Ruben J. Diaz Sr. incorporated the El Paso Water Industrial Services in January 2000, starting the new millennium with a new company. The family-owned startup benefited from the founder’s years of experience in the industry, offering water filtration and waste-water treatment products and services for hospitals, restaurants and smaller manufacturers in both the United States and Mexico. Like many ventures in Texas, Diaz’s new business started out export-oriented, making the most of his personal, family and business connections on both sides of the border. Read More
South Carolina Opens Doors to the Worldwide Marketplace
Export opportunities suddenly and unexpectedly opened for Columbia, South Carolina-based Bridge to Life, distributor of its own line of preservation solutions for organ transplants, when a competitor had to recall its similar solutions.
“The market opened and we were one of the companies that tried to fill that gap,” says Aaron Gilchrist, global director of sales at Bridge to Life. “We went from being a predominantly domestic company with some international sales to going global nearly overnight. We had to move quickly but we continue to fair well due to a great deal of hard work and a lot of help, too.” Read More
South Carolina Opens Doors to the Worldwide Marketplace
Export opportunities suddenly and unexpectedly opened for Columbia, South Carolina-based Bridge to Life, distributor of its own line of preservation solutions for organ transplants, when a competitor had to recall its similar solutions.
“The market opened and we were one of the companies that tried to fill that gap,” says Aaron Gilchrist, global director of sales at Bridge to Life. “We went from being a predominantly domestic company with some international sales to going global nearly overnight. We had to move quickly but we continue to fair well due to a great deal of hard work and a lot of help, too.”
That included help from the U.S. and South Carolina Departments of Commerce in a number of ways, including obtaining international marketing assistance, receiving recommendations for translating labels, packaging and documents into local languages, and even “introducing us to individuals with the know-how of navigating the regulatory landscape in several countries in Europe and beyond.”
Aaron Gilchrist Bridge to Life’s global director of sales in front of the South Carolina State House.
As the company continues to grow, selling more of its solutions, opening a London sales office, increasing its South Carolina staff and seeking out opportunities in new markets, the resources made available through these types of programs become increasingly vital, he explains.
“There are areas around the globe where there are a number of different barriers to entry, including language, regulatory oversight, shipping routes, currency risk and many others,” he says. “But we have a global network of trade help right here at our fingertips in South Carolina, and it can assist greatly with improving the ability to access far-reaching markets.”
South Carolina has a long history of international trade going back centuries, points out attorney David Dubberly, a partner with the Nexsen Pruet law firm in its Columbia, South Carolina office and a member of the South Carolina District Export Council.
“We are number one in the United States on per capita foreign investment, so we have a lot of international companies and international business people here and we rub shoulders every day, which I think helps South Carolina companies understand that there’s nothing strange about getting on a plane and networking globally and doing business globally,” he explains.
“The fact we have a lot of big banks that offer a lot of international services and have offices internationally also helps, as does the home-grown law firms that are becoming more adept at international issues.
“And we have a great support structure,” Dubberly continues. “The U.S. Department of Commerce’s International Commercial Service office has an office here in South Carolina. We’ve got real good people at the South Carolina Department of Commerce who help companies find international business partners and that set up trade missions.”
The State Commerce Department has helped everyone from auto company BMW—which manufactures its internationally distributed X3, X5 and X6 cars only in South Carolina—down to manufacturers of specialty food items, from Blue Buffalo dog food to Mother Shucker’s Cocktail Sauce to a boutique beer, some of these through the South Carolina Specialty Foods Association. The state’s exports go to some 200 countries.
The South Carolina Commerce Department offers seminars, conferences, market research, site location services and international trade missions with overseas sales meetings. And it recently implemented the STEP (State Trade and Export Promotion) grant program, which helps small- and medium-size businesses enter new global markets with financial assistance for export-related activities. Launched and funded by the U.S. Small Business Association—the South Carolina Commerce Department received a $279,128 grant in 2012—the program is managed by each state.
The department also works with the state’s 16 technical colleges to train workers at no cost to the employers. Under the college system’s readySC program, workers are recruited, screened and trained, with training guidelines and curriculum designed to fit a company’s needs.
“Companies get potential employees that have necessary skills and then can go on to jobs with the company,” explains Fred Monk, president of the Columbia, South Carolina-based nonprofit export assistance group ECI/Find New Markets, part of the South Carolina International Trade Coalition. “It’s underwritten by the state. The companies provide the course material and the state, through the technical colleges, trains them.”
Also operated through the state’s technical college system is Apprenticeship Carolina, with companies receiving a $1,000 tax credit for each registered apprentice employed at least seven months of every year.
Small business owners and entrepreneurs can receive personal guidance and assistance through the Clemson [University] Regional Small Business Development Center and other Small Business Development Centers throughout the state, including one-on-one management and technical assistance, marketing analysis, business plan preparation and financial feasibility studies.
Port of CharlestonA registered Foreign Trade Zone, the Port of Charleston was a key factor in BMW choosing South Carolina for its manufacturing site. The port now handles the export of 17,000 BMWs per month.
The South Carolina Chamber of Commerce sponsors seminars featuring the heads of various state agencies so company officials, especially with small- and medium-sized businesses, can learn where to go for assistance with their needs and problems, says Otis Rawl, the chamber’s CEO.
“We have a manufacturing summit each year where we make manufacturers aware of what’s available to them, particularly in regard to workforce education and how they can get their workforce updated and upgraded for the jobs that are here,” he says.
The state offers job-tax credits, job-development credits and low-interest bonds. “We also have what we call a closing account,” Rawl says, “which is dollars that are set aside for the Department of Commerce and can be used for infrastructure to get a facility into a particular location.”
The state also has foreign offices in Germany, Japan and China that companies can take advantage of for help with targeting export markets. Its three main Foreign Trade Zones—one of them at the Port of Charleston and each with a subzone—can be used to escape U.S. Customs duties and some taxes on goods both imported and scheduled for export.
Port of Charleston authorities are developing an inland port some 200 miles away in the northwestern portion of the state near Greer, where BMW and numerous other manufacturers have production facilities.
“The largest concentration of the port’s customer base resides in that Greenville-Spartanburg County area,” says Allison Skipper, a port manager. “So there are hundreds of companies in that vicinity that could utilize the inland port to cut down on their [truck] transportation costs and at the same time alleviate some of the truck traffic we experience on our interstate highways. We have partnered with Norfolk Southern, which has existing rail tracks that run through Greer on its way from Atlanta to Charleston.”
Three major interstates converge near Greer, she points out, with one reaching down to the Charleston port. The inland port, which is scheduled to be fully operation by September, also will have space for companies to store inbound and outbound containers, Skipper notes. And because rail is less expensive and more environmentally friendly than truck, the inland port, she says, could spur some companies to begin to export or expand existing export programs.
The port, with a deeper harbor than its competitors in states to the north and south, is also building a new 288-acre container facility on the site of the former Charleston Navy base intended to boost the port’s container capacity by almost 50 percent, Skipper says. And the port already has set aside 100 percent of the funds needed to deepen its waters to accommodate the huge vessels that will use the expanded Panama Canal come early 2015.
With BMW exporting 70 percent of its autos—some 211,000 cars in 2012—South Carolina ranks first among all states as an auto exporter. With three of the top four tire makers—Bridgestone/Firestone, Continental and Michelin—located within its borders, the state also ranks first as a tire exporter.
BMW’s Spartanburg plant, opened in 1993, was the company’s first production facility outside Germany. According to company officials, the primary drivers of BMW choosing South Carolina were the Port of Charleston, which now handles the export of some 17,000 BMWs every month, and its statewide technical college system, which continues to provide the automaker with trained, skilled employees. When BMW chose South Carolina over Nebraska, its major competitor, Governor E. Benjamin Nelson complained that his state lost because he “couldn’t move the Atlantic Ocean.”
BMW’s strategic decision to make autos “for the world” rather than just the U.S., says Monk of ECI/Find New Markets, led to the company’s decision to be “strategically located” in South Carolina. “Otherwise they would be in Omaha,” he comments.
Such export-oriented development, he says, has led to the state’s “growth as a manufacturing location and accounts for why it’s so competitive in attracting both domestic and foreign investment.”
Bridgestone/Firestone Tire opened its first U.S. manufacturing plant in South Carolina in 1989. In September 2011, the facility was expanded to enable the production of off-road radial tires, which previously had been made only in Japan. Although the Charleston port currently is used only for the import of raw materials, the export of finished tires are expected to occur in the near future, according to a Bridgestone spokeswoman.
“We chose South Carolina,” she says, “for the technical level of the work force, the certified site, the available infrastructure and the incentives.” Through the state’s commerce department.
Bridgestone received $15.5 million in grants for infrastructure, site preparation and improvements to adjacent public roads. “The state, county and local governments have helped us at every turn,” the spokeswoman adds. “I can’t think of a better business environment.”
Bridgestone, like BMW, also continues to benefit from worker training at the state’s technical colleges.
“I think what we’ve done in South Carolina over the past 20 or 30 years—really over the last five years—to make South Carolina uniquely situated, is what we’ve done in the Port of Charleston, getting it dredged to 52 feet at high tide and getting three additional berths,” says chamber CEO Rawl.
“So I think you’re going to see a lot more companies that export and want to have a United States base located within 300 or 400 miles of the Port of Charleston simply because it will be the port of choice for the mid-Atlantic states. “So I think even better days are ahead of us,” Rawl concludes
The Port Corpus Christi is dwarfed by nearby Port of Houston, only 200 miles away. But its officials see the Houston port’s huge size and congestion in its favor as Corpus Christi expands and seeks to attract exporters beyond its core of crude oil products. Other small ports are undergoing similar expansions, trying to increase their range of exports in the process.
“Everyone along the Gulf Coast is trying to take business away from Houston,” says Sandy Sanders, deputy port director for Business Development and Operations at the Port Corpus Christi.
Products from some maquiladoras—export assembly plants in Mexico—along the Texas border now go to the Houston port for export. Sanders sees no reason these goods can’t be exported from Corpus Christi once the port completes its expansion.
“With the deepening of our outer harbor and the opening of an additional 1,100 acres,” Sanders points out, “we’re going to be poised for a multi-purpose dock that will take containers and heavy equipment and be able to be a very thriving port.”
Looking ahead, he believes the wind energy sector, which has been importing products from Europe and China through the port, will turn to exporting some products as those manufacturers open more facilities in the U.S., especially around the port. With its experience in handling wind energy parts, including for nearby Harbor Wind Farm, currently planning an expansion, Port Corpus Christi is well versed in the needs of the industry.
“Corpus Christi was far and away the leading port in those wind components coming through,” Sanders says. “So we already have a relationship with those manufacturers and have stevedores seasoned at handling wind components. Also, a lot of our rail have cut their teeth in our port accommodating these wind components. So it stands to reason that our port will be used for the export of these components. This is an emerging market that we’re going to go after.”
As manufacturers spread out from major metropolitan areas to those less populated and congested, as Sanders has seen occurring near Corpus Christi, smaller ports will seek to offer these companies export opportunities. Many of these ports are already served by the interstate highway system and rail lines.
Quite a few of these ports, many of them non-container ports, are handling the exports of autos and other wheeled cargo that are loaded onto ships—referred to as roll-on/roll-off (RO/RO) vessels—designed to enable these products to be driven onto and off.
Delaware’s Port of Wilmington, which does handle containers, exports autos and earth-moving equipment made by GM and Caterpillar as well as some livestock, according to John Haroldson, the port’s international trade manager. The port, currently undergoing a deepening, has been a successful auto hub for more than three decades, with an auto terminal that now includes a dedicated auto and RO/RO berth. Adjacent to the port, AutoPort Inc., a comprehensive vehicle processing and modification company, customizes GM exports for such overseas customers as police and utility service truck fleets.
The Port of Baltimore, another to deepen its channel in addition to adding four super-sized cranes, has become a major port for auto exports by Chrysler, Ford, Subaru, Toyota and others because of its closeness to the auto industry’s manufacturing plants. But even such distant facilities as Subaru’s in Lafayette, Indiana, and Toyota’s in Georgetown, Kentucky, are now using the Port of Baltimore, which even has an auto trade development director.
However, Honda’s manufacturing facility in East Liberty, Ohio, northwest of Columbus and directly west of Baltimore, uses neither the Port of Baltimore nor the far larger ports to the south, such as South Carolina’s Port of Charleston or Georgia’s Port Savanna. Honda instead ships from JAXPORT. Located farther south in Jacksonville, Florida, it is smaller but shares the Port of Baltimore’s focus on serving the auto export business as it continues to grow. As Roy Schleicher, executive vice president at JAXPORT notes, the port has become number one in the U.S. for vehicle exports and the nation’s second-busiest vehicle handling port.
The Port of Hueneme, 60 miles north of Los Angeles, has also gotten into the auto export business. Pete Wallace, director of operations, says it’s a great way to fill vessels that discharge imports and would otherwise leave empty on return trips to China and South Korea. The port now ships Honda, Toyota, Nissan, Chrysler and GM vehicles “mainly to Korea and China,” he says, noting that such exports have been steadily increasing.
“We also do some exporting of high and heavy cargo—things like tractors and excavators—to China and Korea,” Wallace says. “We’re also shipping Kenworth trucks down to Ecuador. Most of the larger ports identify themselves with containerized cargo rather than automobiles.”
Other exports, he adds, include locally grown citrus fruits and avocados.
Van Grundmann, chief commercial officer for Mississippi’s Port of Gulfport, which is currently undergoing expansion and improvements, sees potential for future exports—especially to Central and South America—in autos from a Toyota plant in Blue Springs and a Nissan plant in Canton. General Electric’s plant in Batesville adds to the state’s export potential, as does a Howard Industries Inc. plant in Laurel that manufactures transformers and other electrical transmission and distribution equipment.
Those transformers soon could be shipped for installation in the Central American hydroelectric power plants to which Port of Gulfport has been shipping “all kinds of concrete and building supplies,” Grundmann points out.
“In general,” he says, “we’ve got a great little niche port with a lot of business running in and out of here every week that a lot of other ports in the Gulf would love to have. We’re a very economical port to ship out of. That’s why we’re attractive to small regional carriers.”
At least 45 truck lines service the port on a daily basis, Grundmann says, and rail service is provided by two rail lines that, through a joint marketing agreement, provide access to two additional rail lines.
There are at least 73 active ports along America’s coasts and its Great Lakes, according to the corporate membership roster of the American Association of Port Authorities (AAPA). The type of goods departing from many of these ports—seafood, agricultural, forest and wood, oil- and gas-related products—reflects their locations
Agricultural products ranging from grains to cotton to various food items, including frozen poultry, are among the most common exports from ports in Mobile, Alabama; Gulfport, Mississippi; Galveston and Victoria, Texas; Iberia, Louisiana; Brunswick, Georgia; Richmond, Virginia and Stockton and West Sacramento, California.
Forest and wood products are handled by such Atlantic coast ports as Richmond and North Carolina’s Morehead City. On the Gulf Coast these goods are shipped through ports at Mobile and Gulfport, and in Northern California it’s Humboldt Bay.
Oil- and gas-related products are the major exports from such Gulf Coast ports as Corpus Christi, Iberia and Fourchon, which is also in Louisiana. “These are what we call niche ports or smaller ports,” says Aaron Ellis of AAPA. “They may consider themselves mid-size ports and a lot of them consider themselves large in the area they focus on.”
Also belying their smaller sizes, most of these ports are undergoing or planning the expansion of their territories to attract more export and import business. Many are deepening their waters to accommodate the larger “post-Panamax” vessels once the widening and deepening of the Panama Canal locks are completed, now expected sometime during the first half of 2015. Those large ships, often referred to as gigantic, could drive today’s large vessels away from major ports to their smaller competitors.
The few ports that don’t already have an established Foreign Trade Zone, where customs duties and some taxes can be avoided by companies trading internationally, are creating at least one. Some ports with FTZs are adding to them and others already have several. These zones, supervised by U.S. Customs, consist of areas in or near U.S. ports of entry where domestic and foreign products and components receive the same customs treatment they would had they been outside the commerce of the U.S.
“Along the Southeast and Gulf coasts,” according to a U.S. Army Corps of Engineers report, “there may be opportunities for economically justified port expansion projects to accommodate post-Panamax vessels.”
All this suggests that much of the future growth in exporting may lay with the smaller, secondary ports.
What Gulfport’s Grundmann says about his port’s potential exporters can be applied to other small or secondary ports located near rail lines, interstate highways and manufacturers with export potential. Experience handling certain types of imports can be applied to the export of similar products in the same fashion put forth by Port Corpus Christi in parlaying its experience with importing wind components to handling the export of such products.
“The global economic malaise,” Grundmann points out, “has created an opportunity for us because large companies that wouldn’t have taken another thought at moving their [export] facilities are now saying, ‘Here’s where we can save half a million a year in pilot fees and a million more where we export out of.’”
Those savings from turning to smaller ports can really add up, he concludes.
Why CEOs Are Focused on Their Truck-to-Rail Connections
When Roy Paulson, president and CEO of Paulson Manufacturing Corporation in Temecula, California, steps outside his facility, he can hear the truck traffic on nearby Interstate 15.
“It’s that close to me,” he says. “I’m sitting right next to this big, beautiful interstate. It’s wonderful. Transportation issues for me are not a big factor because we have this good system. So I’m in good shape. Interstate 15 runs north and south all the way up to Canada. We export to Canada and that all goes up there by truck.
“All of our exports start by highway because I don’t have direct access to rail. So everything has to go from here at least 60 miles by highway before it can be loaded onto rail.”
When Paulson’s family-owned business, which manufactures safety equipment specializing in eye and face protection, was incorporated back in 1947, the lack of a good highway system “was a holdup for us, a real problem,” he says. “But now it’s no longer a problem because of the increase in speed [limits] and the number of these interstates. Our key thing in California is the interstates. The railroad system is secondary for me in my own personal business.”
But when an export destination is Europe or the Middle East, rather than Asia, he explains, containers are carried by truck to a rail connection and then go by rail to a Texas port.
“I’m about 25 percent export sales out of total sales that this year will be about $17 million,” points out Paulson, who is a member of the President’s Export Council, the California Chamber of Commerce Council for International Trade and chair or vice-chair of four different California export-focused groups.
Sacramento, California-based McWong International Inc., which has divisions for energy-efficient lighting and environmental equipment, manufactures in both China and, increasingly, the U.S. The company also purchases heavy environmental equipment in the U.S. for sale to China, most recently making a purchase in Chicago for shipment to China through the Port of Long Beach.
“We had to use rail because of the distance and this equipment is very large,” explains CEO Margaret Wong. “Rail is very important. There aren’t any problems with rail. The rail system’s logistics are pretty good, except that it’s quite expensive and it’s getting more and more expensive. But the system itself is well managed because we have shipments coming from different directions and consolidating in Long Beach. So it’s all workable.”
Paulson, however, charges, “The poor rail system is choking off the imports and the exports of the United States between the Port of Los Angeles and the rest of the country. There’s a choke-point there. There’s an urgency to improving this rail system to the port.”
But Jim MacLellan, director of Trade Development for the Port of Los Angeles, defends the railways.
“Two railways serve the ports [of Los Angeles and Long Beach]—Union Pacific and Burlington Northern Santa Fe,” he says. “The railways keep their equipment up to an excellent standard and they’re always investing in their equipment. We get 100 trains a day of cargo containers. We don’t have any waiting lines and we don’t have any backlog.
“The infrastructure does need upgrading all across the country,” he admits, “but we’re still able to operate fairly efficiently. We need some investments. There’s a new bridge [that’s] going to be built at Long Beach. That’s a fairly substantial investment. So efforts are going on to improve the infrastructure.”
Any problems are mostly highway related, he notes.
“We have two highways,” MacLellan says, “110 goes to the L.A. Port and 710 goes to Long Beach, and sometimes 710 does get a bit congested.”
Some relief was provided a few years ago, he explains, when terminal operators instituted a special fee for containers picked up or delivered during the daylight shift, a fee that is not charged during the second shift.
“That shifted at least 30 percent of the cargo to the second shift,” he says, “eliminating a lot of congestion.”
Truck, rail and port scheduling, says Paulson, is tailored around when the customer wants the product and the time it will take to get from the foreign port to the customer’s location. After determining the latest and safest port arrival time, the latest ship departure date from a U.S. port and the delivery deadline are determined. Finally, Paulson continues, the time for making a rail connection and then a truck delivery to either the rail or port is established, as well as the truck pickup time from the manufacturing facility and the product completion deadline.
“It’s called backwards scheduling,” he says.
Meeting these deadlines “becomes crucial,” he notes, because, if there are any delays, “letters of credit can expire” and “sometimes you’re charged for storage.” So logistics is all-important.
For Paulson, like for many other company heads, the freight forwarder, who arranges everything, is “key,” and he says developing a close personal relationship with that person is the number one job for sales managers.
Memphis-based project location specialist J. Michael Mullis says that for the large projects for which he finds sites, the top criteria is logistics—“How we receive product and components and then how we distribute final product to the customer base, whether it be U.S. or global.”
For many, rail is important, but “access to highway is critically important, either U.S. four-lane highway or interstate highway,” he says. “Those projects will generally be located within a 10-mile access to an interstate system in order to move products quickly over a seven-day basis every week.”
Rail, he points out, is “critically important” for shipping high volumes of heavy manufactured goods, because costs are lower than for use of trucks.
“The challenge you have in the rail system today,” Mullis says, “is that all the Class One rail systems are at capacity or above capacity. So when you’re siting projects that have major rail needs, even though you may have rail next to the site, can you use that rail, can you access that main line rail that has so much traffic that the railroads really don’t want to slow them down? That pushes many of the projects to look at short-line systems where they’ve got a really good, high level of service and reliability on short-line rail that will be tied back into the Class One rails.
“Generally you will be looking for sites that are served by mainline rail but are not necessarily adjacent to mainline rail.”
And in addition to inland river ports, there are inland ports that are not river ports, Mullis explains. These include such ports in the Greenville-Spartanburg area of South Carolina and near Cordele, Georgia, each located where major interstates link with major rail lines for transferring goods from truck to rail for delivery to deep-water ports.
“Logistics,” concludes Mullis, “is what it’s all about today.”
Oklahoma is helping manufacturers like Mills Machine Co. grow at home and expand internationally
Chuck Mills may have been too anxious and too naive to start selling directly to overseas companies when, as the third generation, he took over the family business as president of Shawnee, Oklahoma-based Mills Machine Co. in 1979 after graduating with a Bachelors of Business Administration from the University of Central Oklahoma.
Mills Machine, a custom manufacturer of earth drilling tools, bits, valves and related accessories, had previously made few export sales, all through export trading companies that handled everything.
“I had a great interest in selling internationally,” Mills explains. “It sounds silly. It’s almost the romance of selling to other countries that you’ve never visited and have an image of, or would like to visit or work with the cultures. So we started establishing some relationships, started doing a little advertising in some trade publications, started making some connections.”
The first order came from a company in South Africa.
“Naively enough, we sold with an open account and actually got paid,” he recollects. “Then they ordered the same things six months later and never paid. That was a valuable lesson about really not knowing what you’re doing.
“So then we said that we’d better look around to see if there’s anyone that can assist us, and we got hooked up with the Oklahoma Department of Commerce, which was able to help us with their resources. And we joined organizations and associations and talked to other exporters. All that was the real key.”
Mills joined the now-defunct Oklahoma City International Trade Association—Shawnee is 35 miles east of Oklahoma City—of which he became president. He also joined the State Chamber and now chairs the State Chamber’s International Committee. For the past 25 years he has also been a member of the Oklahoma District Export Council (DEC), as an appointee of the U.S. Secretary of Commerce, and has been its chairman for the past seven years. The DECs, established in 1973, are organizations of leaders from local business communities whose knowledge of international business provides sources of professional advice for local firms.
He also chairs the Oklahoma governor’s international team, which is comprised of educators, manufacturers, service providers, attorneys and others, and seeks to coordinate all the export-oriented entities in the state.
“After the South African debacle, we worked through lines of credit and cash in advance,” Mills says. “We now also use the Ex-Im Bank. We started working with them just a couple years ago to extend credit to customers that we’ve been dealing with a long time. That has expanded our international sales quite a bit. So we’re going to continue to try to develop more business using that safety net.”
For company executives interested in exporting, Mills says that “they need to go to two places that are either free or very inexpensive: either their state’s Department of Commerce, or the U.S. Export Assistance Center, which is the international service arm under the U.S. Department of Commerce.
“The Export Assistance Center is the sponsor of the District Export Councils. They have such great programs and much of their educational information is free,” he points out. “They’ll come and counsel you for free. They have very inexpensive programs like agent distributor searches, and they’ll use the embassies and offices that we have around the world to get you the local information that you need. It’s definitely the way to go.”
Last year at Mills Machine—which has now exported to more than 70 countries—exports accounted for almost 25 percent of total sales, with the figure reaching as high as 50 percent some months, Mills says.
“After our South African experience, we started selling more into Europe and, even before NAFTA, we sold to Canada and Mexico just because they were very close,” he explains. “We treat Canada almost like a domestic customer. It’s just easy to deal with them. Mexico is still a little difficult. You have to be very careful, but we have a lot of sales there. And South America is now the emerging market for us. We’ve sold there before, but it’s getting a little better for us now.”
Mills says that he tries to raise awareness of global export opportunities for businesses in Oklahoma.
“Some people are slow to catch on as to how good the opportunities are,” he admits, “but we just keep promoting anyway. Others understand it. We’ve got a really good support system to help and support them, and we try to work with new-to- market exporters.”
Oklahoma, through its Department of Commerce, has its Quality Jobs Act, which reimburses companies for up to 5 percent of new payroll for up to 10 years. The state also has an Aerospace Industry Engineer Workforce Tax Credit that provides tax credits of up to 10 percent of the compensation paid to engineers during their first five years of employment. Through its PrimeWin Prime Contractor Incentive, the state even offers cash rebates of up to 2 percent of labor costs to companies that are subcontractors to federal prime contractors, the only such incentive program in the nation.
Limco Airepair Inc., a Tulsa-based aerospace manufacturer of heat transfer units, was able to take advantage of the QJA program. The company rebuilt its employee roster to 180, having shrunk to 135 after plans for a move to North Carolina were announced and then canceled, explains Mary Dowdy, vice president and chief financial officer. During that two-and-a-half year period, annual sales increased to $27.6 million from $17 million, with exports accounting for 20 percent of total sales, she says.
“The State of Oklahoma is really working toward rewarding businesses that remain in the state and then grow and add to their payrolls,” Dowdy explains.
Also, Oklahoma is retaining more of its higher education graduates, according to preliminary U.S. Census data, reversing an outward migration trend. And the Oklahoma State Regents for Higher Education reports that more bachelor’s degree recipients are remaining in jobs in the state than was the case a decade ago.
Buckle Up: Tulsa and Oklahoma City regularly appear among the top 10 places for economic performance, operating a business and for living conditions.
Jim Fram, senior vice president of economic development for the Tulsa Chamber, points to “the educational system here with our career tech programs, our community colleges and then the three major universities that have presence here.” All that, he says, “really helps develop a great work force.”
But in the past, numerous state business leaders admit, many university graduates left Oklahoma for Texas, a situation that no longer exists.
The State of Oklahoma and its two major cities, Tulsa and Oklahoma City, regularly appear among the top 10 places for economic performance, operating a business and for living conditions in reports by such specialized magazines as Area Development, Business Facilities and Site Selection as well as RelocateAmerica, The Brookings Institution’s Metropolitan Policy Program, the Business Journals, Thumbtack.com and CNBC. In a survey released this past May, Thumbtack, in partnership with the Ewing Marion Kauffman Foundation, rated the state A+ for overall friendliness for business and for ease of starting a business, an A for hiring costs, regulations licensing and employment, an A- for training programs and a B+ for networking programs. And a research report by the State Chamber released early this year showed that Oklahoma has the lowest cost of unemployment insurance in the nation and the sixth-lowest cost of doing business.
For assistance to start-ups, including affordable lease space and administrative services, the state has 52 certified business incubators.
All of these are factors, says the Tulsa Chamber’s Fram, as to why he is now working with nearly 50 companies looking to open facilities in the Tulsa area, including more than 20 out-of-state companies.
Fram also notes that companies in similar fields or industries like to cluster together, “because they want to take advantage of that [existing] workforce.” In Tulsa, this is the case with the aerospace and the oil industries.
That is why Michael Murray, vice president of marketing and international operations for year-old start-up Summit ESP, LLP, says Tulsa was chosen for the headquarters of his company, which manufactures electric submersible pumping systems for the oil industry. “I would think that our Tulsa location makes us more attractive to overseas markets,” he says.
The location is also making it easier to find experienced skilled workers without being forced to train workers, an expense it cannot afford as a new start-up, Murray explains. He points out, “From a talent pool basis, it made a lot of sense to be here in the Tulsa area.”
Oklahoma even has a port, the Port of Catoosa, on the eastern edge of Tulsa.
“We’ve been here 40 years,” says Port Director Bob Portis, “but there’s still a lot of folks who say, ‘You have a what, where?’”
From the port, barge traffic, thanks to a series of locks and dams, goes down the Verdigris River into the Arkansas River and then into the Mississippi River, where it can go down to the Gulf of Mexico or up the Mississippi to numerous cities, or even up the Ohio River.
The port handles, Portis says, “pretty high-valued machinery that goes to the petro-chemical industry in the U.S. and abroad.”
The Tulsa Chamber’s Fram also points to his city’s “nice international airport”—with its 16 daily direct flights, including to hubs from where one can get direct flights to anywhere in the world—as an attraction for business development.
Exporting, Mills says, is the last frontier for great opportunity.
“Because the world has shrunk, we’re competing with other states’ business for domestic sales, and internationally we’re doing the same thing,” he explains. “But there are a lot of people in other states that don’t have the advantages for business and for living that we have here in Oklahoma.”
And Working Hard for Exporters like SASCO Chemical Group
Looking at the possibility of expanding into a new site in 2009, the third generation owners of Albany, Georgia-based SASCO Chemical Group Inc., Marc and Rusty Skalla, turned to a local representative of the state’s Department of Economic Development (DEcD) for help.
The manufacturer of anti-tack and mold-release agents did receive help, but it was in expanding its international sales. At the time, company president Marc Skalla admitted to having no idea the DEcD’s international trade team could help his company overcome the relative inexperience of its export program. SASCO had found some distributors in Asia and Mexico on its own, but with negligible results, those relationships amounted to nothing but “wasted” time.
Lone Star Shippers
Sweet Carolina
Van Grundmann, chief commercial officer for Mississippi’s Port of Gulfport, which is currently undergoing expansion and improvements, sees potential for future exports—especially to Central and South America—in autos from a Toyota plant in Blue Springs and a Nissan plant in Canton. General Electric’s plant in Batesville adds to the state’s export potential, as does a Howard Industries Inc. plant in Laurel that manufactures transformers and other electrical transmission and distribution equipment.
