Traditional manufacturing was once a powerhouse in the United States’ (US) economy, however, since the global recession in 2009, the sector has gone through a dramatic change. Additionally, China’s manufacturing has been booming creating stiff competition for traditional US manufacturers. Therefore, the US is looking to advanced manufacturing technology to spur the economy and drive this sector into the future.

The United States is a net importer of machinery and transportation equipment. In 2015, the US exported US$644.9 billion in machinery and transportation with US$13.5 billion of that going to Australia. At the same time, the US imported US$986.7 billion in machinery and transportation equipment of which US$1.6 billion originated from Australia. (Source: United States Census Bureau ‘U.S. International Trade Statistics’, 9 November 2016). Of ten categories categorised as advanced technology products, Australia exported to the United States in 2015, the highest was in life sciences (US$38 million) followed by aerospace (US$31 million) while advanced materials came in at less than US$1 million (Source: United States Census Bureau, ‘U.S. Trade with Australia in Advanced Technology Products’ 9 November 2016). Given that the US is a net importer but Australian exports account for a small portion of advanced materials and manufacturing entering the country, there is ample room for Australian exporters to carve a larger share of the pie.

Along with all technology it is imperative that the advanced materials/manufacturing products are innovative, cost effective, and meet the demands of the US market. Australian exporters have the most significant opportunities in the aerospace, marine, and automotive industries using streamline manufacturing technology or inventive materials to fulfil the needs of US manufacturers.

Opportunities

Globalisation has driven companies to restructure their operations internationally, through outsourcing and offshore activities. Companies want to improve efficiency by separating production stages across the most optimal sites. Trends are moving toward international distribution of value chain activities such as design, production, marketing, and distribution.

This increased globalisation of manufacturing and services, is leading to significant new opportunities in specialised, high value-add manufacturing for Australian companies.

The sectors of advanced manufacturing that provide the most promising opportunities for Australian exporters are in the fields of:

• Aerospace –The aerospace market will fare well in the near term as the need for military aerospace technology and increasing demand for global commercial travel. US Aerospace companies are looking to reduce unnecessary time spent being assessed for maintenance, and would prefer on-route assessments, leading to an opportunity for Australian exporters to meet this need.
• Marine – Defense also plays a role in the continued demand for marine manufacturing. In addition, global trade via cargo freight keeps marine manufacturing robust. However, personal boats account for the largest share of marine manufacturing. One trend in this sector includes cost efficient boats both in initial cost and fuel efficiency. In addition, there is demand for speeding up the process to create customised leisure boats.
• Automotive –The United States has one of the largest automotive and auto parts manufacturing markets in the world and there is a renewed interest in the country to build up this sector since the global economic downturn in 2009. Americans are increasingly looking for more eco-friendly cars with long-term cost efficiency. Innovative and new smart software for cars is also gaining interest and provides an opportunity for Australian companies.
• Advanced materials – Innovative materials can lead to more efficient manufacturing and higher quality products. Australia has significant expertise in composite materials, including polymers, as well as carbon fibres and light metals. Nanotechnology of advanced materials also provides an opportunity for Australian exporters due to scaled up and cost effective manufacturing, which is very attractive to US manufacturers.

Competitive environment

China (25.9 per cent), Mexico (19.1 per cent), Japan (8.9 per cent), Ireland (10.2 per cent), and Canada (9.3 per cent) are the primary exporters of machinery and transport equipment to the United States. Australia ranked 33rd with 0.2 per cent of exports into the United States (Source: United States Census Bureau ‘U.S. International Trade Statistics’, 9 November 2016). Therefore there is ample room for Australia to increase its share of the US market for advanced manufacturing technology.

Tariffs, regulations and customs

The Australia-United States Free Trade Agreement (AUSFTA), which came into effect on 1 January 2005, ensures greater access to the United States market for Australian products.

This Agreement also enhances prospects for Australian services, trade and investment, improves the regulatory and investment environment between the two countries, and promotes increased business mobility.

Please visit the Department of Foreign Affairs and Trade website for comprehensive information on the AUSFTA.

United States tariffs are not unusually high by world standards. The US Customs Service and a number of government agencies regulate goods imported to the US. Non-compliance may result in delays, extra costs, litigation and even prohibition.

Tariffs and duty rates are constantly revised and are subject to change without notice. Comprehensive information on US tariffs can be obtained from the website of the US International Trade Commission.

Customs brokers are licensed by the US Department of the Treasury and assess tariff classification, quota compliance and anticipation of difficulties in the entry of products you export to the US. Austrade can help you find a customs broker to suit your exporting needs.

Industry standards

Advanced materials and manufacturing equipment imported into the United States must meet all federal safety guidelines and regulations. For more information, please visit the relevant industry department’s website:

• The Department of Defense
• The Federal Aviation Administration
• The Department of Transportation

Marketing your products and services

Market entry

The United States has a large and competitive manufacturing and materials market. Machinery in the United States is manufactured throughout the country, but production is centred in the industrial Midwest, California, and Texas (Source: SelectUSA, ‘Machinery and Equipment Spotlight’, 10 November 2016). Given the size of the labour force and historical importance of this sector to the US economy, there is a push for products to be made locally in the US which means breaking into this sector and finding partners may be more challenging for foreign companies than other industry markets.

Transport

Using a good customs broker and freight forwarder is the most efficient way to ship your goods. These companies are experts in documentation, freight rate negotiations and finding the most economical way to get your product to the buyer. For more information on freight forwarders, please email info@austrade.gov.au.

There are a number of ports on both the east and west coasts of the United States. The largest ports (by tonnage) in the United States are in Louisiana, Texas, New York, and California. Total transit time between Port Botany in Sydney and Lost Angeles Port is between 25-43 days (19 days on the sea) with an approximate cost of US$1350 (Source: SeaRates.com, 24 October 2016). Air freight is also available but can be more costly.

Links and industry contacts

ASM International
Association of Equipment Manufacturers (AEM)
The Association of Manufacturing Technology (AMT)
Association for Packaging and Processing Technologies (PMMI)
Association for Suppliers of Printers, Publishing and Converting Technologies (NPES)
Engine Manufacturers Association (EMA)
Industrial Truck Association (ITA)
International Association of Nanotechnology (IANT)
Manufacturing USA
National Association of Manufacturers (NAM)
National Electrical Manufacturers Association (NEMA)

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

• develop international markets
• win productive foreign direct investment
• promote international education
• strengthen Australia's tourism industry
• seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.