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Annual Report: No. 2 Japan good for Gulfstream, Georgia Pacific

June 15th, 2006

Savannah aircraft maker and Georgia’s biggest paper manufacturer benefit from the trade relationship with Japan.

Two of Georgia’s top corporations – Gulfstream Aerospace and paper-maker Georgia-Pacific – were among the key players involved in the $7.9 billion in trade that the state posted with Japan last year.

Overall, Georgia’s trade with Japan grew 13 percent in 2005, with imports exceeding exports by nearly $4 billion.

Regional jet parts, worth $243 million, led Georgia’s export list. That reflected a 45 percent increase from a year earlier. Gulfstream Aerospace, a wholly owned subsidiary of General Dynamics, is based in Savannah. It has several clients in the Asia-Pacific region.

Georgia’s wood pulp exports to Japan also rose last year, climbing 21 percent to $65 million. Shipments of cellulose, a major component of paper, soared 50 percent to $45.4 million. Georgia is home to one of the world’s biggest paper manufacturing companies, Georgia-Pacific, which merged in December 2005 with Wichita-based Koch Industries.

On the downside, auto exports fell 10 percent to $133 million. BMW produces Z4 roadsters and X4 Sports Activity Vehicles in Spartanburg, S.C., and ships them to Japan through the Brunswick Autoport, the fourth biggest car-handling port on the East Coast.

At the same time, shipments of kaolin clay – used in ceramics, medicine, bricks, paper, toothpaste, cosmetics and even as a food additive – swelled 7 percent to total $132 million, while polyester exports rose even more, by 31 percent, to close the year at $52 million.

But the bilateral trade exchange favored Japan. Top Georgia imports included heavy construction machinery from companies such as Kawasaki, Komatsu and Kobelco. Those imports gained 33 percent when compared to the year earlier to total $834 million.

2005		Value 2005	Change
Rank	Total all commodities	$5,909,872,607	15.60%
1	Self-propelled heavy construction machinery	834,445,702	33.00%
2	Motor vehicle parts	406,755,734	-1.20%
3	Internal combustion engines, including aircraft	359,408,214	10.50%
4	Tractors	200,360,353	-17.60%
5	Parts for arcade, parlor games	162,886,899	333.60%
6	Electric capacitors	148,697,951	8.40%
7	Engine parts	118,488,881	-0.40%
8	Machining centers for working metal	115,507,517	130.30%
9	Heterocyclic chemical compounds	108,957,823	12.40%
10	Pumps for dispensing liquids	96,802,746	61.70%
11	Machinery parts	93,378,599	24.60%
12	Saws, drills and other hand tools	90,529,395	44.40%
13	Internal combustion piston engines, including aircraft	87,138,490	-2.30%
14	Machinery for working rubber and plastic	86,480,355	123.50%
15	Transmission apparatus for cellular phones	82,925,842	107.60%
16	Transmission shafts, bearings, gears	81,324,306	-4.00%
17	Miscellaneous machines, parts	81,320,697	68.00%
18	Rubber tires	78,282,189	28.40%
19	Color TVs, computer monitors	73,253,058	-24.30%
20	Lathes for removing metal	71,636,743	38.20%
21	Motor vehicles for transporting goods	61,088,549	107.90%
22	Computer parts	52,736,233	-2.80%
23	Taps, cocks and valves for pipes, tanks	51,778,414	11.10%
24	Paper, Paperboard	51,688,136	2.20%
25	Medical instruments for surgeons, dentists, vets	51,454,644	-8.60%

Auto parts, largely to supply the 28 Japanese auto plants and parts distributors in the United States, were the second leading import. In 2005, $407 million-worth of auto parts entered the United States through ports and airports in Georgia. That was a 1 percent drop compared to 2004.

Georgia also imported $359 million-worth of engines, including aircraft engines, up 11 percent from 2004, and $200 million in Japanese tractors, down almost 18 percent from 2004. Georgia also saw a boost in video arcade games. Those imports grew 333 percent to total $163 million.

In December 1975, the Southeast U.S.-Japan Association (SEUS) was created to stimulate trade and investment between Japan and seven states: Georgia, Alabama, Florida, North Carolina, South Carolina, Tennessee and Virginia. Georgia’s then-governor, George Busbee, was a key supporter of the SEUS, which was set up to highlight the benefits of commercial ties at a time when Japanese investments in real estate, including the landmark IBM tower in Atlanta, had sparked criticism.

Now Georgia has a parts-making plant that supplies a Toyota engine facility in Alabama and a Suzuki Motor Co. facility assembles all-terrain vehicles. Honda plans to open an automatic transmissions plant in Tallapoosa. Toyota Industries has an air conditioner compressor plant near Athens.

Fuji Vegetable Oil has a factory in Savannah, and Yamaha has a plant in Newnan, just 30 miles South of Hartsfield International Airport.

Despite the trade deficit, Georgia companies are increasingly exporting services to Japan, according to Larry Barnett, assistant director of business development for the Japan External Trade Organization (JETRO). He said the area of health-care services, in particular, is growing as the Japanese population ages.

Aflac, with global headquarters in Columbus, Ga., is investing heavily in Japan, where it is currently the most profitable foreign insurer.