Dollar's fall gives a boost to state's exporters

The tumbling international value of the U.S. dollar contributed to a bright spot for the struggling Minnesota economy in the last three months of 2007. State-manufactured exports surged 14.5 percent, faster than the 12.5 percent national gain in the fourth quarter.

In effect, foreign buyers found anything made in Minnesota and the rest of the nation on sale, with relative prices continuing to fall. Exports also gained from rising incomes in developing nations, including one of Minnesota's major trading partners, Mexico.

Over the period, the trade-weighted value of the U.S. dollar against the currencies of its top 10 trading partners dropped 7.5 percent. The dollar fell almost twice as fast against the Canadian dollar. Against the Mexican peso, the dollar held relatively firm.

Overall, Minnesota exported nearly $4.3 billion in manufactured goods in the last three months of 2007.

As presidential candidates debate the pros and cons of NAFTA, Minnesota exports to Mexico vaulted 40.5 percent and those to Canada climbed nearly 33 percent over October, November and December, according to a report by the Minnesota Department of Employment and Economic Development (DEED).

The exports gains have not translated into jobs across Minnesota, however. The state's manufacturing sector has been languishing over the last six years.

"We're producing more than ever with fewer and fewer people," said Bob Isaacson, director of DEED's communication analysis and research division. "That's one of the challenges of manufacturing," he said.

Said DEED's Kyle Uphoff: "Where we're not seeing the strong job growth you might expect is with increase of exports."

"Everybody is doing things differently than they did 10 years ago," said Uphoff, the agency's regional analysis and research manager.

A quirk that won't last much longer also contributed to a strong report on Minnesota exports.

Since 2004, the Ford Ranger has been made at only one plant in the nation: St. Paul. The truck is a hot seller in Canada. But the St. Paul plant is set to close next year.

Sales to Mexico were aided by an upswing in demand for Minnesota's prepared foods.

"So much of what we see in Mexico is that at higher income levels they can afford to import products made in Minnesota," Isaacson said.

Food (up 43 percent), chemicals (up 30 percent) and electrical equipment (up 18 percent) were among the other industries leading growth in Minnesota manufactured exports in the fourth quarter 2007 compared with the same period in 2006.

From fourth quarter 2002 to the last three months of 2007, the share of Minnesota exports in North America to customers in Canada and Mexico has remained relatively stable.

At last count, Canada accounted for 87 percent of Minnesota's North American exports -- compared with 65 percent for all U.S. manufacturers, according to an analysis by Thu-mai Ho-kim, DEED economic analyst.

Mexico, she found, claimed 13 percent of Minnesota's North American exports, while the comparable share of U.S. manufactured goods sales to Mexico was 35 percent.

Mike Meyers • 612-673-1746