Wisconsin companies recovering from the effects of the Great Recession are beginning to look around the world for new business, says Lee Swindall, acting director of the Wisconsin Manufacturing Extension Partnership (WMEP). “The inquiries from companies for assistance in developing international sales has increased dramatically in the last four to six months. It’s like a tectonic shift has occurred.”

Export experts call it global engagement, which involves creating a business advantage through people, partnerships and systems that can open doors to global markets, talent and resources.

The Wisconsin Next Generation Manufacturing Study of Wisconsin businesses indicates much work remains to leverage the expertise and products of Wisconsin companies. Only 21 percent of the respondents rated global engagement as highly important in the company’s success in the next five years. Further, only four percent of the respondents believe they are a world-class global player. That leaves much room for improvement.

Today, Wisconsin ranks 11th in the nation for all exports of manufactured goods and 19th in the value of all exports, says Mary Regel, director of the Wisconsin Bureau of Export Development. “It produced $20 billion income in the state in 2010, but only accounted for seven percent of the gross state product. There is tremendous opportunity outside the United States for sales of Wisconsin products. Three-quarters of the world’s purchasing power and 95 percent of the consumers are outside of the United States,” Regel says.

Employees that work at companies with international sales efforts, on average, make 18 percent more than companies without international sales. “These companies also have a higher rate of growth and greatly reduced chance of layoffs or closing,” Regel reports.

Swindall agrees. “Most firms were comfortable selling only domestically until 2007. The economic downturn choked domestic demand and to survive companies needed to find new markets. Companies selling globally fared better in the recession and now small- and mid-sized companies are interested in worldwide markets. If you produce a unique product or have intellectual property, exporting it can be done successfully.”

German contrast
While Wisconsin manufacturers have a long way to go to develop a global presence, it’s quite different in the industrial belt of Germany. “That region matches up well with Wisconsin. It produces high-quality, value-added products. The difference is that the German companies export as much as 80 percent of their products. They are connected globally and source talent from around the world,” says Swindall.

Export markets will continue to grow as developing countries build infrastructure and improve their standards of living. The demand curve outside of the United States will increase sharply from now until 2035, while it will likely remain relatively flat in the United States, says Swindall. “That’s why it makes sense to look beyond our borders for sales.”

Get started
How can a company become globally engaged?

WMEP and the Wisconsin Department of Commerce Bureau of Export Development have a variety of resources and advisors available. The Export Bureau’s Export Development Managers provide technical assistance to companies wanting to grow into new international markets. They have also teamed up to present ExporTech, an intensive three-month training program that is a one-stop shop for companies that want to begin or improve their export programs, says Swindall.

“ExporTech started last year and allows up to eight companies to build an export plan that’s peer- and professionally reviewed for under $1,000,” says Swindall. “It’s an intense program, but has been very successful. Many companies that have gone through the program are reporting actual or expected sales increases of 20 or 30 percent.”

ExporTech demystifies the process and gives manufacturers the resources they need to hit the ground running. A coach/mentor helps companies collect market data, identify target markets and create an international growth plan. A panel of successful exporting companies and international business experts provide guidance and feedback. Participants discover new markets for their products and gain knowledge on logistics, finance, regulation and other topics. WMEP offers the program twice a year and scholarships and grants are available.

Swindall suggests one of the easiest steps in tapping international demand is finding a distributor who can represent your product in that country or region.

Another strategy: Partner with a complimentary manufacturer for your product. “For example, if you produce fuel tanks, look for a flow control valve manufacturer that has a technology that can add value to your tank and make it more of a complete product.” Swindall says.

For greatest impact, Swindall also suggests you conduct market research and pick your first targets, based on sales potential. “WMEP can help companies do this,” he concludes.




ExporTech aides international sales
Evansville-based Harvard Corporation is no stranger to international sales. The company, with sales under $5 million annually, has exported its products for more than 20 years. Today, international customers make up nearly a quarter of its sales of filtration systems for oil, fuel and cooling equipment. “We were part of the first group of companies to go through ExporTech,” says Otto Knottnerus, company president. “The program helped us identify mud puddles we didn’t want to step in and gave us access to resources at the Department of Commerce and at U.S. embassies that we didn’t know were available.” Before attending ExporTech, the company often faced shipping issues that added cost. “Price competition is keen across the world and it helped us find ways to reduce costs so we can be more competitive,” he says.
(See page 30 for more information on ExporTech.)

Exports buffer economic downturns
HWD Acquisitions, based in Medford, makes high-end Hurd brand doors and windows for residential and light commercial construction. This $50+ million annual sales company has found that international sales have taken some of the sting out of the Great Recession. “Export sales have allowed us to reduce layoffs that occurred when the U.S. market went into recession,” says Scott Kleiforth, director of international sales. “In the ’90s, experts were only six percent of our sales. Last year, exports were 16 percent of our sales.” Developing international sales takes patience and persistence. “This is much more about building relationships and developing a mutual trust with customers. Export sales don’t have to be daunting. There are plenty of resources available through the Department of Commerce. Establishing credit and protecting your sale is an important point to consider in international sales. “Financing is important. It means getting letters of credit, cash advances or credit insurance to protect your company,” he says.

Export sales leverage growth plans
Milwaukee-based medical equipment parts supplier Alpha Source president Norine Carlson-Weber says export sales have been an important component in the company’s growth strategy for the last five years. “Export sales account for 15 percent of our gross revenue and we are on target to grow exports to account for 30 percent of our company’s revenue,” she says. Participation in international trade shows and developing an international network of distributors and contacts play a big role in ferreting out export sales. “Some cultures prefer to meet you in person before doing business with you, others not so much. You need to be aware of the customs of the country,” she says. She says extending credit outside of the United States can be tricky and in some cases, downright risky. “Get paid upfront or get insurance to cover receivables if the customer doesn’t pay.” She has found the assistance from the Wisconsin Department of Commerce extremely valuable in locating distributors.

By Clair Urbain

Clair Urbain of Urbain Communications provides marketing services to a variety of business-to-business clients in Wisconsin and across the country.

More Featured Articles