to serve the North American market but now makes vehicles for sale in other countries.

As foreign investment in South Carolina has grown, N.C. officials also have chased business from other countries, said Alan Shao, a marketing and global business professor at UNC Charlotte and past president of the N.C. World Trade Association.

Trade missions sometimes draw criticism because they use taxpayer money, but Shao said “promotion eventually pays off.”

In addition, Carolinas' companies have become more interested in foreign markets. Shao said executives often ask him about doing business abroad, and “there seems to be a seminar every week.”

Les Hudson, a business strategy professor at Queens University of Charlotte, said that's a contrast from when he led a textile company in the 1980s, and exports were an afterthought.

“We would always try to ship something that we couldn't sell here,” he said.

The good, the bad

Carolinas exports increased nearly 15 percent last year, outpacing the national rate of 12 percent. Meanwhile, the value of the dollar against the euro has continued to plunge. As recently as late 2003, a dollar was almost equal to a euro. Now the dollar is worth less than 0.65 euro.

Some N.C. and S.C. industries haven't been part of the exports wave; apparel and textile mill products have seen a decline in value this decade. But many other sectors are seeing annual increases in goods shipped abroad.

In Charlotte, Polypore International's Celgard unit is one of only three companies in the world that make separators for lithium-ion batteries, which are used in devices ranging from laptops to power tools to hybrid vehicles.

Sales have increased from $65 million in 2005 to $88 million last year, and more than 80 percent of separators go to Asia, said Lynn Amos, Polypore's chief financial officer.

Shipping costs aren't a problem, Amos said, because the separators are high value and lightweight. Polypore bought another plant in South Korea recently, but also announced an $18 million expansion in Charlotte that will add about 25 jobs to its work force of roughly 350.

“We're not moving anything from here to there,” Amos said of the South Korea acquisition.

Growth in exports doesn't always lead directly to rapid job growth.

Because of inflation, the value of exports should rise each year, said Clarke Thompson, manager of the international department at the S.C. Department of Commerce.

Also, manufacturers – especially foreign-owned companies – constantly push for more efficiency and productivity, he said. That can curb new hiring, although wages and benefits may be higher.

In other cases, however, increased production can spur job growth, including at other companies.

SC Solar in Lancaster, S.C., makes solar-powered lighting, heating and other systems, with sales in Europe, Asia and Latin America. Sales growth has helped other industries, company officials said, because SC Solar – with only a handful of employees – often subcontracts wiring, shipping and other work.

Growing companies also can spur activity in the service sector, with banks, stores and other local businesses adding staff, Thompson said. “You have a potential to create another tier of jobs,” he said.

Exporting to China

While Canada remains the top destination for Carolinas exports, China – the world's largest country by population – is climbing the list fast.

Last year, the value of N.C. exports to China was eight times more than in 1999, while the value of S.C. exports was more than four times higher. China is now the No. 3 market for N.C. exports – up from No. 21 in 1999 – and the No. 5 market for S.C. exports, up from No. 17.

How long that traffic will stay strong is unclear, especially if more companies decide to build new plants in China. That construction already is happening, Shao said, and it could curtail some shipping from the U.S.

But many Chinese households have a lot of disposable income, Shao said, and place a premium on U.S. goods.

“There's plenty of money to go around,” he said, “and they want quality products.”

Back in Union County, Zimmer said Cyril Bath sees only export growth on the horizon. Besides Europe, he said, orders are coming from China, India and Japan. Once only 25 percent of sales, exports are now about 50 percent and likely will be 75 percent within a few years, Zimmer said.

Although Cyril Bath has 150 employees now, he said, “we can see that doubling.”

Jefferson George: 704-358-5071