Manufacturers Looking Overseas Companies Rely On Healthy Export Market To Fuel Sales Next Year

Manufacturers, faced with the prospect of slower U.S. growth in 1997, are counting on exports to keep unsold goods from piling up in the new year.

With the economy shifting into lower gear, manufacturers expect to see slower demand in the U.S. At the same time, however, they expect to export more goods, from housewares to aircraft, as economies overseas recover from this year’s lull.

“Outside the U.S., the Tupperware business should do well,” said Warren Batts, chairman and chief executive officer of the Orlando, Florida-based Tupperware Corp., which makes household food storage containers.

Corporate purchasing managers predict their exports will grow more rapidly than their imports next year, the National Association of Purchasing Management said earlier this month.

Companies already are gearing up to fill larger orders from overseas. Boeing Co., for example, recently announced it will double production of its popular twin-engine 737 jetliners to a record 21 a month in late 1997 to meet strong global aircraft demand.

A Cahners Economics study this week said manufacturers expect both production and inventories to grow next year. Manufacturers “don’t expect any major changes in economic policy, or in the moderate pace of economic expansion during the early months of 1997,” the study said.

Economists expect a pickup in growth worldwide to help U.S. manufacturers prevent an accumulation of unsold goods. “Our major trading partners are showing evidence of turning around,” said Brian Horrigan, economist at Loomis Sayles & Co. in Boston. “Canada, Mexico and Europe will show pretty decent growth in 1997, and that should allow them to suck in U.S. exports.”

Factories appear to be preparing for that demand. Industrial production surged by the largest amount in nine months in November as strikes against General Motors Corp. ended, the Fed said. Production at factories, mines and utilities increased a larger-than-expected 0.9 percent last month after falling a revised 0.2 percent in October. Capacity utilization rose to 83.3 percent last month from 82.9 percent in October.

“If you look at the industrial sector of the economy, capacity’s growing quite rapidly,” Fed Gov. Laurence Meyer said in an interview earlier this week. “But there are no signs of excess there, no bottlenecks, no powerful demand pressures.” Overall, the U.S. economy should slow to a 2.0 percent to 2.25 percent growth rate next year with tame inflation, Meyer said. “The economy seems pretty well balanced and pretty healthy,” he said. “There are not a lot of excesses out there right now. The important word here is the risks are balanced.”

Among manufacturers expecting exports to help sales in the first part of 1997 is Midwest Grain Products Inc. The Atchison, Kan., producer of beverage and industrial alcohol expects sales growth of 5 percent to 9 percent in the first quarter of 1997 over the first three months of this year, said Robert Booe, chief financial officer.

Higher sales to Russia will push up first quarter profits, Booe said. He sees U.S. demand for drinking alcohol and wheat gluten to be flat, while sales of industrial alcohol rise.

Earlier this month, Black & Decker Corp. said it is counting on demand from Europe to help bring the company out of a slump it expects to continue for the next two quarters.

After a disappointing start in Europe, “we are beginning to see some improvement in European markets, and our new products are doing well,” said Nolan D. Archibald, chairman and chief executive officer.

“Consequently, we are optimistic that the rate of sales growth will increase through 1997” from the 2 percent to 3 percent growth rate in the current fourth quarter, Archibald said.