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Industry & Analysis’ Spotlight Series November 13, 2013 0.

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1 Industry & Analysis’ Spotlight Series November 13, 2013 0

2 Speakers John Vanderwolf Recreational Transportation Office of Consumer Goods 1 Joanne Littlefair Building Products Office of Materials Industries Julia Rauner-Guerrero Team Leader, Marine Technology CS San Diego Michael Marangell International Trade Specialist CS Chicago Building Products Recreational Transportation

3 Industry & Analysis’ Spotlight on Building Products November 13, 2013 I&A: Office of Materials Industries GM: CS Global Design & Construction Team 2

4 U.S. Building Products $84+ Billion Annual Exports (2012) 1 670,216 Jobs (2011) 2 HVAC Annual Exports: $19 billion Insulation Annual Exports: $979 million Appliances, Lighting, Electric Annual Exports: $22 billion Concrete, Tile, Plasterboard Annual Exports: $1 billion Non-ferrous Metal Products Annual Exports: $14.5 billion Glass Annual Exports: $1 billion Iron & Steel Annual Exports: $9.8 billion Doors & Windows Annual Exports: $824 million Paint & Adhesives Annual Exports: $4.3 billion Cement & Asphalt Annual Exports: $581 million Wood Annual Exports: $8.1 billion Stone Annual Exports: $220 million Plumbing Annual Exports: $1.4 billion Miscellaneous Other Annual Exports: $757 million 3 Sources: 1 Data - U.S. Department of Commerce, Bureau of Census 2 Employment - Annual Survey of Manufacturers, Bureau of the Census

5 Economic Impact: Building Products (2012) Total Employment:670,216 jobs (2011) Total Exports:$84.3 billion Balance of Trade:-$35.9 billion Percent of World Exports:14% Total World Trade:$593 billion Total U.S. sector exports grew from $42 billion in 2002 to $84 billion in 2012, a Compound Annual Growth Rate (CAGR) of 7% 6 Sources: 1 Data - U.S. Department of Commerce, Bureau of Census 2 Employment - Annual Survey of Manufacturers, Bureau of the Census

6 U.S. Competitiveness in Building Products 7 Top 10 U.S. Export Markets Canada Mexico China Japan Germany UK Korea Brazil Saudi Arabia 74% of sector exports go to the Top 10 markets On a level playing field, U.S. building products are highly competitive globally based on: – Excellent reputation of “Made in U.S.A” – Quality – Price – Strong, well-known brands U.S. products are competitive in both developed and developing markets U.S. manufacturers have competitive strength in products suited to Green Building, a high- growth market segment – HVAC – Lighting – Windows and doors, glass – Insulation – Plumbing

7 Globally Competitive Top Developed EconomiesTop Developing Economies Canada$26.2 billionMexico$18.6 billion EU$8.4 billionChina$5.3 billion Japan$2.2 billionBrazil$1.6 billion Australia$1.4 billionSaudi Arabia$1.5 billion India$872 million Total:$38.2 billionTotal:$27.9 billion 6 Leading Markets and Total U.S. Building Product Exports (2012) In 2012, the U.S. Building Products sector exported $84 billion of products to a highly diverse range of international markets. 46% of sector exports went to the leading developed markets, 33% went to the top developing markets On a level playing field, the sector is competitive in developed, emerging, or any other international market. Source: U.S. Department of Commerce, Bureau of Census

8 Trade Promotion MDCPs U.S.-China Build  Successful partnership with Evergreen Building Products Association since 2001  Current MDCP is 3 rd grant  ROI $408:1  Focus: energy efficient building materials, senior housing  Standards work facilitation International Association of Plumbing & Mechanical Officials  New award for FY14  Goal: assist Indonesia in developing a plumbing code International Buyer Program World of Concrete  Partnership with Hanley Wood, IBP team, Global Design & Const. Team, and OMI for over a decade, and I&A’s Office of Transportation & Machinery since 2013  Focus: trade promotion for U.S. suppliers of building products & related heavy machinery International Builders Show – NAHB  Partnership with National Association of Home Builders, IBP team, Global Design & Construction Team, and OMI for over two decades  Focus: trade promotion and differentiation of high quality U.S. building products 7

9 Global Design & Construction Team 11 Who are we? We are a group of individuals within all three units of ITA (Global Markets, Industry & Analysis, and Enforcement & Compliance) and industry associations (AIA, EBPA, ACEC, AEM) that coordinate export promotion activities for US companies in the following industry sectors: – Architecture/construction/engineering services – Building products – Construction equipment – Greenbuild & sustainable development – Interior design

10 Global Design & Construction Team 12 What do we do? – Monthly conference call with team members to connect, plan, and implement activities in our relevant industry sectors – Create strategies for promoting export opportunities to US companies via webinars, IBPs, TFCs, Trade Missions, and other creative solutions for clients – Seek input from team members (including USEACs, overseas post, and HQ), industry partners, and clients

11 Global Design & Construction Team 13 -Coordination between all three units on trade missions, IBPs, TFC, webinars, industry training and other outreach activities -Examples of Coordination between units: -MDCP: Evergreen Building Products Association (EBPA) China Build Program, American Institute of Architects (AIA) -IBPs: World of Concrete, International Builders Show, GreenBuild Expo, ConExpo/ConAgg, AIA Convention -TFC: Guangzhou International Lighting Exhibition, Mosbuild, Kazbuild -Trade Missions: India, 3Cs (Chennai, Cochin, and Colomobo(Sri Lanka)), Mexico Infrastructure -Workshops: AIA International Practice workshops (NY, DC, Denver, LA), OPIC, USTDA, MCC, Multi-lateral Development Banks, etc.

12 Global Design & Construction Team 14 Looking ahead to 2014 and beyond for the team… Pilot project for assisting architectural design services 1 st edition resource guide highlighting market opportunities for architectural design services Implement and support activities at IBPs, TFCs, TMs, and webinars Continue to provide innovative solutions for clients in design & construction related industries Provide training opportunities for team members to be able to effectively and efficiently council US companies about international opportunities

13 Trade Policy  Trans-Pacific Partnership (TPP)  Transatlantic Trade & Investment Partnership (TTIP)  Industry Trade Advisory Committees (ITACs) “Industry’s voice in the trade policymaking process.”  ITAC 12 Steel  ITAC 9 Non-Ferrous Metals & Building Materials  ITAC 7 Forest Products  Illegal Logging – At least $460 million in lost U.S. wood product export value annually  APEC Experts Group on Illegal Logging & Associated Trade  U.S.-China MOU to Combat Illegal Logging & Associated Trade  U.S.-Indonesia MOU to Combat Illegal Logging & Associated Trade  Key provisions in TPP and TTIP Environment chapters  Private Sector Dialogue program elements are key to all of the above 12

14 Preventing NTBs APEC Green Building Standards Goal: Advance Green Building in a manner that facilitates trade, creating opportunities for U.S. exporters  APEC economies import 74% of U.S. building products  Green Building is a high-growth market, and regulations are evolving  ITA-led Green Building work in APEC began in 2011  Ongoing standards-focused multi-year project pursues industry-identified priorities for preventing non-tariff barriers to trade as APEC economies work to expand and regulate Green Building  2013-2014 project elements:  Green Building codes  Building Information Modeling (BIM) to advance Green Building  BIM supports a full digital model of a building  BIM allows trial and building performance testing in the design stage, and carries design benefits through building commissioning and into the operational stage of the building  Building envelope product testing and rating (energy efficient products)  Non-tariff barriers to trade in ceiling and flooring products (focus on lab testing requirements)  Strong collaboration within ITA  I&A Office of Standards and Investment Policy + I&A Office of Materials Industries 13 Examples of NTBs include: standards, certifications, lab testing requirements, labeling, ratings

15 Opportunities 17  Strong global construction growth Global Industry Trends Construction accounts for 11% of global GDP. Projected growth in construction output of 67% over next decade, from $7.2T (2010) to $12T (2020), 5.2% per annum, outpacing global GDP growth. China and India projected to account for 38% of increase. Construction spending will shift to Asia and other emerging markets. Construction spending in developed countries will be constrained. Source: Global Construction 2020, Global Construction Perspectives, Oxford Economics. China’s growing construction market became worlds largest in 2010. By 2020 emerging markets will account for 55% of global construction, up from 46% today. Construction will make up 16.5% of GDP in those markets by 2020. In total China, India, the U.S., Indonesia, Canada, Russia, and Australia will account for 65% of growth in global construction by 2020.

16 15 Strong Green Building Growth in Asia-Pacific – Governments in the region are strongly backing sustainable construction trends; best practices that foster a level playing field provide practical references for economies looking to accelerate Green Building. Promotion MDCP program expansion Multiple annual IBPs within the sector (International Builders Show/National Association of Home Builders, World of Concrete, U.S. Green Building Council GreenBuild) NEI sector stakeholder outreach and presentations Private Sector Engagement - provides insights and helps set priorities Industry Trade Advisory Committees (ITACs) Green Building project-specific Advisory Groups Regular participation in industry events Collaboration – strong working relationships within ITA; particularly well facilitated through the Global Design and Construction team – global team training 2/2013. Opportunities (continued)

17 Opportunities: Inward Investment 16 Outlook  The U.S. operating environment continues to reflect an increasing number of housing starts and improving house values  Pick-up in repair and remodeling activity becoming apparent  The company is continuing with its plan to invest in capacity expansions through re- commissioning of idled facilities in future periods Example: Foreign-owned building products company with multiple U.S. manufacturing facilities. Excerpt from investor presentation (October 2013) Current Environment Some positive signs for foreign building products companies considering direct investment:  U.S. housing market recovery has begun  Easing of credit market for qualified developers Sector Historic FDI Success Stories  Steel  Cement

18 Risks and Issues Tariffs – High tariff rates have significant impact on low-margin products – Escalating tariffs are common NTBs – Particularly in standards and regulatory coherence – Of consequence in high-growth Green Building product segments Availability of financing for Green Building projects – Improved metrics are needed to make a consistent business case Global economic conditions – Construction market growth depends on overall economic growth 20 2012 Tariff Rates BrazilChinaIndiaSaudi Arabia Flat-Rolled Steel14%7%6.3%5% HVAC Units23%20%10%8.5% Plywood10%12%10%5% Ceramic Sinks18%10% 12% Doors & Windows14%10% 5% Paints14%10% 8.5% Light Bulbs18%10% 5% Insulation16%10% 6.5% Source: WTO Tariff Database

19 Examples of ITA and Interagency Activities 21 ITA -MDCPs -Global Design & Construction Team -Industry Trade Advisory Committees advise Administration on trade policy: steel, forest products, non-ferrous metals and building materials. -APEC Green Building Interagency -Illegal logging (APEC Experts Group, U.S.-China and U.S.-Indonesia MOUs) -U.S.-Canada-Mexico Green Building Construction Task Force under the NAFTA Commission on Environmental Cooperation (USTR, EPA)

20 Analytical Products 22 1.Promoting Green Building while preventing non-tariff barriers to trade  APEC Building Codes, Regulations & Standards  Study on regulatory pathways economies may utilize to enhance building performance; detailed chapters for 21 APEC economies plus best practice guidelines.  E-published August 2013 (450+ hits to date)  Building Information Modeling (BIM) Start-Up Guide for Policymakers  Guide to concrete steps policymakers can take to increase BIM uptake and benefits.  Under collaborative development with bimSCORE, Inc. for e- publication expected November 2013. 2.Providing U.S. Industry with Up-To-Date Market Information  International Metals Study Group Databases, Forecasting and Directories  International Copper Study Group/International Lead and Zinc Study Group bi-annual metals production/consumption forecasts  ICSG/ILZSG Directory of Producers, Mines, Plants and Smelters  Study Group Annual Words Metals Factbooks  Annual Industry Snapshots

21 Building Products Team Staff Gary Stanley; Building Products Team Leader, U.S. China Build MDCP Lead; 202-482-0376 Joanne Littlefair; APEC Green Building Standards, Illegal Logging, Forest Products, CEC Green Building Construction Task Force; 202-482-4855 Brian Ledgerwood; DFO ITAC-7 Forest Products, Green Building, Forest Products, Precious Metals; 202-482-3836 Salim Bhabhrawala; ITAC-9 Non-ferrous Metals & Building Materials, IAPMO MDCP Lead; 202-482-1784 Bob Shaw; ITAC-12 Steel; 202-482-0606 20

22 Global Design & Construction Team 24 Want more information about the Global Design & Construction Team? Contact Us Terri Batch, Team Leader Tel: 310-235-7212 Michael Marangell, Deputy Team Leader Tel: 312-353-5097 Or visit our page Or connect with us on our LinkedIn Group Global Design and Construction Trade Leads from US Commercial Service Currently 247 members, only US companies are approved for membership Individuals with email automatically added to the group Or Join our Team! Send an email to Terri Batch asking to be added to the team’s distribution list and start participating in our monthly calls

23 Industry and Analysis’ Spotlight on Recreational Transportation November 13, 2013 Prepared by John Vanderwolf Office of Consumer Goods 22

24 Recreational Transportation What is it and How is it covered??? This sector includes most of the FUN ways we move like  Boats (not ships) and all the accessories and parts (e.g., Jet Skis, Sea Ray Boats, and Mercury Marine Engines)  Motorcycles, Bicycles, and Parts (e.g., Harley-Davidson and Trek)  Recreation Vehicles or RVs (e.g., Airstream and Winnebago)  Miscellaneous Transportation which includes golf cars, snowmobiles, All-Terrain Vehicles, and Segways 25

25 “Work Hard, Play Hard!” Positive trade balance! Exporting American Lifestyle! Create Jobs! Coordinated ITA Effort! Why Recreational Transportation as a Priority Sector

26 NEI Priority Markets: (Figures based on Year-End 2012) Source: U.S. Census Bureau 1.Worldwide$7.692 B Since these markets are relatively small ITA needs to take advantage of opportunities when they are available. 2.Canada $3.032 BMost US manufacturers view this market as an extension of the US market. 3.European Union (15)$1.436 BThese are the easiest markets for US SMEs to start with particularly for firms in the boating industry. 4.Australia$463 MThis market is a perfect market for some manufacturers too fixated on the US market as its season starts as the US ends. 5.Japan$412 MJapan is a developed market with a desire for U.S.-made products. 6.Mexico$220 MThe proximity and low barriers give the industry a great advantage. 7.China$197 MThe biggest growing leisure market and with a desire for US- made products. 8.Brazil$184 MThe largest market in South America and with a great desire for recreation and leisure activities. 9.Russia$95 MA great potential market that could be great for RV and motorcycle manufacturers. 10.South Korea$52 MA market with low barriers and a growing middle class with increasing leisure time. 29 U.S. Recreational Transportation Exports to Target Markets Tariff Rate: 0% Tariff Rates: 1.7-14% Tariff Rate: 0% Tariff Rates: 10-30% Tariff Rates: 20-35% Tariff Rate: 0% Tariff Rates: 5-20%

27 30 Competitive Subsectors NOTE: Much of what is made in the US is competitive worldwide so if a subsector is not mentioned here but the client produces here he is competitive there! Think New York, New York! Motorboats from 25-80 feet. -- This is where the bulk or the U.S. market wants and the industry is competitive producing. Leisure and “statement” motorcycles – U.S. consumers and many foreign consumers of motorcycles want to make a statement or be noticed and yes get from point A to B comfortably. Accessorized Motorhomes and Travel Trailers – U.S. consumers want the “bells and whistles;” they want all the comforts of home and sometimes that means space. U.S.RVs tend to be bigger than European – produced products. “Work adapted” products– U.S. RV, Boat, and Motorcycle firms often can customize products to serve various needs of government and business. Mobile offices, government patrol boats, and ATVs, police motorcycles to name the more obvious products. Golf cars and snowmobiles – These products are uniquely American and most foreign manufacturers have found it hard to compete with the economies of scale achieved by servicing the U.S. market. 3 Georgia manufacturers supply at least 85 percent of the world market.

28 31 Regional Manufacturing Centers: Harley-Davidson and Polaris/Victory have operations in Wisconsin, Pennsylvania, Missouri and Iowa. It is likely to have parts suppliers near those facilities. California and Texas are the most likely locations for custom bikes and parts. But can be found scattered throughout the United States. Boats are manufactured throughout the U.S. but the largest concentrations of boating related employment are Florida, California, Michigan, Texas, and New York. RVs are primarily manufactured in Indiana accounting for 80% of U.S. production. ATV and Snowmobiles are primarily produced in the central U.S. states. (golf cars-GA) The following sites have membership lists that may be of interest to you: For RVs: For Boats: For Motorcycles and ATVs: Inward Investments: Inward investments might be possible for the RV industry in the development of specialty products and by European manufacturers looking to increase their market share in the U.S. For the bicycle industry foreign investment may be a viable option for custom bike builders especially for those using unique materials.

29 Opportunities and Challenges In general, U.S. recreational transportation manufacturers see continued global growth for their products. Over the next 10 years leisure time and middle-class disposable income should increase faster in overseas market and the U.S. market Growing markets in Asia led by like China and Latin America led by Brazil show promise for increased exports:  Growing Middle Class this levels of disposable income that allow the purchase of these items,  Little or no competition from domestic producers and they want the best…want American-made.  Particularly for Asian markets, there is a high comfort level with motorcycling but not necessary sporting/large motorcycling. U.S. manufacturers are world leading producers of new technologies:  Highest quality products and adaptable to various markets,  Only major competitors in world are in Europe (some exceptions). Challenges:  U.S. firms so focused on U.S. market.  For RVs, many may not have export manager.  Foreign consumers may view U.S. products as too big.  In markets where European firms have strong market share could it is difficult to sell into.  Regulations may favor foreign competition.  Some markets may have hybrid regulations that could restrict U.S. products. (If clients have encountered these issues please contact our office so that we can address them to the appropriate officials.) 32

30 ITA Strategic Partners: National Marine Manufacturers Association & Recreation Vehicle Industry Association National Marine Manufacturers Association Recreation Vehicle Industry Association 33 After an NEI Outreach Event in 2011, The National Marine Manufacturers Association (NMMA) and the Recreation Vehicle Industry association (RVIA) stepped up and increased its efforts to promote exports hiring or allocating additional resources. The NMMA had an ambitious export program helping its members participate in trade shows in China, Brazil, Brazil, Europe, and Colombia. the RVIA submitted and won an MDCP award to increase exports to China, Japan, and now South Korea. So far, the association has recorded $13.9 million in exports to the target markets. The NMMA’s Miami International Boat Show has been selected for the IBP program while the RVIA’s National Trade Show has been selected as an IBP Select show in 2014.NMMA’s Miami International Boat Show RVIA’s National Trade Show Both NMMA and RVIA have become an official ITA strategic partners, helping its members learn of export opportunities through a series of export assistance webinars for their members. The NNMA president and RVIA International Business Director have become a members of the Consumer Goods ITAC (4) in order to address trade barriers that affect their industries. is a website created by NMMA to help those looking to buy a boat and might of interest for international buyers. is a website created by RVIA to help those looking to buy an RV and might of interest for international buyers.

31 ITA Strategic Partner: National Marine Manufacturers Association 34 After an NEI Outreach Event in 2011, The National Marine Manufacturers Association (NMMA) increased its efforts to promote exports, and hired an international trade/export promotion specialist. With additional resources, NMMA has an ambitious export program, helping its members participate in trade shows in China, Brazil, Europe, and Colombia. The NMMA’s Miami International Boat Show has been selected for the IBP program.NMMA’s Miami International Boat Show NMMA has become an official ITA strategic partner, and helping its members are learning about export opportunities. ITA and NMMA have held a series of export assistance webinars for its members. NNMA’s president has become a member of the Consumer Goods ITAC (4) in order to address trade barriers that affect the boating industry. is a website created by NMMA to help those looking to buy a boat and might of interest for international buyers.

32 ITA Strategic Partner: Recreation Vehicle Industry Association 35 After an NEI Outreach Event in 2011, The Recreation Vehicle Industry Association (RVIA) increased its efforts to promote exports, adding an International Affairs Director. With the additional resources, RVIA won an MDCP award to increase exports to China, Japan, and now South Korea. So far, the association has recorded $13.9 million in exports to the target markets that can be directly tied to MDCP advocacy. The RVIA’s National Trade Show has been selected as an IBP-Select show in 2014.RVIA’s National Trade Show The RVIA has become an official ITA strategic partner, helping its members learn of export opportunities. ITA and the RVIA also presented export assistance webinars for its members. The RVIA Director of International Affairs has become a member of the Consumer Goods ITAC (4) in order to address trade barriers that affect the RV industry. is a website created by RVIA to help those looking to buy an RV and might of interest for international buyers.

33 Examples of ITA and Interagency Activities Supporting RVIA’s MDCP for China, Japan, and South Korea – ITA staff has supported the RVIA’s visit to China. In addition ITA staff has participated in meeting and events to develop the market for RVs in China and assisted in the development of new RV and RV Campground standards. – In Japan, Staff developed a Platinum Key Service that identified key government officials for reconstruction efforts and key contacts for the development in the consumer market. In addition ITA staff worked on a model project that would highlight offerings of US RV manufacturers. Coordinate with USTR on addressing motorcycle industry concerns with South Korea, Taiwan, and for larger organizations like APEC and WTO The CS Global Team for Automotive products has held several export promotion activities for motorcycles including a trade event in Germany. In addition, the team has responded to trade leads from various market for RVs, ATVs, motorcycles, parts, and accessories.CS Global Team for Automotive products The Global Team for Textiles and Sporting Goods has worked with the golf industry at the PGA Show to promote US golf products like golf cars and the expansion of the overseas golf industry to grow opportunities for further export growth.Global Team for Textiles and Sporting Goods ITA staff has supported and continues to support the RVIA National Trade show bringing delegations from China and Japan the last two years and looks for increased role in 2014. ITA staff has worked closely with USGC to address standards issues in Japan and Europe Supporting for China, Japan, and South Korea. ITA staff is circulating a non-paper for Interagency clearance on potential negotiating positions for the current TTIP negotiations which hopefully will lead to lower costs when exporting to the European Union. 36 Shaking hands over a Harley-Davidson Softail are China’s Minister of Commerce, Chen Deming, and United States Ambassador, Gary Locke.

34 Marine Technology Team Marine Technology Team Julia Rauner Guerrero- Team Leader 37 ITA Strategic Partner Membership throughout ITA includes staff in 60 countries + 40 U.S. cities

35 Pleasure Boats & Accessories Major Activities with NMMA Partnership METS – Amsterdam, Nov 18-20, 2014 Certified Trade Fair 130+ U.S. Exhibitors with USA Pavilion 7 CS EU Posts Participating: NMMA Hosted International Luncheon and Reception Global Chat G2B Meetings Industry Training by NMMA Miami International Boat Show IBP Select 2013 now Full IBP 2014 22 delegations being recruited B2B Meetings Site visits International reception and more 38

36 Client and Market Development NMMA Partnership Joint client export education – webinars and IBEX NMMA client referrals to CS for export services Support for NMMA’s global market expansion: China, Korea, Colombia, Spain 39 Industry Briefing At Miami Boat Show

37 Recreational Transportation Staff John Vanderwolf; Sector Lead, Industry Economist, Office of Consumer Goods, Office of Textiles, Consumer Goods, and Materials,; Charlie Rast; Recreation Vehicles analyst, International Trade Specialist, Office of Consumer Goods, Office of Textiles, Consumer Goods and Materials; 202-482- Julia Rauner Guerrero; Marine Technology Team Leader; CS Team Leaders for Recreational Transportation products: 40 Eduard Roytberg; Automotive Team Leader; David Fiscus; Textiles, Apparel, and Sporting Goods Team Leader;

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