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Given my “look under the hood ethos,” like I was going to pass up the chance to do a deep dive into the full-year 2014 trade figures that were released last week? Not a chance!

The exercise is especially interesting this time because I looked at what I call the “deep deficit” in October, examining the year-on-year changes for that month. Now that we have the full-year figures, we can see what’s changed – and the results surprised even me.

First, let’s set the scene: Manufacturing overall ran up a $733.90 billion trade deficit in 2014. That’s 13.47 percent greater than the previous record deficit of $646.77 billion – set in 2013. This trend clearly is not domestic manufacturing’s friend.

At the same time, much of this deficit is in labor-intensive consumer goods sectors that were decimated long ago, and which can’t possibly be reshored to any meaningful degree. Moreover, although they provided good livings for millions of working class Americans – they’re not the type of production that’s central to America’s future as a high-wage, first-world society.

That’s why the deep dive is so important; it permits an examination of the high-value, capital- and technology-intensive industries that are the keys to continuing prosperity. And these data don’t make for a pretty picture, either.

Let’s start with those major manufacturing industries whose deficits grew between 2013 and 2014, with the January-October 2013-2014 percentage change figures I posted two months ago on the left, and the full year 2013-2014 numbers on the right. The sectors are listed in descending order of their trade deficits in absolute terms:

Pharmaceuticals:                                                                       +28.76%   + 31.90%

Telecommunications gear:                                                           +8.52%     +10.27%

Iron and steel:                                                                         +67.58%      +72.05%

Heavy duty trucks and chassis:                                               +151.85%    +111.02%

Metal-cutting machine tools:                                                       +2.32%       +1.43%

Search, detection, navigation, guidance instruments:                +144.50%     +94.90%

Industrial valves:                                                                       +27.84%    +29.64%

Cutting tools and machine tool accessories:                               +41.45%     +43.72%

Automatic environmental controls:                                            +21.22%     +17.60%

Ball and roller bearings:                                                           +25.69%      +20.45%

Metal-forming machine tools:                                                  +36.65%      +38.91%

What I hate about these data is that six of the eleven industries with worsening deficits saw their deficits continue to worsen. Only five made up competitive ground in the last two months of the year. As for the automotive numbers, they suggest that maybe it’s most accurate to speak of a boom in auto parts imports in addition to one in domestic vehicle production. (Where, as we’ll see, a deficit – the biggest in all manufacturing – slowed its decline.)

And don’t forget the supposedly booming automotive sector! All of these sectors suffered from worsening trade deficits on a January-October 2013-14 basis. Here’s how much their trade shortfalls widened on a full-year basis:

transmission and power train parts                             +10.45%

engines and engine parts                                            +22.06%

motor vehicle electronics:                                           +11.68%   

tires and tire parts:                                                       +3.28%

motor vehicle steering and suspension:                        +18.95%

motor vehicle seating and interior trim:                        +14.29%

vehicular lighting equipment:                                       +30.88%

motor vehicle brakes:                                                +22.75%

motor vehicle air conditioning:                                     +6.51%

Moreover, the huge miscellaneous auto parts sector saw a $1.61 billion deterioration in its trade balance, the motor vehicle stampings surplus fell by 3.26 percent, and the much smaller deficit in vehicle bodies fell by nearly a third.

Many other trade-deficit sectors saw these shortfalls shrink from the first ten months of 2013 through the first ten of 2014. How did they finish the year? Here are the results, again presented in descending order of surpluses in absolute terms with the January-October numbers on the left:

Autos and light trucks:                                                                  -4.49%       -3.52%

Broadcast and wireless communications equipment (a category that includes smart phones):                                                                                      -8.75%       +0.84%

Computers:                                                                                 -2.18%       -2.59%

Medicinal and botanical drugs and vitamins:                              -12.73%        -9.81%

Computer parts:                                                                      -20.75%      -12.81%

Computer storage devices:                                                        -8.53%        -7.55%

Relays and industrial controls:                                                   -6.67%        -9.97%

Speed changers, high-speed drives, and gears:                       -10.95%       -12.98%

Special dies, tools, and fixtures:                                                -7.03%      -18.66%

Motor vehicle bodies:                                                            -23.15%       -32.67%

Fluid power valves and hose fittings:                                        -9.76%         +4.44%

The bottom line? Six of these eleven saw their deficit shrinkage slow, and in two of those sectors, deficit shrinkage turned into deficit growth.

But there’s another category of recent trade losers – relatively speaking – that shouldn’t be overlooked – those industries that run trade surpluses, but whose surpluses have shrunk. Here’s how a representative sample of those has fared, presented in the same format as immediately above:

Plastics and resins:                                                                 -6.19%           -6.11%

Oil and gas field machinery and equipment:                          -10.14%            -7.31%

Turbines and turbine generator sets:                                      -3.83%            +0.74%

Miscellaneous basic organic chemicals:                                -67.17%          -56.49%

Laboratory instruments:                                                       -12.13%          -10.54%

Semiconductors and related devices:                                   -21.11%          -20.76%

Mining machinery and equipment:                                        -12.15%          -10.19%

Electricity measurement and test equipment:                         -16.73%          -11.59%

Farm machinery and equipment:                                          -44.76%          -55.82%

Pumps and pumping equipment:                                          -61.20%          -57.86%

Motor vehicle metal stampings:                                           -2.07%              -3.26%

Electro-medical devices (like CAT scan & MRI machines): -71.02%          -74.37%

Nonetheless, here there’s a silver lining to the story – nine of the twelve sectors listed had less annual surplus shrinkage at year-end than over the first ten months of 2014, and turned surplus shrinkage into surplus expansion.

Finally come the manufacturing sectors that are the biggest trade winners – those with surpluses that rose January-October, 2013 to the same period, 2014. Here are those previous results, plus the full-year 2013-14 changes, presented in the same format:

Aerospace products and parts:                                           +4.88%            +5.92%

(As is not the case with industries like autos, the data enabling a breakdown of aerospace trade balances into parts trade and finished aircraft trade are no longer available.)

Semiconductor manufacturing equipment:                         +44.30%           +33.80%

Pesticides and other agricultural chemicals:                          +4.51%            +2.41%

Miscellaneous general purpose machinery:                          +3.80%             -2.07%

Non-costume jewelry:                                                     +218.63%       +381.69%

Miscellaneous basic inorganic chemicals:                         +175.52%         +147.47%

Non-diagnostic biologic products (vaccines):                     +36.81%          +71.60%

Ships:                                                                          +1,438.81%        +611.76%

Optical instruments and lenses:                                        +268.00%          +51.76%

Power boilers and heat exchangers:                                   +93.18%         +23.78%

These ten industries clearly are in fine competitive shape. But seven of them arguably were in less fine shape in December than in October, and in one, trade surplus growth turned to trade surplus decline.

Finally, no review of manufacturing’s trade year would be complete without mentioning the jaw dropping worsening of the construction equipment trade balance – by $5.10 billion, into a $1.02 billion deficit – and the 10-fold surge in the trade surplus for ethyl alcohol – to $1.443 billion.

As noted in the previous deep dive post, economists tell us that trade is desirable in the first place mainly because it drives each trading country to focus on what it’s best at economically, with deficits, surpluses, and their changes providing compelling evidence of evolving patterns of competitiveness. It’s hard to look at either the 30,000-foot-level manufacturing data and these details and be optimistic about America’s future even in the most valuable industries – unless someone in charge in Washington starts wondering if there’s something fundamentally wrong with the global trade system that’s producing these results.

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