THE BEEHIVE STATE HAS BEEN BUZZING WITH NEW GLOBALLY FOCUSED PROGRAMS

Exporting had never been on the mind of Tom Dickson, founder of Orem, Utah-based Blendtec, Inc. until he was approached by a staff member of the Governor’s Office of Economic Development (GOED).

“The state literally came to us and said, ‘We’d love to help you export products. We’ll help you go to these different countries and we’ll do everything we can.’ And they assigned a state [employee], who was from Austria, to help us in multiple countries. They were so helpful and it didn’t cost us a penny to get established.”

It helped Blendtec, a manufacturer of consumer and commercial blenders, develop an international program that now spans 90 countries with its dealers and distributors. But this export assistance wasn’t the first time the company received help from the state. Founded in California in 1978, when Blendtec moved to Utah in 1989, it needed and obtained from the state an $80,000 loan and the deed to land by the City of Orem.

The company has also benefitted from participation in state trade missions. “I just got invited to join a trade trip to Mexico and I’ve been on other trips,” Dickson says.

Utah has been active in its co-sponsoring of trade missions, often cooperating with such entities as the U.S. Commercial Service, FedEx and Zions Bank, one of the nation’s major SBA lenders and a recipient of the SBA’s Export Lender of the Year award.

Besides co-sponsoring trade missions—most recently one to Colombia and Panama to take advantage of last year’s free trade agreements with those countries—the bank, every May, has “a large trade and business conference where we focus on business and economic opportunity, including foreign trade,” explains Mark Garfield, a senior vice president for International Banking at Zions Bank, who also chairs Utah’s District Export Council.

“In recent years,” Garfield points out, “we’ve really increased our focus on supporting small- to medium-sized enterprises as they reach out to other countries to export.”

The bank, an SBA Export Express lender, also manages one of the state’s 14 Business Resource Centers.

In the past decade, Utah has assisted businesses—particularly in exporting—by establishing the Governor’s Office of Economic Development, an International Trade and Diplomacy office, a fellowship and internship program, a Corporate Recruitment and Incentives program, federal and university Small Business Development Centers, the Utah District Export Council, World Trade Center Utah, private non-profit centers such as the Utah Economic Council and the Economic Development Corporation of Utah, and the 14 Business Resource Centers created under a state act approved in 2008, not to mention funding the federal State Trade and Export Program (STEP).

In addition, says Vincent Mikolay, managing director of the Governor’s Office of Economic Development, “The governor leads foreign trade missions twice a year. This year, those will be Mexico and Brazil. In the past, the governor’s trade missions have gone to China, the U.K., Israel, Canada and Mexico.”

The 2014 Mexico trade mission was preceded by a Mexico Business Symposium aimed at educating business leaders on steps to strengthen Utah’s business relationship with Mexico.

One of his office’s goals, Mikolay explains, is to help small businesses “understand international markets and have an export-readiness plan in hand. Ultimately,” he adds, “we connect them with buyers and potential partners in other countries, matching foreign needs with Utah companies.”

“Utah,” says SBA Region VIII administrator Matt Varilek, “has developed a comprehensive export assistance network. The state, local resource partners and the SBA strategically work together to open the international marketplace for small business.”

How well has it worked? Exports have nearly tripled since 2007.

All this activity in a state that accounts for less than 1 percent of the nation’s total population has certainly been a factor in Utah being ranked as best state in business strength and economic growth and third for exports by the U.S. Chamber of Commerce in 2013; best state for business in 2010, 2011 and 2012, and third best in 2013 by Forbes; and the best state for small business in 2013, according to a survey by Thumbtack and the Ewing Marion Kauffman Foundation.

The state also provides ETIFs—economic tax increment financing—to companies that meet such specific expansion goals as hiring a certain number of new employees at 125 percent of their county’s average wage. A company can then deduct a designated amount from their state taxes the following year.

IM Flash Technologies, a Lehi, Utah-based manufacturer of flash memory chips for electronic products, has received three ETIFs totaling $54 million, according to GOED Director of Communications Michael Sullivan.

“The jobs have to come and the capital investment has to take place,” says IM Flash’s Governmental Affairs officer Stan Lockhart. “And then they give you a post-performance rebate on some taxes. There are other places—in fact, a majority of other places—that have far more generous incentive packages, but it’s the can-do attitude of the governor’s Office [of Economic Development] that really makes a big difference for us.

“When we want to get some additional skills out of our workforce, we can have presidents of local universities or officials from the public education community in our office in a few days to have discussions; or maybe people from the governor’s Office of Economic Development; or maybe it’s a group of legislators or the governor or a federal delegation. They’ve all been to IM Flash and spent time wanting to know what they can do to help us succeed. It’s a wonderful working relationship.”

IM Flash, which once accounted for as much as one-fourth of the state’s non-precious metals exports, hires so many engineers that it needed to go out of state to find sufficient numbers, according to Lockhart. To fix the issue, he met with the governor who then worked with the legislature to increase the state’s Engineering Initiative program by $2.5 million to enhance university engineering programs.

Hycomp, Inc., a Hyde Park, Utah-based manufacturer of oil-free air and gas compressors, had no intention of exporting. Then its website prompted inquiries from companies in India and China, says company president Robert James.

“We hooked up with the Utah District Export Council,” he explains, “and they’ve been of tremendous help. Figuring out how to ship [to international customers] and what you can ship certainly was a challenge without them. And the DEC has helped hook us up with customers overseas. We also attend DEC classes in Salt Lake about twice a quarter.

“Shipping from Utah is not as hard as it seems,” James points out. “Everything we ship has to be on a flatbed because it’s going overseas, about 95 percent of the time, by ship. We contract with a Salt Lake freight forwarder. We don’t do the containerization ourselves.”

Other help has come from the company’s revolving line of credit with the SBA’s export loan program, and from the local Export Assistance Center, James says.

“The local Export Assistance Center has never turned us down,” he says. “If they say they can’t help us, they’ll usually tell us who can. Once, someone from the Export Assistance Center even came out and visited us.

“Utah is a great place to do business,” James concludes. “There’s good support for business. And it has access to everything we need.”

NORTH CAROLINA IS MAKING SURE ITS GLOBAL BUSINESSES ARE WELL HEELED

Advanced Superabrasives, Inc., (ASI) had made several unsuccessful attempts to expand its export business into China before trying to break in through a joint venture with a Chinese company. That not only failed, the Chinese freight forwarder held a container of the company’s machinery used to make abrasive wheels and “tried to extort money from us” for its return, says Jonathan Szucs, general manager of the Mars Hill, North Carolina-based company’s international division.

“We were really naïve when we started exporting,” he now admits.

But the North Carolina Export Assistance Center (EAC), part of the U.S. Department of Commerce, provided advice and assistance to retrieve the container for what ASI actually owed and put Szucs in contact with “a real freight forwarder who was able to tell me things I needed to do.” Afterward, the EAC also helped him file a grievance with the maritime law authorities against the offending freight forwarder.

It was the beginning of ASI’s ongoing relationship with the EAC and its Export University, which has trained numerous ASI employees. And if U.S. Commerce can’t help, North Carolina’s Commerce Department can, Szucs says. “We use both interchangeably.”

The state has a trade office in Hong Kong that he says has provided great market assessments. “I also had them do background checks on a couple customers in China to make sure I wasn’t selling to the wrong people.”

China now is ASI’s top export destination, followed by Brazil and Canada, which once was the company’s sole export market. Szucs worked closely with a representative in the Brazilian trade office of the North Carolina Commerce Department’s International Trade Division (ITD) who has kept him informed on the country’s changing import laws.

The ITD was instrumental in ASI expanding its export program to 16 countries, destinations often opened through recommended contacts and market assessments. As a result of its growing exports, the company received the President’s “E” Award for export expansion in 2013.

North Carolina’s ITD also has trade offices in Mexico City, Toronto, Frankfurt, Tokyo and Shanghai, with staff who know the local language and business environment. It’s a “tremendous asset,” says David S. Robinson, special counsel in the Raleigh office of the law firm Nexsen Pruet PLLC, a provider of legal and other assistance to exporters. The foreign offices, Robinson explains, show that North Carolina is committed to developing business relations with these countries and regions.

“Some states are now pulling back their international offices or their investments in global operations,” he says. “But North Carolina continues to fund its international offices, which we make use of all the time.”

The ITD organizes trade missions and often has exhibition space at trade shows to promote North Carolina and specific companies serving that trade.

“Throughout many administrations,” says ITD director Jean Davis, “funding for the Division has been maintained.”

In September 2013, the North Carolina Commerce Department led a trade mission to Turkey, and two more—second trips to both India and China—are in the planning stages, according to ITD’s Davis. “We do about two big trade missions a year,” she says, noting that they are led by either the governor or commerce secretary.

Michael Viniconis, president of Charlotte-based Argus Fire Control Inc., praises another of ITD’s services. “One of the things the Trade Division does is let you know when there’s a trade show coming up that would be in our market,” he says. “In China and Mexico we actually were in booths operated by the state.”

Teams from ITD attend more than 21 trade shows annually, often bringing officials from North Carolina companies with them, says Davis.

Argus, which manufactures customized fire protection equipment primarily for the textile industry, now does business in 50 countries thanks to state and federal help identifying potential distributors, Viniconis explains. “That was a key part of our original growth,” he says.

Stephan Janz, vice president of Business Development and International Sales at Leland-based Flow Sciences Inc., says his company obtained lists of potential distributors in other countries from both the U.S. and North Carolina commerce departments.

“Going to trade shows in our target countries allowed us to start developing relationships and screening some candidates,” says Janz, whose company designs and manufactures containment enclosures for toxic or noxious materials that require safe handling in laboratories. Janz adds that the presence of U.S. and North Carolina commerce departments at these shows meant he “always had a place to hang my hat and grab a cup of coffee.”

North Carolina has “a long history of pulling our industries together, especially around global challenges,” says ITD’s Davis. “A group of small North Carolina companies called American Search Exporters has banded together to try things like eight furniture companies hiring one rep in Mexico to represent all eight of their furniture lines. That kind of collaboration is amazing. So we’ve seen growth in companies learning how to increase international sales.”

The volume of North Carolina’s exports continues to grow, totaling $14.8 billion in the first half of 2013, up 6 percent from $14.1 billion for the first half of 2012.

Janz says he received a grant through the state’s STEP program that helped him with the costs of attending a conference in Singapore, where he connected with a new distributor. Now he is seeking a second grant for travel costs to Belgium in hopes of finding another distributor.

“Right now we have export dealings in about 25 countries,” he says. “Ten years ago it was like three.”

Janz has also worked with the Small Business Technology Development Center (SBTDC) at the University of North Carolina at Wilmington. A service of the University of North Carolina, the SBTDC is administered by North Carolina State University in partnership with the SBA with the aim of providing “export-related guidance and assistance to small and mid-sized businesses.”

It consists of 10 regional service centers and development units at 16 constituent institutions, all of which operate as a single program statewide, making it, the program boasts, “the most fully-integrated [small business development center] program in the country.”

The North Carolina Lawyers for Entrepreneurs Program—known as NC LEAP—provides free business-related legal advice to “low-wealth entrepreneurs and business owners;” a unique endeavor in that it serves all of the state’s 100 counties.

“While many other states have programs similar to ours or even modeled after ours, it’s my understanding that there are no statewide programs such as ours,” says Mary A. Horowitz, director of Public Service & Pro Bono Activities, at the North Carolina Bar Association Foundation.

Free mentoring is offered to new and young companies throughout the state by the Blackstone Entrepreneurs Network (BEN), which has partnered with Duke University, North Carolina Central University, North Carolina State University and University of North Carolina at Chapel Hill.

Yet another sign of statewide cooperation: All 68 of North Carolina’s community colleges have been engaged by the ITD to “help us do training for companies outside of metropolitan areas,” says Davis.

EAC’s Export University has helped ASI and North Carolina companies such as Charlotte-based Refiner Products Manufacturing (RPM), which builds equipment that grinds wood chips into individual fibers for the manufacture of paper and fiber board.

“That Export University thing is a really good program,” says Richard X. Taylor, co-owner of RPM. “Different experts speak on topics you have to know in order to export efficiently.”

The courses are designed by the U.S. Commercial Services and the volunteer non-profit North Carolina District Export Council, which also provides other benefits to business leaders, including Argus’ Viniconis and Flow Sciences’ Janz, who are members.

Also a North Carolina focus, helped by federal commerce officials, is to encourage companies to join the DEC and apply for President’s “E” Awards. Having received a President’s “E” Award for export achievements and been a member of the DEC, Flow Science’s Janz says both have helped him gain export business.

“Part of being on the District Export Council allows me to show someone that I have gone through some learning,” he says.

The “E” Award, he points out, “gives us additional credibility when we want to enter foreign markets. When you are talking with distributors and show them a federal award that has a gold eagle on it, that makes them feel better. It says the government says we’ve achieved something. Most people then say, ‘Let’s do business.’”

That inviting attitude also applies to North Carolina. In 2013 it was ranked the third-best state for business by Chief Executive magazine and the third-most competitive state by Site Selection magazine, which had ranked it No. 1 for best business climate in 2012. That same year, Forbes ranked North Carolina the fourth-best state for business and a CNBC survey ranked it fourth among America’s Top States for Business.

Located between port-heavy states Virginia and South Carolina, the Tar Heel state offers exporters many choices.

For export shipments, the North Carolina State Ports Authority operates ports in Wilmington and Morehead City, plus inland intermodal ports in Charlotte and Greensboro—although some North Carolina companies use more convenient and larger ports in South Carolina and Virginia.

Deborah Murray, executive director of the Caldwell County Economic Development Commission says, “The state is working to broaden our exporting opportunities by opening up the Port of Virginia to North Carolina businesses.”

The Virginia port has terminals in Newport News, Norfolk and Portsmouth, all just across the border from North Carolina.

Two major railroads, CSX and Norfolk Southern (NS), and several small short-line railroads serve the state. NS has intermodal facilities in Greensboro and Charlotte, though the land-locked facility in Charlotte is to be replaced with a larger one at the Charlotte-Douglas International Airport.

“That’s part of our Crescent Corridor project,” says Norfolk Southern spokesman Robin Chapman. “Most of the freight that travels on that corridor is hauled by truck so there’s a tremendous opportunity to get more of that freight off the highways and onto rail.”

Developing that intermodal facility for train, truck and plane, says North Carolina Commerce Department Secretary Sharon Decker, is “going to be incredibly important for North Carolina’s economy.

“North Carolina is a very attractive place to do business,” she concludes, “and we want to make it even more so.”

The Cornhuskers are Upping State Incentives and Exports

Jack Schreiner, president and CEO of Bruckman Rubber Co. in Hastings, Nebraska, always wanted to expand the sales of his company’s industrial rubber products through exporting. “But when you’re a little rubber company out in the middle of Nebraska how do you do that?” he asks.

Exports to China, Japan, the Philippines and Mexico now account for about 16 percent of Bruckman Rubber’s total sales, a figure he sees reaching 30 percent.

How did his “little rubber company” do that? Its international success is rooted in Bruckman’s participation in state-sponsored trade missions to Japan and Taiwan, but a major boost came when he joined 34 other Nebraskan business leaders on a seven-day trade mission to China led by Gov. Dave Heineman in the summer of 2012.

It was the state’s 10th such trade mission since Heineman became governor in 2005, three of which were led by him, including one to China and another to Japan. The destinations of the seven others included Hong Kong, Taiwan, Cuba and, again, China and Japan.

“I don’t think there’s any other way to do it,” Schreiner says of the trade missions. “For a company our size it’s just not practical to do it on your own. You’ve got to have help. You couldn’t just hop on a plane, go to China, get off and start to do business. And with the trade missions led by the governor, that opens a lot of doors.”

China, says Nebraska Department of Economic Development (DED) director Catherine Lang, is a country where the government’s sponsorship of trade missions has an impact, especially with the governor’s leadership.

“You kind of enter China through the government,” she says, “so it’s very helpful to have a government entity supporting businesses getting into China. That’s why we’ve put a lot of our effort into China. We can help open doors and make introductions. In other countries, state involvement is less important.”

Nebraska’s China-bound exports doubled to $488.24 million from 2002 to 2012, says Lang, while total exports reached $7.45 billion. The state’s largest export markets in 2012 were, in order: Canada, Mexico, China, Japan and South Korea. China was in fourth place only a year earlier, according to Lang.

“We have a strong Pacific Rim focus,” she says. “We’ve found that’s really where a lot of our opportunities for non-agricultural products lie.”

With financial assistance from a grant offered through the STEP program, Schreiner returned to China on his own in the spring of 2013 and worked with people from the Nebraska Center China in Shanghai who lined up business meetings, made hotel reservations and, best of all, “helped interpret stuff,” as Schreiner says. The Shanghai office, opened in March of this year, is a center similar to one Nebraska opened in Tokyo in November 2006.

Nebraska’s DED also sponsored reverse trade missions in 2008 and 2011, welcoming government leaders from 25 countries in an effort to attract foreign investment to Nebraska, says Lang. The resoundingly successful events enticed 35 companies—10 from Japan, seven from China and 18 from 10 other countries—to invest in the Cornhusker State.

Craig Stoffel, vice president of Omaha-based Werner Global Logistics, says these Chinese entries into Nebraska include two Chinese companies that purchased existing businesses—one on the verge of collapse—and two other companies that established operations for the export of meat and other farm products. Stoffel is proud to report Werner now handles some of the new shipping.

“These are examples of companies that [were] introduced to Nebraska on a trade mission or a reverse trade mission, liked what they saw and the state got aggressive attracting them here,” says Stoffel, whose company co-hosts the state’s trade offices in Shanghai and Tokyo.

“Our business in Nebraska is growing [nearly] double digits every year,” he says. “Most of that growth is the small and medium-size businesses that are finding new markets overseas and don’t know how to get their product shipped over there.”

Many of Nebraska’s exports are agricultural, but there are also products developed to support these businesses—either biomedical or equipment such as irrigation systems.

“You have a lot that is tied to the ag sector,” says Richard Baier, executive vice president, Nebraska Chamber of Commerce, “but it’s spilled over into a lot of other products.”

“Because the [irrigation system] business started in Nebraska and the four key players are here, [the state] has been a hub of activity for international growth,” says David B. Downing, president of international operations at Omaha-based Lindsay Corp. The company has a manufacturing plant in China but still exports from Nebraska to Canada, South America, the Middle East, Australia and New Zealand.

“Irrigation is Lindsay’s primary business,” Downing says. “It will continue to grow and the international space will continue to grow because there’s very little efficient irrigation that’s employed in the international space, especially in China.”

Jim Snyder, director of International Business Development at Reinke Manufacturing Co., agrees that China has “real water issues.” His Deshler-based company exports its product to more than 40 countries, China included. “The Chinese government is interested in irrigating more efficiently and have embraced our technology. That’s what’s driven the market in China.”

Despite the sprawling, picturesque cornfields so readily associated with Nebraska, its exports extend beyond agriculture and ag-related equipment.

Kawasaki Motors Manufacturing Corp. USA manufactures watercrafts, all-terrain and utility vehicles in Lincoln, breaking the Cornhusker state’s mold. About 20 percent of these Nebraska-made vehicles are exported, says Ryan Rikli, the company’s assistant manager of Logistics and Compliance. He says Kawasaki has received state assistance in the form of tax credits and other incentives that encourage its investment in Nebraska. “We also utilize the state’s internship program,” he adds.

Nebraska, like some other states, offers tax credits for angel investments and research and development, says the state chamber’s Baier, a former director of the Nebraska Department of Economic Development. The investment tax credits, he says, apply to all industry sectors and, as with the research and development tax credits, are refundable.

“You have no tax liability and can still get a check back from the State of Nebraska,” he explains.

The state’s “Nebraska Advantage” offers numerous tax incentives and programs, including separate funds for business innovation and site building, a Microenterprise Lending Program and the Nebraska Economic Gardening Program (NEGP), which was authorized by the Small Business Innovation Act (SBIA) to provide technical assistance and data analysis.

Invest Nebraska Corp. is also available to the state’s startups and emerging companies with high-growth potential. The private non-profit corporation works directly with entrepreneurs, researchers and companies to help commercialize technologies and access needed capital.

Logistically, Nebraska’s central location with two railroads and nearby major interstates is also attractive to businesses.

“Nebraska is home to two of the largest trucking companies in the country,” says Baier. “We also are home to Union Pacific Railroad and then Burlington Northern Santa Fe’s main line runs through Nebraska. Those things have really helped us solidify the transportation sector. You can use truck or rail to carry goods.”

Werner’s Stoffel agrees. “The rail infrastructure in and out of Nebraska is very good,” he says. “Going west there’s the Union Pacific and the Burlington Northern. Going east you cross over to the Norfolk Southern and the CSX. And then heading south you have service with the Kansas City Southern clear down into Mexico. The rail infrastructure plays a huge role in our state for supporting exports in all the different directions you’d want to go.”

And it’s getting even better. Burlington Northern is currently building a rail shuttle loading facility in Laurel for Agrex, Inc., an agricultural trading company, and it built a rail spur in Imperial for another exporter, AK Acres Popcorn Co.

The state’s successes haven’t gone overlooked; it has been at or near the top of numerous rankings.

Nebraska was the nation’s second-most business-friendly state in 2013 and fifth in terms of providing incentives and other tools conducive to business growth, according to research by Pollina Corporate Real Estate, Inc., a Park Ridge, Illinois-based national leader in corporate site selection.

Forbes’ rankings of best states for business placed Nebraska sixth and CNBC named it the fourth best for business in 2013. The U.S. Chamber of Commerce, in the most recent edition of its annual Enterprising States Report, ranked Nebraska 13th in overall economic performance in 2013, 23rd for exports and 11th for export growth since 2002.

Nebraska’s strong economic performance, the U.S. Chamber stated in its report, can be attributed at least in part to a robust, decade-long upswing in exports: More than 1,900 of its businesses now export products to markets outside the U.S.

“We’ve been watching from our offices the national rankings that come out,” says Baier from the state’s chamber. “With Nebraska among the top five or 10 states in the country in which to do business, what you’re seeing is really a reflection of a lot of work that’s been done over the last 10 or 15 years in Nebraska to really put a focus on job creation by establishing an environment in which it is easy for companies to do business.”