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2012 PLUMBING MANUFACTURERS INTERNATIONAL FALL CONFERENCE THE NATIONAL EXPORT INITIATIVE AND U.S. PLUMBING PRODUCTS EXPO

2012 PLUMBING MANUFACTURERS INTERNATIONAL FALL CONFERENCE THE NATIONAL EXPORT INITIATIVE AND U.S. PLUMBING PRODUCTS EXPORTS October 7-10, 2012 Hyatt Regency, Washington, DC.

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2012 PLUMBING MANUFACTURERS INTERNATIONAL FALL CONFERENCE THE NATIONAL EXPORT INITIATIVE AND U.S. PLUMBING PRODUCTS EXPO

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  1. 2012 PLUMBING MANUFACTURERS INTERNATIONAL FALL CONFERENCE THE NATIONAL EXPORT INITIATIVE AND U.S. PLUMBING PRODUCTS EXPORTS • October 7-10, 2012 • Hyatt Regency, Washington, DC Presented byGary StanleyActing Office DirectorOffice of Materials IndustriesU.S. Department of CommerceSalim Moiz BhabhrawalaSenior International Trade SpecialistOffice of Materials IndustriesU.S. Department of Commerce

  2. Presentation Outline • National Export Initiative • Building Products and Plumbing Materials • Global Industry Trends • Key U.S. Building Products Export Markets • Plumbing Products NEI Data Analysis

  3. “So tonight, we set a new goal:  We will double our exports over the next five years, an increase that will support two million jobs in America.” President Obama State of the Union January 27, 2010 • National Export Initiative • Exporting is an individual business decision. The federal government role focuses on reducing roadblocks identified by U.S. companies, particularly small and medium-sized enterprises: • Lack of readily available information about exporting • Lack of market research to identify markets and customers • Challenges obtaining export financing • Strong competition from foreign companies • Obstacles thrown up by foreign governments

  4. Building Products & Materials are…. • Copper Pipes & Fittings • Builders’ hardware • Doors & Windows • Fences • HVAC equip. • Paint & sealants • Sheet metal work • Engineered homes • Roofing • Flooring • Plumbing Pipes & Fixtures • Flat Glass • Steel, wood structures • Bricks • Concrete blocks • Gypsum products • Insulation • Moldings/Millwork • PVC pipes • Tiles • Wood products • Screens • Lighting fixtures • Trusses • Cement • Wood, steel studs • Bathroom Fixtures …and a lot more!

  5. Global Industry Trends • Global Market estimated at $2.4T for 2010. • Total Global Export Market in 2010 $989B. • U.S. products are competitive in medium- and high-end and specialized segments of the market. • U.S. is well-positioned in the global construction market. U.S. suppliers are recognized as high-quality, high-volume, and competitively priced producers and exporters.

  6. Best Export Prospects in Building Materials (2010) • Air Conditioning & related HVAC ($5,974 million) • Lumber & wood products ($2,919 million) • Plumbing Products ($1,686 million) • Fabricated structural metal ($1,027 million) • New and replacement windows, flooring, and interior finishing ($851 million) • Insulation ($761 million) • High-end kitchen & bath fixtures ($380 million) • Prefabricated buildings ($487 million) • “Green” technologies (>$3 billion in 2011)

  7. Leading Building Products Export Destination Regions 2010 ($989B total exports)

  8. U.S. Building Products 2010 Export Destinations ($87B)

  9. Building Products Overview: (1/3) Sensitive / Pre-Decisional • Description: Commercial and residential construction expansions in key developing markets, often associated with massive infrastructure builds, support growing export potential for the full range of U.S. Building Products exports. Within the expanding global construction market, sustainable construction is a specific high-value global growth trend. In international markets, the U.S. is most competitive in innovative and technologically advanced Building Products. This sector strategy seeks to defend and expand global market share for U.S. exports in the face of increasing competition from sophisticated (and at times low-cost) international players and within an evolving standards landscape responsive to government policies and market trends. • Total Import Market excluding U.S. (2009): $706.9 billion; ‘00-’09 CAGR: 7.5%; US Share of Imports (2000 & 2009): 18.9% & 9.9% • I. Reported Major Challenges to U.S. Exports: • Challenge: Tariffs have a serious impact on U.S. industry export competitiveness in this low-margin sector. Tariff escalation (higher import duties on semi-processed products than on raw materials, and higher still on finished products) is a major problem in this sector. • Challenge: Non-tariff barriers may impede market access. These include potentially restrictive construction and other regulations, product standards and building codes. • Challenge : Foreign “Green building”/sustainable construction rating systems, product certifications, and eco-labeling programs/regimes. • II. Other Reported Major Challenges to U.S. Exports: • Challenge: Lack of adequate stakeholder participation in international standards-setting processes. • Challenge: The building products industry does not have any type of coordinated, cross-sector strategy for trade promotion and overseas market development and advocacy. The private sector must lead the way in working with foreign stakeholders in coordination, promotion, and support of broad, industry-based trade shows, conferences, and exhibitions. • Challenge: Domestic regulatory issues. • Challenge: IPR/counterfeit goods and third-party certification requirements. • III. Potential Policy Actions for Immediate Term: • Policy Action: Pursue sector-specific tariff negotiations through trade agreements like FTAs and the WTO sector process. • Policy Action: Implementation of recent/pending FTAs (e.g., Colombia, Panama, South Korea). • Policy Action: Completion of the Trans-Pacific Partnership (TPP) FTA negotiations. • Policy Action: Completion of WTO Doha Round, including forest products tariff sector strategy. • Policy Action: Facilitate participation of relevant stakeholders in multilateral fora in which they can exchange information and collaborate on sector-specific standards development. Priority market segment: sustainable construction.

  10. Building Products Overview: (2/3) Sensitive / Pre-Decisional • IV. Potential Policy Actions for Medium/Long Term: • Policy Action: Facilitate the participation of relevant stakeholders in multilateral fora in which they can exchange information and collaborate on sector-specific standards development. Priority market segment: sustainable construction. • Policy Action: Continue aggressive WTO dispute settlement consultations with China on competitively priced raw materials. Materials availability is integral to the competitiveness of U.S. manufacturers and their supply chains. • Policy Action: Work in bilateral and multilateral fora such as APEC and TPP to combat illegal logging, which industry estimates reduces U.S. wood product exports by $460 million annually. • Policy Action: Pursue market access negotiations by identifying and negotiating new FTAs. • Policy Action: Expand membership in the plurilateral WTO Agreement on Government Procurement (GPA). • Policy Action: Completion of WTO Doha Round. • V. Potential Actions by Private Sector that Can Increase Exports • Policy Action: Advocacy for the development of consensus-based product standards, building codes and testing/certification procedures through international standards-setting processes. • Policy Action: Development and promotion of consensus-based green building/sustainable construction certification schemes. • Policy Action: Development of MDCP-related market development programs to leverage use of Federal, State and local trade promotion resources. • Policy Action: Identification of key product and market priorities for contributing to the development of an overall USG trade policy strategy.

  11. Building Products Overview: (3/3) Sensitive / Pre-Decisional • VI. Potential Target Markets • 1. Brazil: The Brazilian construction market is among the world’s most dynamic and expansive. Short/medium-term growth will be tied to large infrastructure, commercial, and residential projects associated with global sporting events. • Policy Action: Pursue tariff reductions in the WTO and other regional/multilateral fora, including a forest products tariff sector strategy in the WTO NAMA negotiations. • Policy Action: Encourage the development of consensus-based construction standards internationally. • Import Market Size (2009): $8.7 billion; CAGR ‘00 – ’09: 9.1%; US Share (2000 & 2009): 31.2% & 18.0% • 2. Canada: Canada is by far the leading U.S. export market for building products, with U.S. exporters enjoying almost 60% market share in this stable, mature, yet growing market. • Policy Action: Using NAFTA and APEC for a, work to harmonize building codes, product standards, and testing/certification practices, especially in the area of sustainable construction materials. • Import Market Size (2009): $28.2 billion; CAGR ‘00 – ’09: 2.3%; US Share (2000 & 2009): 76.1% & 59.3% • 3. China: China is the world’s largest construction market and the third leading U.S. export market for building products. There are strong growth opportunities in the area of sustainable construction. Industry support for U.S. trade promotion activities in China is exceptionally high. A current Market Development Cooperator Programs has produced tremendous results. The development of formal public-private partnerships has resulted in increased industry activity and success in exporting building products to China, especially in the medium/high end construction sectors. • Policy Action: Pursue tariff reductions in the WTO and other regional/multilateral fora, including a forest products tariff sector strategy in the WTO NAMA negotiations. • Policy Action: Encourage the development of consensus-based construction standards in the WTO and international standards-setting processes. • Import Market Size (2009): $60.4 billion; CAGR ‘00 – ’09: 14.7%; US Share (2000 & 2009): 11.3% & 9.3% • 4. Mexico: Mexico is a strong number two export market for U.S. building products, with U.S. exporters enjoying a 58% market share in this reliable yet growing NAFTA trading partner. • Policy Action: Encourage the development of consensus-based construction standards, building codes, and testing/certification practices in NAFTA and APEC meetings. • Policy Action: Work with U.S. industry to conduct standards education through trade and industry events in support U.S. competitiveness interests. • Import Market Size (2009): $24.1 billion; CAGR ‘00 – ’09: 1.4%; US Share (2000 & 2009): 81.9% & 58.4%

  12. U.S. Exports of Plumbing Products - $1.82 Billion in 2011 Plumbing Products Approx. 3 Percent of U.S. Building Products Exports in 2011

  13. Plumbing Goods and Services Exports Were up 17% from 2009 to 2010 and an additional 11% from 2010 to 2011 * Services Figure Source: World Plumbing Market Report, ReportLinker, September 2012

  14. Plumbing Exports Were Up 9% from 2009 to 2010and an additional 13% from 2010 to 2011

  15. Top 10 Plumbing Products Export Destinations 2011 By Value (minus services)

  16. Breakdown of U.S. Plumbing Exports by Products (2011 by Value)

  17. Thank You Gary Stanley Acting Office Director Office of Materials Industries U.S. Department of Commerce Tel. 202.482.0376 E-Mail: Gary.Stanley@trade.gov Salim Moiz Bhabhrawala Senior International Trade Specialist, OMI U.S. Department of Commerce Tel: 202.482.1784 E-mail:Salim.Bhabhrawala@trade.gov

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