In the News
Missouri small businesses get help to boost exports (3-18-11 St. Louis Post-Dispatch)
Gary Watson envisions a day when a quarter of his sales are outside U.S.
That may seem daunting for Watson Coatings, a company in Ferguson that employs only 36 people to make industrial coating products for concrete, steel and plastic.
Yet, Watson said there's growing demand overseas for environmentally friendly coatings offered by his company. The 32-year-old company began exporting to Canada, Mexico and Japan only in the last few years, and now exports make up 5 percent of sales.
Watson Coatings increasingly gets queries from outside the U.S. for its product line, he said, which includes water-based coatings as alternatives to lead-based coatings.
"We're hoping to open their eyes that there are safer products," he said.
Watson Coatings is one of many small and midsize Missouri businesses looking to exports as a way to diversify their customer base and increase sales. Local efforts under way to boost exports come as the Obama administration announced a goal earlier this year to double the nation's exports in the next five years.
After the global recession spurred a sharp drop in 2009, Missouri exports last year increased 36 percent to $12.9 billion, according to the World Trade Center St. Louis, outpacing the national average by 15 percentage points. Canada receives the largest share of Missouri goods, followed by Mexico and China.
The state's small and medium-size companies, with fewer than 1,000 employees, are helping drive the state's export gains. Exports by these firms accounted for a quarter of Missouri's exports in 2009, and state economic development officials say that figure may rise to as high as 35 percent in 2010, when they complete their evaluation of 2010 export data.
"They have been trending up," said John Fougere, spokesman for the Missouri Department of Economic Development. "Inquiries to our international division of the Department of Economic Development by smaller companies requesting help in identifying trade partners overseas have grown dramatically in the last six to eight months."
To help identify new markets and create a new export plan, Watson Coatings is participating in ExporTech, an annual training course. The course, supported by state agencies, was developed in 2006 by the U.S. Commerce Department and the U.S. Commercial Service to provide training for businesses on financing, licensing, intellectual property, risk and logistics related to exporting.
ExporTech programs have been held in 20 states, and nearly 270 companies have participated.
"We have coaches and mentors available who have been through it before and know the challenges," said Dusty Cruise, president and chief executive of Missouri Enterprise, which is running the state's ExporTech program. Rolla-based Missouri Enterprise is funded in part by the Missouri Department of Economic Development.
The course, which was previously held in Joplin, was held this year in St. Louis for the first time. The current program, which already started earlier this month, costs $900 and concludes in May.
Illinois has not yet held an ExporTech program, but state economic development officials have had preliminary discussions about holding one. The state posted $49.8 billion in exports last year, up nearly 20 percent from 2009. Most of its exports are from Chicago-area companies.
For Global Products Inc., which makes licensed apparel and gifts for companies including Harley-Davidson, ExporTech offers an opportunity to learn more about tariffs and currency fluctuations.
The St. Peters-based company, with 90 employees, suffered sales declines during the economic downturn and had layoffs in 2007.
Sales to overseas customers make up less than 20 percent of Global Products' business, but exports are a critical part of the company's growth plans, said company President and Chief Executive Rebecca Herwick.
Last year, Global Products had $13.5 million in revenue, and Herwick projects sales will reach $15 million this year.
"We're working our way back," she said.
Programs like ExporTech are just some of the assistance available to small and medium-size businesses that want to increase their exports or learn about how to start exporting.
The World Trade Center St. Louis, which is based in Clayton, provides training programs throughout the year, and helps companies evaluate export opportunities.
"If a company wants an analysis of their products and where they might have success, call us," said Tim Nowak, executive director of the World Trade Center.
Nowak said identifying new exporters will be important in helping establish a China hub in St. Louis, a project he has been working on for several years. Missouri exports to China in 2010 totaled nearly $1 billion, a 43 percent increase from 2009.
"The success of the hub rests on our ability to grow the number of exporters," Nowak said. "We have to fill the planes (to China)."
The U.S. Commercial Service office in Clayton has nearly a dozen free webinars — seminars offered via webcast — on exporting available and connects local business owners with representatives in its 100 offices in embassies and consulates worldwide to help overcome export barriers, said Chris Poli, senior trade specialist with the U.S. Commercial Service.
The increase in manufactured goods in China and other Asian countries is prompting more U.S.-based companies to look for ways to increase exports to offset domestic sales losses, Poli said.
"It affects everyone, and companies know that if it doesn't affect them today, it will," she said.
Through an executive order, the Obama administration created the National Export Initiative in January to encourage small companies to increase exports. The initiative calls for increased trade missions and federal export assistance.
Also this year, the maximum amount for a loan guarantee through the U.S. Small Business Administration's Export Working Capital Program increased to $5 million in January, up from $2 million. Through the program, the SBA guarantees 90 percent of a loan to provide capital for small businesses that are exporting.
John Blum, who oversees financing programs for the SBA in four states, including Missouri, said that since the loan maximum was raised, demand has increased dramatically. In the St. Louis area, eight companies used the EWCP program in the SBA's fiscal year that ended Sept. 30. Based on activity since the start of the year, he expects that figure to double in fiscal 2011.
"It helps companies that are growing to have needed capital to grow," Blum said.
There may also be additional resources available for Missouri companies looking to grow exports. The state of Missouri is applying for a grant through the U.S. Small Business Administration's STEP program that's part of the Small Business Jobs Act of 2010.
The grant program, announced March 3, will offer $30 million annually to states in 2011-13 to support efforts to increase exporting by small businesses. Fougere, of the state Economic Development Department, said Missouri is readying its application for a yet unspecified amount.
Training and assistance can make the difference for a small business.
Osagian Canoes, a subsidiary of Lebanon, Mo.-based Carmeco Inc., had less than 1 percent of its business outside the U.S. in 2010.
The company had regularly received phone calls from potential overseas clients in recent years, but the firm was worried about the high cost of shipping assembled canoes, said Carmeco Vice President John Carr.
Last year, Osagian participated in ExporTech, which helped the company develop an export plan.
"We became aware of other markets, and we have a ton more confidence with it now," Carr said.
Osagian now ships unassembled canoes overseas, allowing for up to 400 canoes to fit in a freight container, compared with 20 assembled canoes. In December, Osagian opened a canoe assembly facility in Denmark, and now exports account for 15 percent of its business.
"The U.S. market for canoes is saturated, which is why we starting to look for ways to grow outside the U.S.," Carr said.
"The discretionary income in Europe is not much behind the U.S. We could potentially double our sales."