Machinery

U.S. total exports of machinery rose by $5.9 billion (4 percent) in 2014, with some of the largest product-group increases driven by higher global investment in semiconductor manufacturing and by oil and gas industry spending on taps, cocks, and valves. The export markets that accounted for the largest increases in exports were Mexico (up $1.7 billion, or 10 percent), South Korea (up $919 million, or 16 percent), and China (up $506 million, or 6 percent) (table MT.1).

U.S. general imports increased by $14.5 billion (9 percent) in 2014, with import growth spread broadly across product types—in fact, imports increased in 23 of 30 machinery product groups. Import growth reflected growing demand fostered by increases in U.S. consumer spending, business investment, and residential and nonresidential construction. The countries that accounted for the greatest increase in imports, in value terms, were China (up by $3.7 billion, or 8 percent), Mexico (up by $2.6 billion, or 10 percent), and Germany ($1.2 billion, or 7 percent).

U.S. Exports¹

U.S. domestic exports of machinery substantially increased across a number of product groups, including semiconductor manufacturing equipment (up $1.4 billion, or 10 percent), mechanical power transmission equipment ($1.3 billion, or 45 percent), and taps, cocks, valves, and similar devices ($938 million, or 9 percent) (table MT.2). The largest decline was in U.S. exports of farm and garden machinery and equipment ($933 million, or 8 percent).

U.S. domestic exports of semiconductor manufacturing equipment grew significantly in 2014, with South Korea, China, and Ireland accounting for the largest increases in U.S. exports. The increase in exports was driven by rising global demand for semiconductor manufacturing equipment, which was projected to grow by 19 percent in 2014 as major manufacturers made significant investments in their plants.² For example, equipment spending in South Korea rose as Samsung and SK Hynix made major investments, and demand rose in China as companies like Samsung, SK Hynix, and SMIC upgraded and expanded their production.³ Intel, meanwhile, invested in its production in Ireland.⁴

U.S. domestic exports of taps, cocks, valves, and similar devices expanded in 2014 because of rising demand from the oil and gas industry. These products are often used in oil and gas refining and pipeline applications, which contributed to the steady increase in exports from 2010 onward. Despite the decline in crude petroleum prices starting in June 2014, several valve manufacturers have stated that their order books were not significantly affected in 2014 and that they will be more likely to feel the impact in 2015.⁵

In the farm and garden machinery product group, U.S. domestic exports declined because of weaker global demand and the strengthening of the U.S. dollar. Global demand for farm equipment weakened because of a fall in commodity prices and incomes.⁶ The biggest decline in U.S. exports was to Canada, and the biggest component of this decline was lower exports of combines, which fell because of a substantial drop in Canadian combine sales. The value of tractor exports to Canada also declined substantially, but the number of units exported increased despite lower commodity prices because of higher demand for small tractors.⁷ The United States remained the leading foreign supplier of combines and tractors to Canada.⁸

U.S. Imports

U.S. imports of machinery rose by $14.5 billion (9 percent) in 2014, driven by increases in U.S. consumer spending, business investment, and residential housing construction.⁹ Overall U.S. demand for machinery grew by 9 percent, roughly the same pace at which imports expanded.¹⁰ The largest increases were in U.S. imports of semiconductor manufacturing equipment (up by $2.4 billion, or 22 percent), air conditioning equipment and parts ($1.8 billion, or 12 percent), and household appliances ($1.6 billion, or 7 percent).

The increase in imports of semiconductor manufacturing equipment, like the increase in exports, is due to growth in U.S. investment by some of the major U.S. manufacturers. The North American semiconductor equipment market was expected to reach $8.31 billion in 2014, up from $5.27 billion in 2013.¹¹

A rise in U.S. residential and nonresidential construction and home improvement investment contributed to the significant increase in U.S. imports of air conditioning equipment and household appliances. U.S. residential housing starts grew 8 percent in 2014; investment in private nonresidential construction, by 11 percent.¹² Further, the strengthening of the U.S. dollar made imported appliances less expensive and further strengthened demand.¹³ For air conditioner equipment, 52 percent of import growth came from Mexico (up by $917 million), which surpassed China as the United States’ largest source for imports of air conditioning equipment and parts for the first time since 2002. For appliances, the increase in 2014 was spread across a number of products, including coffee and tea makers (up by $245 million), assorted refrigerating or freezing equipment (up by $221 million), and electric space heaters and soil heaters (up by $173 million).¹⁴

Imports of air conditioning equipment and household appliances grew from both China (up by $861 million) and Mexico (up by $559 million). Imports from South Korea, however, fell by $330 million, due in part to intensifying price competition; the South Korean won remained strong against the dollar, while the currencies of many other exporters in Asia and Europe fell. In addition, imports of certain residential washing machines from South Korea and Mexico are subject to antidumping and countervailing duties.¹⁵

The largest decrease in U.S. imports was in imports of electric lamps (bulbs) and portable electric lights (down $186 million, 6 percent), reflecting a shift in the U.S. lighting market toward more energy-efficient lighting. One important factor in the shift was the Energy Independence and Security Act of 2007, which prohibited the import or manufacture of many traditional incandescent lamps (100 watts, starting January 1, 2012; 75 watts, starting January 1, 2013; and 40 and 60 watts, starting January 1, 2014). Another factor was the increasing availability and cost-competitiveness of energy-efficient lighting technologies. Both of these changes led to a substantial shift away from traditional incandescent lamps to more efficient halogen incandescent lamps and light-emitting diode (LED) lamps.¹⁶ The decline in imports of traditional incandescent bulbs was especially significant with the implementation of rules phasing out 40- and 60-watt lamps in 2014. LEDs are classified in a different product group, and therefore the shift toward more energy-efficient lighting resulted in a decrease in imports in the electric lamps commodity group.¹⁷