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Exporting to help sales driving growth in Michigan
Exporting is crucial to America’s economic health and stability. For Michigan, it is extremely crucial. Increased exports mean increased sales, business growth and new jobs for Michigan companies.
In President Obama’s State of the Union speech, he presented his plan to rescue, rebuild and restore America. Part of his plan is to “double exports over the next five years, an increase that will support 2 million new jobs in America.”
Michigan has taken this challenge and could very well meet or surpass the president’s plan. For Michigan to accomplish this goal, more businesses need to consider exporting as an option.
Trade is already stimulating economic growth in Michigan, but it will experience economic growth faster if more small businesses start exporting. According to the National Association of Manufacturers, the total exports from Michigan have increased by $8 billion over the past five years. Thousands of manufacturing jobs depend on the export of manufactured goods. The latest data show 243,000 jobs in Michigan depended on trade; of these, 141,500 are manufacturing.
Joe Sabo is the president of Sabo Industries, which provides centrifugal foam buffing pads. Sabo Industries recently started exporting when a Brazilian company contacted it to provide samples.
“The company found that to import quality foam and build the dies made it too expensive to build in Brazil. So we worked with them for 10 months, and we are scheduled to export our first shipment to them Oct. 3,” Sabo said. “We are already looking at additional foreign markets to sell our products.”
According to the Department of Commerce, there are 10,373 exporters in Michigan. Of these companies, 89 percent (about 9,265) of small businesses export in Michigan. These companies exported over $6.5 billion worth of goods to markets throughout the world in 2006 alone. This is roughly $685,766 per small business.
Is exporting for your business?
A clear division no longer exists between domestic and international markets. In a world of over 6 billion people, global communication networks, overnight airfreight deliveries across the globe and access to resources to assist small businesses with foreign trade, it simply doesn’t make sense to limit a company’s sales to the local or even the national market.
“If a company’s strategy is reactionary, then they may never know if exporting is an option for their business,” said John O’Gara, regional manager Export Solutions Group Office of International Trade with the U.S. Small Business Administration. “Firms that proactively plan to do business in foreign markets are much better poised to succeed. It takes a long-term commitment by top-management to make the investment of time and money to set the course.”
Michigan has 835,946 small businesses, according to the most current federal data available. Of those, 187,373 have employees. So, why don’t more of them consider exporting? One reason is that they do not know how to engage with foreign markets.
The Export Assistance Center in Grand Rapids, serving the entire western portion of Michigan, is a great place to start. “We can help small businesses decide whether entering into foreign markets is for their company,” commented Tom Maguire, director/international trade specialist for the Grand Rapids Export Assistance Center U.S. Department of Commerce, ITA.
Maguire and two other trade specialists, Kendra Kuo and Patrick McRae, are in the Grand Rapids office to assist West Michigan small businesses.
“We will meet with them and together we will examine the exportability of their products for foreign markets,” he said.
The Export Assistance Center also makes company referrals to the Western Michigan District Export Council, a group of volunteers appointed by the Secretary of Commerce who have expertise and insight on foreign distribution, international logistics and other legal issues. The DEC helps companies create export market plans as they address export opportunities, regulations, international business culture and practices.
“If you have a product that is locked in and slow moving in the U.S., it might be advantageous for a small business to consider foreign markets,” stated Sabo.
An additional resource is the Van Andel Global Trade Center located at Grand Valley State University. The VAGTC partners with the U.S. Department of Commerce, the SBA’s International Trade Program and the Michigan District Export Council.
“The VAGTC assists businesses in learning the ins and outs of what it means to go global,” said Sonja Johnson, executive director. “Through relevant consulting and training programs, companies gain the tools and knowledge they need to take the next steps to become engaged with foreign markets.”
Lending for exporting
Companies need to prepare before presenting their exporting plan to a lender.
“Every business has its own story to tell,” said Martha Gabrielse, vice president for global trade at JPMorgan Chase’s Grand Rapids office. “So it’s very important to take the time to meet with their lender, present up-to-date and thorough financial statements and business plan, and have an ongoing and open discourse.”
Gabrielse has 25 years’ experience in global trade and serves on the Michigan District Export Council. She has seen a shift in small businesses to exporting. “More businesses are exporting across the board,” she said. “The lending aspect is difficult to isolate because companies borrow for myriad reasons. I know that our small business lending is up, in general.”
President Obama’s export initiative
The president’s plan to double exports over the next five years is a goal for the nation to strive to achieve. Michigan is no exception.
“Michigan stands a very good chance at meeting or exceeding this goal, because small businesses are realizing they should look outside of U.S. markets for customers. Wishfully, they should have started years ago,” commented the Commerce Department’s Tom Maguire.
Gabrielse has seen increased local trade activity. “From what I observe, Michigan is on track in our pursuit of President Obama’s goal,” she said. “As both a global trade specialist for JPMorgan Chase and as a member of the Michigan District Export Council, I see a continued increase in not only interest in export, but activity as well. I would say that most of the clients I meet with are conservative and deliberate in matters of trade — global or domestic — and this has served them well.”
Small business owners who would like to consider exporting should contact the U.S. Department of Commerce at www.commerce.gov, the SBA at www.sba.gov, or Van Andel Global Trade Center at www.gvsu.edu/vagtc
Jennifer Deamud is marketing manager at the Small Business Technology and Development Center in the Seidman College of Business at Grand Valley State University.