Minnesota exports drop 17% because of the coronavirus

The COVID-19 pandemic has pummeled Minnesota exports, crushing big production sectors such as communications equipment and agricultural and construction machinery.

Overall, government statistics show the state’s exports were down more than $339 million, or 17%, in June 2020 compared with June 2019.

But critical industries fared worse than the average, according to a spreadsheet assembled by the Trade Partnership, a group that analyzes data and promotes international trade.

“Minnesota’s exports have done better than most states this year falling around 17% in April, May and June,” said Dan Anthony, Trade Partnership vice president, “but still much worse than any recent period besides 2009.”

Exports in Minnesota’s communications equipment sector shrank by 76%. Agricultural machinery and construction equipment exports were down by nearly half of what they were in June 2019.

Nationally, 45 states saw exports shrink at least 10% in June compared with the same month in 2019, the Trade Partnership reported. Exports were down in 85% of the country’s congressional districts.

All eight of Minnesota’s congressional districts suffered declines in exports. The losses ranged from 20.2% in the Fourth Congressional District, which includes most of St. Paul and its suburbs, to 13.6% in the Sixth District, which includes the far west suburbs and St. Cloud.

At this point, pandemic-driven losses of exports are still lower than the peak of the Great Recession of 2008 and 2009. State exports shrank 23% in the first and second quarters of 2009, Minnesota Department of Employment and Economic Development (DEED) records show. But the second quarter of 2020 saw a much sharper increase in unemployment than the job losses of 2009, according to DEED.

“When market production and consumption drop in one country, so do imports,” said Robert Kudrle, University of Minnesota professor emeritus and international trade specialist. With the COVID-19 pandemic, “this is happening to everyone at the same time.”

To control the global health crisis, countries around the world turned to what Kudrle called “induced reduction of economic activity.”

In Minnesota, an anticipated reduction of world trade by 15% to 33% threatens not just individual companies, but communities, especially in the outstate area, he said.

“It has a devastating effect outstate if firms [that lose exports] are major employers,” Kudrle said.

Exports of medical equipment and supplies dipped nearly 23%. The hit was almost entirely due to COVID-19, said Shaye Mandle, CEO of Medical Alley Association, a trade group representing hundreds of Minnesota medical technology companies.

“We’re really seeing this tracking elective surgeries,” which have been restricted in countries with mandated shutdowns, Mandle said.

In the March-to-June time frame, many countries in Europe and Asia forced hospitals to “eliminate everything except lifesaving surgeries” to free up bed space for COVID-19 patients.

“If people don’t use [medical] products,” Mandle said, U.S. companies “are not shipping products, especially around the world where they are managing the pandemic better than the U.S.”

On the other hand, Minnesota companies involved in production of COVID-related devices such as pulse oximeters and ventilators flourished. Mandle said one Medical Alley member saw sales rocket up 2,600% in March.

In addition, Mandle said the state’s medical device companies raised more investment capital than others in the country.

Also, he added, Medical Alley’s startups and young member companies, principally located in the Twin Cities metro area, attracted more investment in the first half of 2020 than such tech-heavy centers as San Francisco, San Diego, New York, Boston and Austin, Texas.

Mandle said this investment has the sector in good shape for when the pandemic is under control in the U.S.

“Nobody’s changing their business model,” he said. “A lot of our companies took advantage of the Paycheck Protection Program. But we haven’t had any of our companies say they are going out of business.”