Small businesses: Exporting to Extend Reach
By Ann Meyer
At the first signs of a slowing U.S. economy a few years ago, Karen Eng,
president of CSMI in Schaumburg, cast her eyes on new markets.
"When the recession started to come, I diversified my clients, then my
capabilities. Now I'm trying to diversify economies" by tapping
potential customers in China, Eng said.
Eng traveled to China three times last year to make sales calls and push
advice from her consulting company, which serves Fortune 500 food and
beverage, pharmaceutical and personal-care companies. She worked with
the U.S. Commerce Department's commercial service to find translators
and drivers in China and asked her domestic contacts to open doors for
her across the Pacific.
"I was leveraging my relationships," she said.
While America long has been considered the land of opportunity, there is
clearly some promise to foreign markets. In 2009, Illinois companies
exported $41.5 billion in merchandise to Canada, Mexico, China, Germany,
the United Kingdom and other markets, according to the Census Bureau's
Foreign Trade Division.
"If small businesses can sell more, they'll produce more, and more
people can find work," U.S. Sen. Dick Durbin, D-Ill., said at a
small-business export promotion forum he hosted last week with the U.S.
Small Business Administration. "American consumers can't be counted on
to lead our economy back to recovery. We need to look to demand beyond
the United States."
With Illinois' unemployment rate at about 11 percent, Durbin said, "We need the jobs now."
But the jobs won't come easily. In many cases, small exporters say, they
are lucky to add any new positions, let alone in large numbers.
Skokie-based ProMark Associates, which won an Export Achievement
Certificate at the forum, has added two jobs related to a $611,000
contract to supply its proprietary clean-air-filtration system to a new
airport terminal in New Delhi, said Bernice Valantinas, chief operating
officer. The contract also will support workers at contract
manufacturers in the United States, she said.
The customer found ProMark on the Internet, Valantinas said, and the
Commerce Department's Commercial Service helped with the bidding. Next,
ProMark is expecting to secure a $6 million contract to outfit other new
terminals at the airport, scheduled for construction next year,
Valantinas said.
Sawmill Hydraulics, a Farmington, Ill.-based manufacturer of sawmill
equipment that employs 25 workers, has added five workers in the past
two years and is hiring two more, due partly to growing international
sales, said Chris Helle, vice president.
Sawmill's products are priced 30 percent to 50 percent lower than
similar equipment made overseas, he said. A weak dollar on the
international market adds to the savings.
If U.S. companies doubled their export volumes, 2 million new jobs would
be created, President Barack Obama's administration estimates. But
others point out that exporters often end up hiring workers overseas or
moving production there entirely.
Promoting exports "looks good as a headline, but it's not a real,
executable opportunity," said Dan Brown, adjunct associate professor at
the Segal Design Institute at Northwestern University's Robert R.
McCormick School of Engineering. "If they really wanted to (promote) it,
they should focus on making the playing field more fair."
When companies include value-added taxes imposed at many foreign
borders, plus protectionist measures, U.S. manufacturers are at a
disadvantage, said Brown, who is also president of LoggerHead Tools in
Chicago, which produces its wrenches in the United States.
"We struggle exporting because we don't have subsidized costs like in
China, and labor is higher," he said. "The price difference is so great,
buyers won't do it."
Brown would like to see a reciprocal open marketplace solution, rather
than protectionist measures, so that U.S. companies wouldn't have to
move their manufacturing offshore to compete. LoggerHead exports to
Canada because the North American Free Trade Agreement has leveled the
playing field.
Philos Technologies in Wheeling hopes to add 10 workers by growing
international sales of its surface treatment technology, President
Samuel Ko said.
"Initially, we will be exporting. But as we go on, we may set up
satellite manufacturing in China," said Ko, who employs 40 workers at
four facilities in the U.S. and four in South Korea. Philos Technologies
recently received its first Chinese contract.
Meanwhile, ProMark contracts with U.S. manufacturers but has not ruled
out moving some production overseas, particularly because the New Delhi
airport requires that a certain portion of the filtration system be
built in India, Valantinas said. "It's not a level playing field in so
many ways."
Still, American-made products can compete on value, said Benjamin Shaw,
president of United Printing Equipment & Materials Corp., a
Skokie-based distributor of U.S.-produced Mark Andy printing presses to
China, Hong Kong, Vietnam and Taiwan.
"In my business, made in the U.S.A. means value, reliability and durability," he said.
Even so, Shaw said, his equipment sales were slow in 2009.
"Our customers are dependent on exports to the U.S.," which declined, he
said. But over time, as the standard of living increases, Shaw said,
"China will be a huge market for consumable goods."
mindingyourbiz@gmail.com
Government programs for exporting
•U.S. Commerce Department's Commercial Service, which provides assistance and counseling, export.gov, 800-USA-TRADE
•U.S. Export Assistance Centers, U.S. Small Business Administration,
which provides technical assistance and loan program, sba.gov
•Export-Import Bank of the United States, which provides credit insurance, loan guarantees, working capital, http://www.exim.gov
•International Trade Administration, trade.gov