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Annual Report: No. 9 Australia- Capturing the Aussie market

July 1st, 2006

Georgia has honed a tight relationship with Australia, one that creates jobs on both sides of the globe.

The Savannah Customs District handles more cargo to and from Australia than any other spot in the country except Los Angeles. And that trade is expected to grow even more thanks to the Australia-U.S. Free Trade Agreement that took effect in January 2005.

During the first year of the pact, trade between Georgia and Australia gained more than 11 percent, ending 2005 at $2.2 billion.

The free trade agreement removes or reduces tariffs on 5,490 products exchanged by the United States and Australia, ranging from automotive parts to cut flowers. However, the industry in Georgia that has benefited the most, according to Australia’s consul general and trade commissioner in Atlanta, is manufacturing.

Amanda Hodges said the pact, known as AUSFTA, eliminated 99 percent of the tariffs that Australia placed on U.S. manufactured goods. That gives Georgia exporters an average 5 percent price advantage when doing business in Australia.

According to Austrade, the Australian trade office, there are 25 Australian companies with offices in Georgia. They employ 3,000 workers and nearly three-quarters of the jobs are manufacturing related.

At the same time, Georgia is among 31 states signing onto the government procurement provisions of the AUSFTA. That permits Australian service providers to compete for state and local government contracts. The biggest interest is in procurement services and services to agribusiness industries.

In 2005, more than 86 percent of the trade flows came in the form of shipments from Georgia. Georgia sent $1.9 billion in exports to Australia, up nearly 13 percent from a year earlier. According to Austrade, exports to Australia directly support 1,300 jobs in Georgia.

Cargo vehicles were the top of the export roster as Georgia shipped $403 million-worth in 2005, a jump of nearly 13 percent compared with a year earlier.

One of those exporters was BMW Manufacturing, which has a plant in Spartanburg, S.C. Z3 Roadsters and sport utility vehicles produced at that facility are shipped to Brisbane, Fremantle, Melbourne and Sydney. In 2005, BMW Manufacturing sent 3,500 vehicles to Australia.

However, unlike freight trucks, exports of passenger vehicles decreased last year, falling to $186 million. In 2004, they were $203 million.

Tractors, another major export to Australia, stayed nearly flat at $106 million.

But a big jump was seen in exports of power boats and yachts. They climbed 69 percent to end the year at nearly $102 million.

A traditional product headed the list of Georgia imports from Australia. Wine imports saw a 34 percent jump to close the year at nearly $42 million. So important are wine imports in Georgia, in fact, that the Austrade office in Atlanta specializes in wine imports and hosts wine-tasting events and importer-distributor meetings across the United States.

The Australian wine label Yellow Tail ranks among the best-selling brands of wine in the United States. In 2000, just 112,000 cases of Yellow Tail were sold in the United States. In 2005, that number had reached 7.5 million.

Motor vehicle parts turned up as the second most important import, increasing 31 percent in value last year when compared to 2004. Georgia imports those auto parts from GM Holden, a General Motors subsidiary in Adelaide that manufactures the Pontiac GTO.

GM imports car components for the Pontiac model because only 10,000 to 20,000 of the vehicles are produced annually – enough to support parts production in Australia but not enough to support such manufacturing in the U.S. market.