Hope for Michigan businesses? One word: Exports
Michigan’s declining population and slow economic growth are prompting many companies, including mom-and-pop operations, to consider exporting.
“There’s been a tremendous increase in interest,” said Patrick McRae, a trade specialist at the United States Commercial Service in Grand Rapids. “A lot of it is due to the economic downturn. But the global nature of modern business makes exporting essential.”
McRae also maintains an office at Michigan State University’s International Business Center, which was started just over a year ago to help small and medium-sized companies export their products abroad.
Faculty and students at the center perform free market research for companies wanting to serve global markets.
Once potential markets are identified, McRae and his staff connect those Michigan businesses with overseas distributors and help them make travel arrangement to set up business arrangements in other countries.
“Many companies in these economic times don’t have resources to figure out if they have a viable market in another country,” said Tomas Hult, director of MSU’s International Business Center. “We do the market research and the Commercial Service helps them close the deal on the back end.”
So far, the MSU center has helped 40 companies start exporting. Hult said nondisclosure agreements prevent him from discussing those deals, but he did say one business the center aided was run by an East Lansing dermatologist who manufacturers lotions and wanted to sell them in China.
The center also helped Lansing’s Capital City Airport obtain a Foreign Trade Zone designation. That allows local companies to import parts from other countries duty free, process them into finished products and export them.
Michigan exports took a big hit over the past several years because of the global economic crisis, but shipments are rising again.
Last year, Michigan sold $44.5 billion worth of goods to the rest of the world, up 36.3 percent from 2009.
Autos and parts made up about half of the state’s exports. But Michigan companies exported a wide range of products, from $850 million worth of consumer foods to $396 million in components for barber, dental and other medical chairs.
Michigan’s two largest trading partners have long been Canada and Mexico, respectively. But China has surpassed Germany as Michigan’s third-largest export market in recent years.
Companies in Michigan sold $2.2 billion worth of goods to China last year, up 63.5 percent from $1.3 billion sold in 2009.
President Barack Obama is pushing exporting as one way to boost the sluggish U.S. economy. His National Export Initiative includes increased technical assistance for exporting and offers loans for small businesses to help them sell goods in other countries.
Some critics say the president’s goal of doubling U.S. exports by 2015 is too ambitious, but Hult said he thinks the target can be met.
“Less than 1 percent of U.S. companies export,” he said. “It wouldn’t take a tremendous amount to get to a doubling of that percentage.”
Michigan, which still has a strong manufacturing base, can play an important role in boosting global trade.
Among the members of the President’s Export Council are Ford Motor Co. CEO Alan Mulally, Dow Chemical Co. Chairman Andrew Liveris and Sen. Debbie Stabenow of Michigan.
“We have more representation on that council than any other state,” Hult said.
McRae said companies used to tell him that they didn’t need to export because sales were so strong at home. That’s no longer the case for many businesses.
“Circumstances have changed that tune,” he said.
Email Rick Haglund at Haglund.email@example.com.