New Articles

Changing Channels

Changing Channels


America’s Gulf and East Coast seaports are scrambling to accommodate the 8,000+ TEU (twenty-foot equivalent unit) ships that will navigate the expanded Panama Canal once it becomes operational in 2016. That’s because a port is considered Post-Panamax ready when it has met three key criteria: channel depth of 50 feet with sufficient channel width and turning basin size; cranes capable of loading and unloading Post-Panamax ships; and docks engineered to handle new, bigger cranes. Here’s where some key ports stand:

Completion of the $1.3 billion “Raise the Roadway” project on the Bayonne Bridge is scheduled for summer 2016. The effort involves lifting the road from 151 to 215 feet within the confines of the bridge’s current arch. Meanwhile, PANYNJ is working with the U.S. Army Corps of Engineers (USACE) to deepen the turning basin for

“Once harbor deepening reaches the stated goal of 50 + 2 feet [two feet of clearance underneath the keel] we do not expect any restrictions imposed on larger vessels,” says Lenis Rodrigues, PANYNJ spokeswoman.

The Delaware River Main Channel Deepening Project is on schedule and making remarkable progress. “We have high hopes for full completion by 2017,” reports Don Brennan, Governmental and Public Affairs director, Philadelphia Regional Port Authority (PRPA).
PRPA anticipates accommodating more commerce when greenfield Southport Marine Terminal becomes a reality. A Request for Expressions of Interest (REI) was issued on Oct. 1, 2014, to establish Public Private Partnership interest. On Nov. 14, PRPA received 16 proposals from interested parties.

Seagirt Terminal in Baltimore met the 50-foot depth requirement and became Post-Panamax ready in 2012. That year, Seagirt operator Ports America Chesapeake also completed construction of a new 50-foot container berth that was accompanied by four Super-Post-Panamax cranes in January 2013. This makes the Port of Baltimore and Port of Virginia the only East Coast ports with both a 50-foot channel and a 50-foot berth.

“Ports America has invested a quarter billion dollars in the port,” says Maryland Port Administration Executive Director James J. White. “They see it as a great opportunity as business grows.”
But problematic are impediments to double-stack intermodal rail traveling to and from the port.

With 50-foot-deep channels since 2006 and berths all 50 feet, the Port of Virginia is the first East Coast port to be Post-Panamax ready. Norfolk International Terminals has 14 Super-Post-Panamax cranes. The port also has congressional authorization for a 55-foot channel. Since February 2014, the port began taking deliberate steps to improve overall cargo velocity. “We’re continuing to implement constructive changes to better serve our customers and stakeholders,” says Virginia Port Authority CEO and Executive Director John F. Reinhart.

South Carolina Ports Authority (SPCA) is moving ahead with its Charleston Harbor Deepening Project. USACE released its study in October 2014 that recommends the harbor be deepened to 52 feet. Completion of the final study is expected this September, at which time USACE will present it to Congress in hopes it approves $166 million of funding for the $510 million project. (SPCA is paying $343 million.) If authorized, harbor deepening could be completed by the end of 2019. Meanwhile, construction is under way on the 288-acre Navy Base Container Terminal with Phase I anticipated to open in 2019.

Since the signing of the Water Resources Reform and Development Act on June 10, 2014, Georgia Ports Authority (GPA) has been fast tracking its Savannah Harbor Expansion Project (SHEP). The endeavor will deepen the inner harbor to 47 feet at low tide and the entrance channel to 49 feet, and also extend the channel by seven miles. SHEP’s completion is expected in 2018.

“A deeper harbor will complement the land-side infrastructure improvements and increase the Port of Savannah’s capacity and improve services,” says GPA Executive Director Curtis Foltz. Those enhancements include increasing the number of ship-to-shore cranes from 22 to 30 and rubber-tired gantry cranes from 116 to 169.

With initial engineering and design work already begun, JAXPORT is on schedule to deepen its shipping channel to 47 feet, starting as early as 2016. Construction is under way on the port’s Intermodal Container Transfer Facility at Dames Point, which should be operational late this year. Six berths that are also being rebuilt at Blount Island Marine Terminal are expected to be finalized this year.

“We are preparing docks at Blount Island to accept 100-gauge cranes and in October signed a contract to purchase three new Super-Post-Panamax cranes for the terminal,” says JAXPORT Executive Vice President Roy Schleicher.

Port Everglades is advancing its 18-year effort to deepen and widen its Outer Entrance Channel to 55 and 800 feet, respectively, and deepen the Inner Entrance Channel and Main Turning Basin to 48 feet. Other improvements include widening the constrained Southport Access Channel, including a “knuckle” area, by about 250 feet. Construction is anticipated to be completed by 2022.

“This is a game-changer,” says PortMiami Director Juan Kuryla about the port deepening its channel from 42 feet to 52 feet, scheduled to be completed this year. Other efforts for big-ship readiness include PortMiami recently acquiring Post-Panamax cranes and the Florida Department of Transportation’s construction of a $500 million tunnel for trucks to transport cargo directly from the port to Interstate 95. An on-dock rail loading facility that links to Florida East Coast Railway (FCC) was also added, making it possible for FCC to load at the port and take shipments to its ramp in Hialeah.

In addition to dredging Bayport and Barbours Cut to 45 feet, Port of Houston is investing $700 million during the next decade at Barbours Cut to accommodate larger vessels and increase its capacity. “We recently completed construction of 1,300 feet of wharf,” reports Bill Hensel, spokesman for the port. Four new Super-Post-Panamax container cranes are being assembled and will ship early this year. In 2014, Port of Houston was awarded $10 million to expand the next berth at Bayport. “We have built 3,300 feet of wharf and this grant will fund 700 feet. Completed, it will be 7,000 feet,” Hensel adds.

The Export Phoenix of Arizona


Rowpar Pharmaceuticals of Scottsdale, Arizona, is back in the export business thanks to Arizona’s State Trade and Export Promotion program (AZ STEP). The company—maker of CloSYS toothpaste and oral products—once exported to Europe, but in 1997 sold its license to distributors.

“Now exports are again a significant part of our business,” says James L. Ratcliff, Rowpar chairman and CEO.

The Arizona Commerce Authority (ACA) runs AZ STEP, which assists Arizona small businesses to export and expand into new markets. AZ STEP has many success stories, with more than 235 Arizona companies having participated in the program to date.

The program is ranked No. 2 in the nation for enrollment.

Participating companies report export success to 79 countries and increases in exports of $44 million since the program’s inception. As for Rowpar, it has taken advantage of services such as translation for dual language packaging for the Canadian market and pre-arranged meetings with potential distributors in the Middle East.
AZ STEP facilitated Rowpar’s participation in an Arab American Business Association conference in New York. “We had a booth and garnered some good contacts,” Ratcliff recalls.

Through the Gold Key matching service program of the U.S. Commercial Service, Rowpar also arranged for meetings with potential clients at a Riyadh, Saudi Arabia, conference. “ACA paid the conference fee,” Ratcliff says, “we paid our hotel and air fare.”

The conference introduced the company to contacts interested in distributing its products. “It is a great way to do preliminary scouting and initial partner identification.”

Indirectly, Rowpar also benefits from its Scottsdale location because of a cluster of businesses the city and the Greater Phoenix Economic Council (GPEC) promote called the Scottsdale Cure Corridor.
“The objective is to build a large biomedical core for Arizona,” Ratcliff says about the cluster, which benefits small firms like his by populating the area with talent. “We contract with leading dentists or medical or labs for our scientific work.”

Azmira, a Tucson-based manufacturer of holistic pet food and supplements, has a different perspective on state and federal export promotion programs. The company exports a significant amount of its products, particularly to Japan, Hong Kong, Singapore, Malaysia, the Netherlands and Canada. “We are working on Mexico,” says Rob Carr, the company’s COO. “We have a distributor and are in the early stages,” but the challenge in Mexico, he says, is obtaining permits and paperwork.

“In Japan, it’s different interpretations such as what is considered an herb,” Carr says, noting that herbs are an ingredient in Azmira’s pet food.

He says state agencies go to great lengths to connect companies with overseas partners; though countries that cannot import lamb-based products such as those made by Azmira—Australia, for instance—are excluded. “The agencies try to do due diligence and hopefully find a good fit,” Carr says, “but we have never gone to one of their trade shows or paid money for lists.” The reason: There’s usually not a good fit.

Azmira contracts its manufacturing to companies elsewhere in Arizona and the Midwest. “We consolidate products at our distribution center in Tucson and, for the most part, ship out of the Port of Long Beach,” Carr says.


Free trade agreements such as NAFTA are instrumental in attracting companies to Arizona and encouraging exports.
NAFTA has helped Medi-Temp increase its exports considerably.

“That’s one reason we moved to Peoria—to be close to Mexico,” says Medi-Temp president and CEO Randy Evans. “In the United States there’s a lot of competition, and copycats from China try to underbid. In Mexico there’s a 30 percent tariff on Chinese made products.”

Medi-Temp, which originally hailed from Vancouver, Canada, moved to Peoria, Arizona, because more than 90 percent of its customers are in the U.S. The company exports 20 percent of its hot and cold body therapy products, though Evans says the company hopes to grow exports to 50 percent.

With help from AZ STEP, Medi-Temp executives attended trade shows, such as one in Mexico. “The state paid for half and also translation services for our brochures and packaging,” Evans recalls.

“They also helped find us a distributor in Mexico.”
According to Evans, Mexico is a difficult place to locate a good distributor. “It takes longer than normal,” he says. Then there’s government registration and enormous red tape for some products such as drug testing cups and infectious disease testers.

“We had to go through the FDA equivalent in Mexico to get a registration number,” he says. “We worked with the U.S. Embassy in Mexico City. It was a big learning curve.”

Today the company exports to Mexico via Laredo, Texas, or Nogales, Arizona. “Our customers take possession of the shipments at the border,” Evans explains. “They do their own clearing and pay taxes.”

One customer in Mexico, Walmart, has its own clearinghouse at the border and a trucking firm that takes over the shipments. Medi-Temp still does business with Canada; not directly but through a distributor in Montreal. “We send everything to them and they distribute the goods to customers.”

This year the company began expanding its exports to Panama and is now looking into Colombia. The reason, Evans says, is the free trade agreements the United States has with those countries.


Maxwell Technologies, Inc., headquartered in San Diego, California, manufactures energy-storage and power-delivery products in Peoria, Arizona. The company expanded its operations there in 2012, assisted by a $1.5 million incentive from the city based on job creation.

From Peoria the company exports electrodes used for ultra-capacitors. “We have a proprietary manufacturing process for our electrode, so it is only produced in the United States,” explains Earl Wiggins, vice president of Maxwell’s Ultracapacitor Operations.
The company ships its electrode to contract manufacturers in China, Taiwan and Germany and other manufacturers of ultra-capacitors.

Today, Maxwell’s total annual revenue comes predominately from exports. “We do 65 percent of our business in China, 25 percent in Europe and the rest in North America,” Wiggins reveals. The company has been exporting for more than six years.

Helping escalate the business are trade shows, primarily those for wind power and hybrid vehicles. “Our product is an energy storage device that is used in many applications that require high power,” he explains. “Since many of the countries that are leading the way in alternative energy are outside of the U.S., we take advantage of meeting with people in those countries.”

To manage transportation expenses, the company utilizes freight routes that minimize costs and third-party logistics providers that ensure smooth clearances through customs. A primary benefit from its location in Peoria is that city’s foreign trade zone (FTZ) allows Maxwell to reduce duties and helps facilitate its Customs-Trade Partnership Against Terrorism (C-TPAT), a voluntary supply-chain security program led by U.S. Customs and Border Protection.

Scott Whyte, Peoria Economic Development Services director, acknowledges that the FTZ is one of the most important projects the City of Peoria has done for companies like Maxwell Technologies. “It helps make them competitive in the export market,” he says.

FTZs are considered outside the U.S. Customs territory, so goods received into FTZs are generally not subject to duties, tariffs or quotas until, and if, they leave the zone.

Arizona is the only state in the nation with the ability to lower real and personal property tax rates up to 75 percent for companies that are FTZ-qualified. “Gaining an FTZ classification allows manufacturers to assess their real and personal property at a rate of 5 percent, rather than a standard manufacturer’s rate of 25 percent,” Whyte explains.

Where Aerospace Companies Are Landing


Just like the automotive industry, aerospace has taken flight to the U.S. Southeast with major manufacturing sites for Airbus in Mobile, Ala.; Boeing in North Charleston, S.C.; Honda Jets in Greensboro, N.C.; Gulf Stream in Savannah, Ga., and United Technologies Corp. (UTC) in Charlotte, N.C.

The attraction is low-cost wages, a skilled workforce, low taxes, attractive incentives, excellent training, top universities, a non-union environment and excellent logistics support.

Pacific Rim Aerospace selected Charleston for its first site outside Washington state so that it could more directly support its customers in the Southeast. Toray Industries, a Japanese carbon fiber manufacturer and major aerospace material supplier, announced in February plans to build its first consolidated facility in Spartanburg, S.C.

“Toray will locate 200 miles from Boeing’s Charleston campus, shortening the supply chain by several thousand miles,” says Allison Skipper, South Carolina Department of Commerce spokeswoman.
Charlotte, N.C., has more than 140 aerospace suppliers in avionics, composites, metals, engine systems, interior products and control systems.

“When UTC acquired Goodrich over a year ago and moved its UTC Aerospace division headquarters here, they found that our cost structure was competitive,” says David Swenson, senior vice president of the Charlotte Regional Partnership. For the move, N.C. gave UTC tax credits and grants.

The company was also helped by Connecticut Governor Dannel Malloy, who signed legislation to help UTC expand and upgrade its R&D and manufacturing facilities in the Nutmeg State and invest up to $4 billion in research and other capital expenditures over the next five years.

Although approximately 40 percent of Virginia’s 260 aerospace firms are in Northern Virginia and 33 percent in Hampton Roads, U.K.-based Kilgour Industries plans to manufacture aircraft components in Martinsville in southern Virginia. The area is appealing for its geographic proximity to North and South Carolina’s burgeoning aerospace industry, proximity to Washington, D.C., and the East Coast’s hardworking employees and low cost of living. Interest in the area also was piqued by advanced manufacturing at New College Institute in Martinsville.

Elsewhere, states like Connecticut, Ohio, Oklahoma, California and Washington present cases for aerospace attraction.
Oklahoma, home to 400 aerospace companies, is fast becoming a global leader in unmanned aerial vehicle (UAV) R&D and testing.

Washington has in place an industry strategy to identify, assist and attract Boeing suppliers, particularly in new programs such as the 737 MAX, KC-46A and 777X in expansion and/or establishment of facilities in the Evergreen State.

A 2014 report by Deloitte indicates that the U.S. aerospace and defense industry generates $324 billion in revenues, contributes 2.23 percent to GDP, has a direct payroll of $84 billion, pays federal and state cash income taxes of $38 billion, and exports $90 billion of goods. Aerospace and defense are the highest contributors to the nation’s trade balance.

Getting A Foothold In Europe


With $2 billion and counting in annual sales, Skechers USA Inc. is making fast tracks around the globe, including Europe. Like many companies expanding in Europe and beyond, the key to escalating this high-performance footwear maker’s business there is its European distribution center (EDC).

Back in 2002, Skechers’ presence in Europe was miniscule, with distribution performed from a 2,500-square-foot distribution center (DC) in Liège, located in Belgium’s region of Wallonia. Today its EDC is nearly 420,000 square feet and expanding. One of five in the world, the EDC is also the company’s biggest outside the United States.

Studies by Ernst & Young have found that location decisions have a large impact on the total supply-chain costs of a company. Therefore, operating costs, which may vary significantly per location, and other factors such as labor costs, quality issues and costs for inbound and outbound transportation should also be taken into account when deciding where a new distribution center should be located, the consulting firm recommends.

Sophie Houtmeyers, Skechers EDC’s vice president of Distribution Operations, explains that the California-based company chose to locate the large facility in Liège because it anticipated increased European market share. Company executives saw the location superior to hot spot locations such as Amsterdam, Venlo, Antwerp and southwest Germany. The reason: Wallonia’s less-congested roadways and a strong, ample workforce—despite the competitions’ closer proximity to major seaports and airports.

A big factor in favor of Liège, adds Houtmeyers, was availability of land, plus favorable electricity and labor rates. “Wallonia’s high unemployment rate benefits the company by making it easy to hire good workers who are flexible and loyal,” she says.

Initially, Skechers brought everything through the Port of Rotterdam. “But a few years ago we switched to the Port of Antwerp because it is closer to Liège and traffic between the two cities is much less congested than that surrounding Rotterdam,” Houtmeyers reveals.

The Skechers EDC receives goods coming from China via Antwerp and stores them until they are redistributed to European markets.

Another plus: Liège offers proximity to customers. “We needed to have a place close to our customers,” Houtmeyers says.
From Wallonia, the company ships products throughout Europe and even Russia, with some five to 35 trucks leaving the DC daily. Those destined to the U.K. go by ferry via the Flemish Port of Zeebrugge, which is less than two hours away.

Another plus: Skechers is designated as an Authorized Economic Operator (AEO). AEO is a regional trade facilitation program similar to the C-TPAT program that is recommended by the World Customs Organization to ease trade and customs clearance for tax compliant and prominent importers and exporters. For Skechers, this means that once its containers are unloaded off the ship, they can be taken immediately by truck to its DC.

Today the EDC is so successful for Skechers that in November the company announced a major investment and technology upgrade to its Liège EDC. The centerpiece is an automated order-picking system that will more efficiently manage the company’s business.

“We have hit a ceiling in terms of productivity,” explains Houtmeyers. “We will reorganize the two existing buildings with an automated sorting system.” The system is similar to that developed for the company’s new North American distribution center in Rancho Belago, California.

The investment increases the productivity of the EDC, which is necessary for the company’s continued European growth. It will also help Skechers establish its e-commerce business in certain European markets. Houtmeyers points out that flexibility and reliability are key in meeting customer demand. “This investment will allow us to expand our operations and utilize a skilled workforce in the execution of our European logistics operations,” she says.


Many companies find investing advantages by having manufacturing and distribution sites under one roof. Since 1992, Häagen-Dazs, a General Mills subsidiary, has been operating its global production plant in Arras, France, part of the Nord-Pas-de-Calais region. The site manufacturers and distributes 80 percent of its premium ice cream from the plant to consumers in 77 countries. That produced in the United States by the Oakland, California-headquartered company is for consumption only in the U.S., Canada and Japan.

A benefit for Europeans who enjoy Häagen-Dazs ice cream, the Northern France location is in reach of 78 million consumers within a radius of 180 miles.

François-Xavier Brehon, plant manager of the Arras site, explains that the company located in Northern France rather than Belgium, Germany, the Netherlands or the U.K.— big markets for Häagen-Dazs—because of Nord-Pas-de-Calais’ quality of infrastructure.

“This site is close to major motorways, and, when we came here, the Channel Tunnel between France and Britain had already opened,” he says. “We are also close to ports where we receive ingredients.”

Logistically, the site is quite well suited for sourcing key ingredients. High-quality milk comes from local dairy farms and chocolate is sourced across the border from Belgium. The ice cream is warehoused down the road then shipped for distribution.
Proximity to major seaports is a critical factor. “Almost 40 percent of our product is for export outside of the European continent, with our biggest export markets being Hong Kong, China, Taiwan and Korea,” Brehon says.

Häagen-Dazs also finds Northern France appealing for the region’s workforce. “It’s very easy to find employees with technical skills here,” Brehon says. Plus, France provides low-cost electricity thanks to its investment in nuclear energy.

Desiring to increase its market share worldwide, particularly in Asia, the company recently was confronted with the dilemma of either expanding its Arras facility or building an entirely new plant in China. But incentives from the French State, the Regional Council, the European Union and the Arras urban community sold company executives on Arras, where it added a new production line of approximately 11,500 square feet. The expansion doubled the plant’s capacity for mix preparation, including blending, pasteurization and homogenization. “Those subsidies covered 8 percent of our total investment, which was around 18 million,” Brehon reveals.


The Netherlands has long billed itself as a distribution mecca for companies not only distributing goods in Europe but also selling globally. Avure Technologies HPP Equipment and Services Division is one such example. In February of this year, this maker of ultra-high-pressure systems for the food industry opened a new Parts Distribution Center in Amsterdam that enables 24-hour delivery of stocked spare parts to customers throughout the E.U. and Asia.

Managed by a professional global logistics firm near Amsterdam’s Schiphol Airport, the DC replaced an existing facility in Västerås, Sweden, with the intention of shortening the delivery time on spare parts.

Similarly, Tesla Motors chose to locate its EDC in Tilburg, Netherlands. The U.S-based manufacturer of high-end, all-electric cars is expanding rapidly in Europe with the opening of about 15 new stores and service centers and will use its new facility as its final Model S assembly point, vehicle distribution hub and regional service center.

The 62,000-square-foot facility is centrally located to enable efficient, timely and cost-effective operations throughout Europe. From Tilberg the company can make deliveries to anywhere in Europe within 12 hours. The city is also well linked to an excellent rail and motorway network and is only 50 miles from the Port of Rotterdam.

How To Help A Nutcase


Michael Morrow, founder and chief executive of Portland, Oregon-based Nutcase Helmets, is convinced that to grow his company beyond its 30 worldwide markets, his bicycle helmet brand needs to be picked up by bloggers, website writers and social media, particularly in Japan.

To help reach his goal, Nutcase participated in an April 2014 Portland Development Commission (PDC) trade mission to Japan, a nation where it already enjoys success.

“The Japanese have a love affair with design and Portland’s affinity for sports and the ecological way of living,” Morrow says. “Our goal for that trip was exposure and goodwill, and to add a halo to the Nutcase brand. We hope there’s a ripple effect to the alpha Japanese who are on the cutting edge of finding new, cool products from Portland.”

Founded in 2000, Nutcase designs and engineers its helmets in Portland but has them manufactured in China and shipped to Oregon via the Port of Tacoma, Washington. “We used to use the Port of Portland,” Morrow says, “but there are longshoremen issues. We do not know yet if this current port of choice is permanent for us or not.”

The company is enjoying international success, especially among the Germans and Danes who have a keen sense for design. It has gained global exposure thanks to assistance from economic development organizations like Business Oregon, which provided Nutcase a boost by designing its marketing plan. “They helped us develop a very thorough marketing plan, demographics of typical customers and what we needed to do to be in the top bicycle cities in the country,” recalls Susan Cassuto, Nutcase financial manager.

Other assistance from Oregon included State Trade and Export Promotion (STEP) grants that helped Nutcase attend Euro Bike and ISPO—major trade shows held annually in Germany.

“These shows are wildly expensive and they offer big opportunities,” Cassuto says. “Dealers and distributors always attend. It is where we make networking connections and find distributors.”

STEP also supported Nutcase by developing its international website. “Distributors will have their own websites, but we needed to establish a domain website that would work as a template for all distributors to use,” Cassuto explains. “This provides consistency for the brand.”

Business Oregon, which utilizes a collaborative approach called “TEAM Oregon” to work with local partners around the state, also facilitated Nutcase executives’ attendance at a workshop on the benefits of utilizing distribution warehousing in the Netherlands. They learned that Nutcase could import products directly from China to Europe without having to first bring the goods to Portland.

“The Dutch have good arrangements related to how to file value added tax (VAT) in Europe,” Cassuto says. “Their Port of Rotterdam is also well versed, and bonded warehouses are centrally located. We’ve been there now almost a year.”

Business Oregon’s Global Strategies team helps existing Oregon businesses grow by accessing overseas markets. “Personal assistance is available from professionals located here in Oregon, as well as from the state’s trade representatives in China, Japan, Korea and Europe,” reports Marc Zolton, Business Oregon spokesman.

These offices are staffed by bilingual professionals equipped with both private-sector experience in their markets and knowledge of Oregon products, companies and culture.

Like Nutcase, Giant Loop, LLC, a manufacturer of motorcycle saddlebags in Bend, Oregon, attributes its success accessing overseas markets to Business Oregon’s export assistance through both the Oregon Trade Promotion Program (OTPP) and coordination with federal agencies. Among the help it received were access to export insurance guarantees through the U.S. Export-Import Bank, introductions to U.S. Commercial Service and its overseas services, and financial grant assistance to defray costs for an international trade show in Milan, Italy, where the company finalized a distribution deal with Touratech AG in Germany.

Business Oregon provides Export Assistance grants ranging from $2,000 to $5,000 in matching funds to Oregon companies to help defray the costs of travel and exhibiting at international trade shows. Since 2012, Business Oregon has awarded more than 200 Export Assistance grants totaling $661,000 to 157 companies. Those companies have reported actual and projected sales revenue as a result of these trade show appearances at more than $50 million.

“Business Oregon is actively working on enhancing opportunities for Oregon companies by building on the national focus on promoting exports via the President’s National Export Initiative which aims to double U.S. exports within five years,” Zolton says.

Business Oregon also helped Giant Loop obtain a list of potential export partners in the U.K., access an affordable federal insurance program and, through its office in Japan, prepared an online directory listing for Giant Loop.

“We were really excited to find out these programs existed and that there’s this whole team of people whose job it is to help small business people like us,” says Harold Olaf Cecil, owner and co-founder of Giant Loop.

Business Oregon helps organize and execute business development and trade missions overseas in conjunction with state and local partners, including Governor John Kitzhaber. One company that took advantage is Oregon City’s Benchmade Knife Co., which originally hailed from California before setting up shop in Clackamas, Oregon, in 1990. In 1996, it moved into the 35,000-square-foot facility where it manufactures specialty cutlery. To expand its international foothold, the company received grants that offset costs for a trade show in South America and a trade mission with Kitzhaber to Asia in September 2011.

“In recent months, we have traveled to Asia, Brazil and the E.U.,” says Zolton.

Benchmade has made the most of the export assistance, not only experiencing triple-digit export growth, but also now employing 180 workers and serving customers in 40 countries around the world.

According to Rob Morrison, Benchmade’s now-former director of Marketing and Strategic Planning, the company’s exports have grown more than 180 percent over the past three years. Asia encompasses 35 percent of its exports, led by Japan and China, where its products are especially popular.


Complementing Business Oregon, PDC (Portland Development Commission) takes a slightly different approach to economic development and trade promotion. Created by the city of Portland as an urban renewal agency, PDC focuses on four strategies.

The first concentrates on Portland’s leading export industry, computer electronics, which is anchored primarily by Intel. “Our strategy is to focus on increasing the supply chain for Intel in our region with the understanding that the more they export, the more other firms will become part of the supply chain,” comments Chris Harder, PDC Economic Development director.

The second strategy focuses on companies across many industries that PDC deems are “under exporters.”

“These are mainly larger companies that have sold their products or services to one or two markets either by chance or via companies around the world that have sought them out,” Harder explains. By putting together a sophisticated approach that works with the firms to understand their products, PDC takes these firms on high-value business development trips focused less on trade shows and more on connecting them with actual buyers.

“The third strategy is a catch-all,” Harder continues. “It focuses on increasing the number of small and midsize businesses that are thinking about exporting and accessing existing export opportunities via resources in our community such as the Port of Portland.”

The fourth strategy focuses on branding and marketing. “We are known worldwide, particularly for ‘green’ development and clean tech,” Harder emphasizes. “We have found that when Portland leaders travel around the world, they are often asked how Portland does this and achieves high sustainability. They want to learn from us.”

By combining the under-exporter and global-exporter strategies, PDC officials believe they have heightened Portland’s branding and marketing effort as well as developed tools and resources that are unique to the region.

“I don’t think anyone else around the country is doing this,” Harder says. “This is where we have seen most of the success.”


Partner-Shipping: How to Reduce Logistics Costs Through Collaborative Distribution

The immense weight of Dal-Tile’s high quality ceramic tile and natural stone products led to a unique logistics challenge for the Dallas-headquartered manufacturer: Containerized shipments from its Mexico production site met weight capacity before utilizing each container’s actual space, leading to exorbitant shipping expenses. Sonney Jones, the company’s division director for Transportation, devised a plan to reduce these transportation costs.

“Typically in a 40-foot ocean container used in international trade, you have a 25-metric-ton weight limit,” Jones says. “Since our products are heavy, we weigh out by using only 30 percent of the container.”

Dal-Tile Corp., a subsidiary of Mohawk Industries, is the largest ceramic tile manufacturer in the United States and one of the largest in the world. It currently operates eight manufacturing facilities—seven in the U.S. and one in Mexico—and five regional distribution centers. Jones felt that if Dal-Tile could collaborate with another company whose products weighed much less but were bigger and bulkier, they could share containers with Dal-Tile’s products and absorb some of the cost. That way both companies could save money.

“I spun my wheels for six to eight weeks because I did not have a proof of concept; only a cost model that said we could save a lot of money if we did this,” Jones recalls.

He felt that if Dal-Tile put 200,000 pounds of product two pallets high on a box car that has a 210,000-pound capacity, there would still be seven or eight cubic feet throughout the car that was not used. Collaborating with a shipper that could utilize that space would lower the cost per unit for both parties.

Then a representative with Transplace, a North American non-asset-based third-party logistics (3PL) provider, called Jones, and the two began discussing the concept with a Transplace Mexico director.

“They started working and put together processes that were approved by both U.S. and Mexico Customs that allowed us to cross multiple shippers on the same conveyance,” Jones says.

Transplace eventually found a good match for Dal-Tile with General Electric and Whirlpool, since these companies use considerable box-car capacity to move product.

“Improving weight or cubic capacity utilization is a challenge many shippers face,” Jones says. “Partnering with like-minded businesses has allowed Dal-Tile to bring its shipments much closer to absolute capacity optimization and realize financial and environmental benefits without sacrificing service. Collaborative consolidation of Dal-Tile’s high-density freight with other shippers’ low-density freight onto the same vehicle has reduced the demand for transportation resources by 60 percent on applicable lanes, netting cost reductions of 10 to 25 percent while reducing our carbon footprint.”

Dal-Tile collaborated on about 4,000 loads with these companies last year, according to Jones. “We expect to double that this year,” he predicts.


In these lean times, when cost is a major concern to all companies, collaborative distribution is quickly becoming a new paradigm that’s saving businesses money. Not only are increasing numbers of companies agreeing to collaborate to work out efficiencies in supply-chain management, some are engaging competitors.

Consider Ocean Spray and Tropicana, companies that compete directly in the fruit juice business. To centralize its supply chain closer to clients and cut costs, Ocean Spray opened a new distribution center in Lakeland, Florida, that received products trucked from its manufacturing factory in New Jersey. This meant the company was returning empty trucks on the northbound leg.

But when Ocean Spray officials learned from its logistics partner, Wheels Clipper, that competitor Tropicana was paying to move 175 empty rail cars per week via the CSX railroad from New Jersey to Florida and delivering product on the northbound back-haul, Ocean Spray realized there could be some advantages to a collaborative transportation agreement.

“First, the two companies needed to work out several issues such as load planning to enable Ocean Spray to take advantage of the back haul,” says Jason Mathers, senior manager at the Environmental Defense Fund.

For example, each truckload shipment held 19 pallets of goods, but boxcars handle 38. The company had to take that into consideration in its order-fulfillment planning, as well as pallet size and configuration.

“But it made economic sense to them since it meant cheaper moves,” says Mathers, who leads EDF’s work to promote environmental best practices in supply-chain logistics.


Although not a new concept, manufacturers and shippers are also realizing greater advantages by collaborating with 3PLs to run their warehouse and distribution center operations. That’s because 3PLs have widened their portfolio of offerings to be more competitive. Today, many 3PLs offer more than just the traditional freight brokerage, packaging, sorting and handling.

“There’s a growing willingness by clients to involve their 3PLs in making operational and strategic decisions,” comments John Langley, clinical professor of Supply-Chain Management, Penn State University. “One of the major things 3PLs are being asked to do today is to be the provider of technology-based services.”

This can include network design, information technology and warehouse-management software to optimize, configure and structure a supply chain that best serves the needs of the customer.

Collaboration arrangements also can be in the form of best placement for a distribution warehouse, which transportation companies to use and on what routes.

Consider Penske Logistics’ relationship with Whirlpool Corp., which earned the 3PL Whirlpool’s Finished Goods Warehousing Provider of the Year Award in October 2013 for boosting year-over-year productivity, cost savings, safety improvements and other innovations that benefit the appliance manufacturer’s supply-chain network.

Penske Logistics manages and optimizes a combined network of 10 major warehousing and distribution centers for Whirlpool across the United States. These facilities encompass approximately 9 million square feet of warehousing space and accommodate more than 43 million units of finished goods annually.

“Penske’s investment in a collaborative relationship and continuous-improvement culture continues to pay dividends for both Whirlpool and Penske,” says Dan Iddings, director of Distribution Operations for Whirlpool. “All of our Penske-managed sites have achieved excellent performance while providing top-level customer service.”

Exports Are Flowing From The Mississippi River Corridor


The Mississippi River is a mighty force for trade and commerce, and programs within the 10 states that share its banks are helping push exports, with a wide host of companies benefiting.

After the economic collapse of 2008, Monticello, Kentucky-based Stardust Cruisers needed a life preserver. By third quarter 2010, the company—America’s oldest continuously operating manufacturer of houseboats—sank to the point that it was building nothing. Its workforce dropped from 70 to 15 employees. “There was zero work in the shop,” recalls Terry Aff, Stardust president.

Thanks to assistance from the Kentucky Cabinet for Economic Development and the Kentucky Export Initiative, the boat builder was able to dramatically turn its business around. A state grant paid for a business trip to Dubai, resulting in Stardust winning about $1.5 million in business. In addition, the company received help and financing through state export assistance programs and Kentucky Highlands Investment Corporation (KHIC).

Now Stardust has another Dubai customer for whom it is building commercial boats. “This could double our business,” Aff says.

In Wisconsin, Middleton-based biotech firm Lucigen Corp. is ramping up its exports with the help of Wisconsin Economic Development Corporation (WEDC) export programs. The company sells life science molecular and biology research tools for academic and industrial research customers.

“The company was exporting prior to using state programs,” comments Curtis Knox, Lucigen’s marketing director, adding that WEDC programs helped Lucigen expand its business, strategize its export program and even develop its products. Today, one-third of its products are exported.

“Several years ago we took a loan to help develop a product that is now the basis for major work we are doing and products we are exporting,” Knox says. Lucigen is about to embark on another loan to help purchase capital equipment.

Company executives will soon embark on a state-run trade mission to India, also supported by grants. “On two different occasions, we used grants to cover costs for exhibiting in Europe,” he says.

One program through which the company particularly benefits is ExporTech. Run by the Wisconsin Manufacturing Extension Partnership (WMEP), the program fast tracks companies to the best export markets for their products.

“We went through the full program and had a grant to pay for half its cost,” Knox reveals. “ExporTech forced us to look at our export program.” Consequently, Lucigen hired a full-time employee to focus on its distribution network of managers outside the U.S.

Roxanne Baumann, director of Engagement, WMEP, explains that each year, WMEP graduates 40 to 50 companies from the program. “We are proud to have ExporTech graduates who have won our Governor’s Export Achievement Award,” she says. “Not just for newbies, our ExporTech-graduate companies average $900,000 in export sales in six to nine months.”


Hagie Manufacturing of Clarion, Iowa has benefited from state promotion efforts. For one, the Iowa Economic Development Authority (IEDA) plays a key role in helping the manufacturer of innovative agricultural sprayers and other agricultural equipment identify prospective international business opportunities that best align with Hagie’s business goals.

In June 2013, for example, Hagie CEO and President Alan Hagie traveled with agricultural leaders, including Iowa’s secretary of Agriculture, on a USDA trade mission to Turkey.

“IEDA has also been a great resource in providing services and funding to help with the promotion of Hagie’s products in Asia,” adds Amber Kohlhaas, Hagie’s brand manager.

In addition, IEDA has conducted market studies on Mexico for Hagie. The company now enjoys a strong distributor relationship there, one that Kohlhaas says was aided by IEDA. Today, 25 to 30 percent of Hagie’s overall sales consist of exports to more than 14 countries, including Ukraine, Hungary, Argentina, China, Canada and Mexico.

Mark Cleveland, CEO of Swiftwick, a manufacturer of high-performance socks in Brentwood, Tennessee, finds his state to be a keen export supporter. For one, the Tennessee Department of Economic and Community Development, through its statewide initiative TNTrade, is charged with making Tennessee the No. 1 location in the Southeast for high-quality jobs by boosting exports of small and medium-sized businesses.

“Our governor and his team know how to create an environment that fosters the mindset that exporting is a priority,” says Cleveland. “The export support program in Tennessee is not just another resource, but a confidence builder that helps minimize obstacles. We don’t need incentives; we need the environment—the team behind us helping create the connections that result in confidence.”

Today, Swiftwick enjoys a strong relationship with Ortho Europe, which provides the company with feedback during the product-development phase of its medical compression socks designed to benefit athletes and travelers.

Cleveland particularly emphasizes that Tennessee presents an ideal geographic launching point for any domestic manufacturer with a complex supply chain. Important to Swiftwick is the fact the footprint of the U.S. textile industry is still found in the region encompassed by Tennessee, North and South Carolina, Georgia and Alabama. “That means our supplier partners are within reach,” he says. “Their shipping costs and ours are minimized, from source material to fiber conversion to construction and, ultimately, shipping finished product to the end user.” In addition, rail, air and land transportation options are excellent, as are warehousing resources. Tennessee is also in close proximity to the bulk of the U.S. population.

Among other statewide programs, the Knoxville-U.S. Export Assistance Center, a public-private partnership between the Knoxville Chamber of Commerce and the U.S. Department of Commerce, has assisted with more than $110 million in shipments to 95 countries.

“Our Export Assistance Center has also helped train more than 500 people involved in the export process,” says Doug Lawyer, Knoxville Chamber vice president of Economic Development.


Illinois Governor Pat Quinn is committed to exports. His website indicates a goal of doubling Illinois exports by the end of 2014. “One of the ways we will achieve this goal is by offering increased export services, programs and training to our small- and medium-sized businesses, enabling them to grow into markets outside of the U.S., through the Illinois Department of Commerce and Economic Opportunity’s (DCEO) Office of Trade and Investment (OTI), our Illinois Small Business Development Centers’ International Trade Centers, Illinois’ Department of Agriculture and other partners such as the U.S. Department of Commerce,” he writes.

In particular, Illinois’ State Trade and Export Promotion (ISTEP) program provides Illinois’ small- and medium-sized businesses with financial and technical assistance to raise the dollar value of their export sales. ISTEP includes three options for Illinois companies to grow their export sales: group trade missions, individual foreign market sales missions and assistance to achieve product compliance certifications.

“Through the DCEO-OTI program, our company is on the right track to expanding our international sales efforts,” writes an official with Smart Medical Technology of Darien, Illinois, which participated in the Arab Health 2013 group trade mission. “With the introduction of matchmaking services to our marketing platform, it may allow our small domestic business to transition to a very large international business.”

Louisiana companies benefit from state programs in export promotion and training arranged by either Louisiana Economic Development (LED) or the U.S. Commercial Service. Companies also benefit by participating in the State Trade and Export Promotion program (STEP). Geoshield LLC, a Baton Rouge-based maker of window coatings, is one such company. Through STEP, the company was reimbursed $4,000 in trip-related expenses for a week-long meeting with clients in Saudi Arabia, Oman, Qatar and other Middle East nations. The trip resulted in renewal of a five-year, $1 million-plus deal.

“If LED hadn’t provided support, we wouldn’t have gone,” says Burns Mulhearn, Geoshield president.

Launched in 2012, STEP provides $5,000 to $6,000 in reimbursement of export-related travel and expenditures; up to $9,000 for higher-tier markets such as China.


When Shawn Askinosie decided to get out of the criminal defense lawyer business, he turned to manufacturing artisan chocolate. Right from the beginning, this small batch, bean-to-bean chocolate maker built relationships with the Missouri Department of Economic Development’s (DED) team at the Missouri International Trade & Investment Office. As a result, Askinosie Chocolate exports to Scandinavia, Canada, Hong Kong, Japan and Australia.

“That team contacts us when there’s an opportunity internationally,” he says. “We contact them when we need contacts in other countries or have super complicated questions.”

Besides offering trade counseling, agent/distributor research, information on business protocol and customized market research, the trade office assists in accessing SBA trade finance programs, providing details on upcoming trade shows and planning and offering customized trade missions.

Minnesota Trade Office is also in on the exporting act, with its STEP program available to provide export assistance and financing for small and midsized companies. Experts are available in the areas of medical, healthcare and environmental and energy industries.

Small businesses may apply for reimbursement of up to $500 for export training that results in the development of an export strategy, or up to $7,500 for approved export-development activities, including participation in trade missions, exhibiting at trade shows or industry-specific events, translation of marketing materials, development of foreign language websites, matchmaking services, company-specific international sales activities and testing or certifications required to sell products in foreign markets.

Special Report: Supply Chain Epicenter


When Liz Claiborne Inc. decided to offload its manufacturing and distribution business to Hong Kong-based Li & Fung Ltd., a Chinese powerhouse engaged in managing supply chains for retailers and brands worldwide, the move marked an innovative shift that still impacts suppliers in the Pearl River Delta (PRD) region of China today.

“Companies are now taking their entire supply chains and selling them off to someone else,” comments C. John Langley, clinical professor of supply-chain management, Penn State University. “Li & Fung sources the materials, makes the clothing and handles the logistics. This frees the customer to focus more on merchandise and product design.”

Li & Fung’s location in Hong Kong offers the company a host of advantages. Considered part of the greater PDR region, Hong Kong is a good source for capital, management, technology, market knowledge and access to international markets. Plus, Hong Kong’s proximity to PRD’s Guangdong Province—the economic heart of the PRD—has facilitated that region in becoming a major world player in light-manufactured and technology-based goods.

“After 20-plus years of manufacturing for the world, PRD has amassed nearly every kind of supplier that would be needed in a world-class supply-chain system,” says American Chamber of Commerce (AmCham) South China President Harley Seyedin. “One of the reasons PRD offers the best opportunities for companies wishing to produce value-added services for the Chinese market is this amazing capability.”

Apple Inc. has particularly benefited from the strong supplier base in the PRD. Contract manufacturer Foxconn performs the final assembly and customization of Apple’s iPad at its 1.16-square-mile factory in Shenzhen, its largest factory within the company’s network. Its location is critical given the many intricate parts needed for the assembly that arrive either by suppliers in the PRD or via the excellent transportation links to the PRD. There, Foxconn customizes the iPad according to market needs. Shipments are then consolidated, brought to a local distribution point, then shipped overseas by air freight.

Hong Kong International Airport (HKIA) has been ranked as the busiest airport for international air cargo since 1996. “HKIA is the world’s busiest international air cargo airport, handling around 4.1 million tonnes of cargo annually,” says Gregory So, secretary for Hong Kong’s Commerce and Economic Development.

The PRD’s Guangzhou Baiyun International Airport is the third-busiest airport for cargo traffic in China. It serves as the main hub of China Southern Airlines and is a focus city for Shenzhen Airlines and Hainan Airlines. Shenzhen Bao’an International Airport is a hub for China Southern Airlines and also serves as an Asian-Pacific cargo hub for UPS.

In addition, the Port of Hong Kong is among one of the world’s busiest container ports with nine container terminals and 24 berths. It handles more than 23 million containers annually and is ranked by the World Shipping Council the second-busiest port in China behind Shanghai. The PRD seaport of Shenzhen is ranked third; Guangzhou is ranked fourth.

“With these advantages, Hong Kong is a leading center for the movement of goods and an ideal converging point for freight forwarding and logistics business,” So says.

Seyedin notes that the PRC also has the best network of high-speed rail systems which are seamlessly connected to subways and other modes of transportation, the best state-of-the-art telecommunication and fiber optics network, the best logistics, a highly sophisticated supply chain, skilled labor and educational institutions.

Seyedin admits that there has been a shift in business in the PRD from producing goods for export to supplying products to the Chinese market. While some of that shift has been the result of reshoring production back to the U.S. due to rising labor rates, reports of poor working conditions and concerns over intellectual property rights in China, some executives cite worker flexibility and speed to production as reasons to retain supplier relationships in the PRD. Some also contend that they need suppliers there to keep costs low and profits high to pay for product innovation.

“We have watched the transformation of the PRD in the past 10 years from being the factory of the world to a value-added production center for the Chinese market,” Seyedin comments.

This shift, he adds, particularly enables American companies to use the PRD as a platform for producing value-added goods and services for China. “In fact, three-fourths of American companies in the PRD are now primarily producing goods and services for the Chinese market and not in the export business,” he says.

A particular benefit for cross-border trade flows is the Closer Economic Partnership Arrangements (CEPA) that Mainland China has with the special administrative regions (SARs) of Hong Kong and Macau. A free trade agreement, CEPA offers qualifying products, companies and residents of Hong Kong and Macau preferential access to the mainland Chinese market.

Hong Kong itself is world renown for trading and logistics. In fact, in 2011, these sectors employed more than 770,000 people and accounted for 25.5 percent of Hong Kong’s GDP.

Helping to further develop and promote logistics is the Hong Kong R&D Centre for Logistics and Supply Chain Management Enabling Technologies (LSCM R&D Centre), which was recently established with funding from the Innovation and Technology Commission of the HKSAR Government and is hosted by three leading universities in Hong Kong: the University of Hong Kong, Chinese University of Hong Kong and Hong Kong University of Science and Technology. The goal of LSCM R&D Centre is to be a leading world center of excellence in logistics and supply-chain management R&D by developing and promoting logistics and supply-chain-management-enabling technologies.

By May 2013, LSCM R&D Centre had already approved 47 projects that will help increase the productivity and competitiveness of the logistics and supply-chain industries in Hong Kong.

Meanwhile, China’s National Development and Reform Commission (NDRC) is putting together an outline to reform and develop the PRD between 2008-2020. Plans call for creating three super-metropolitan areas comprising Guangzhou and Foshan, Hong Kong and Shenzhen, and Macao and Zhuhai with the goal of improving infrastructure and promoting Guangdong as a world-class logistics center. Included in the plans are a number of hub-type modern logistics parks, including those at Guangzhou Baiyun International Airport, Bao’an International Airport and the ports of Guangzhou and Shenzhen.

In that plan, NDRC calls for developing the outsourcing-service industry, developing a series of specialized conventions and exhibitions, fostering creative industry business clusters and increasing the innovation capacity of the region. This includes building 100 new R&D centers and developing three to five high-tech industrial clusters.

NDRC also plans to create a series of industrial clusters based on the internationally influential brands that have flocked around certain cities in the PRD. For example, Foshan is known for its many suppliers of home electric appliances and building materials, Dongguan for garments, Zhongshan for lighting, and Jiangmen for papermaking.

Rounding out the logistics equation is the number of new infrastructure links that are planned to better connect the greater PRD with the overall PRD region. They include the Zhongshan-Shenzhen passage across the estuary of the Pearl River; the Hong Kong-Zhuhai-Macao Bridge (scheduled for completion in 2015); the eastern passage between Shenzhen and Hong Kong; express rail from Guangzhou via Shenzhen to Hong Kong; the development of a coastal railway system (the Guizhou-Guangzhou railway and the Nanning-Guangzhou railway); urban rail transit systems of Guangzhou, Shenzhen, Foshan and Dongguan; improvement of the modern functions of the ports of Guangzhou, Shenzhen and Zhuhai; and expansion of the Baiyun Airport in Guangzhou.

Suppliers and shippers alike will benefit from these transportation links as they will facilitate faster and more efficient movement of goods throughout the PRD.

Washington is Heating Up!


Keith Carpenter didn’t have intentions of starting a company that manufactured stone hearth wood- and gas-fired industrial ovens that would be exported worldwide. Prior to 1990, he only wanted to satisfy a customer’s request for a wood-fired oven. But after contacting an acquaintance who built ceramic incinerators and doing some homework, both found themselves in business.

Since 1990, their Bellingham, Washington-headquartered company, Wood Stone Corp., has sold over 10,000 pieces of equipment in more than 75 countries and was recently acquired by Henny Penny, a complimentary business.

Today, Wood Stone products have been expanded from stone hearth ovens and wood-fired rotisseries to include a mix of theater and specialty restaurant cooking equipment for clients such as California Pizza Kitchen, Wolfgang Puck, Whole Foods Market and Marriott Hotels & Resorts.

Like many Washington companies, Wood Stone ventured into exporting partially by accident and partially by design. Its first foray into international sales came from an appeal from California Pizza Kitchen, which was opening a restaurant in Singapore.

“We supplied them with ovens for several years, then realized we needed a more comprehensive marketing and service plan for going to market and initiating the challenges of distribution internationally,” says Merrill Bevan, Wood Stone vice president, International Sales & Team Building.

It hired a distributor in England, which was quickly becoming Wood Stone’s largest international market, and one year later engaged an export management company to handle distribution in the Middle East, Latin America and Asia.


Wood Stone also benefits from Washington’s natural attributes—its proximity to Canada and Asia and its natural deep-water ports. Its Bellingham location on the Canadian border also offers an entrée to cross-country rail service via Vancouver for shipments to Eastern Seaboard seaports.

Then there are Washington’s global brands that help put the state on the map as an export giant—Boeing, Microsoft, Starbucks, Costco and Amazon. Not surprisingly, the state’s Department of Commerce reports that one in three Washington jobs are tied to international trade.

Most of all, Wood Stone has benefitted from funding for infrastructure improvements that has spurred even more exports. In 2007, the company expanded its facilities from 60,000 to 120,000 square feet. Those funds came from the Washington Department of Commerce’s Community Economic Revitalization Board (CERB) through Whatcom County’s Port of Bellingham.

CERB provides funding to local governments for public infrastructure that supports private business growth and expansion. It is an example of how the Washington Department of Commerce leverages local participation and public-private partnerships for strategic investment in economic development.

“This option for financing was especially helpful in that it gave us the ability to invest in a new building,” Bevan says. “It also gave us the ability to finance some of the metal fabrication equipment we needed in order to compete.”

Wood Stone is a tenant of the Port of Bellingham, which has 1,683 acres in its real estate portfolio and is a development associate for Whatcom County. “We also reach out to companies to promote resources such as the EX-IM Bank, U.S. Commercial Services and export finance assistance,” reports Dodd Snodgrass, Port of Bellingham’s FTZ administrator.

There are other examples of Washington programs assisting companies expanding their exporting efforts.

Like Wood Stone, Slingshot Sports LLC located in Bonneville, a rural town in the depths of the Columbia River Gorge, had become a seasoned exporter with a network of faithful distributors. But when this manufacturer of internationally known kiteboards expanded its product line, its executives found the company needed to fine-tune its export strategy.

Enter a Washington State Department of Commerce-sponsored program that gives companies in rural areas an opportunity to take advantage of export-skills training. The training is made possible by the U.S. Small Business Administration’s State Trade and Export Promotion (STEP) program.

By taking advantage of the program, Slingshot Sports executives learned how to leverage credit insurance and export financing to broaden its appeal to foreign buyers. They also received advice, during one-on-one consultation with a Commerce trade specialist, on how to save thousands of dollars when developing overseas relationships.

“Commerce showed us that instead of spending $50,000 on a trade show, we could spend $10,000 to $15,000 on a road show instead,” says Jeff Logosz, Slingshot Sports’ co-founder.

The company used an export voucher from Commerce, provided by STEP funding. The voucher offset the costs of setting up a central meeting location in Europe to meet with potential buyers from around the continent. The road show delivered a sales boost well above expectations.


Washington businesses understand the power of tapping into overseas markets. In fact, according to the Washington Department of Commerce, more than 8,000 Washington companies grow their business by exporting.

“Creating a culture of exporting is vital to Washington’s economy,” comments Brian Bonlender, Washington Commerce Department director.

Smaller and new-to-export companies face tough challenges in getting their products and services to the international marketplace. “That’s where the state plays an important role,” Bonlender adds. “We provide research, training and expertise for target market development, business-to-business matchmaking, connections to legal and financial resources such as Ex-Im Bank, trade missions and other support that companies need in order to grow through exporting.”

Exporters find Washington State’s well-organized network of trade-related organizations helpful, such as the Washington Council of International Trade (WCIT), Trade Development Alliance of Greater Seattle (TDA), Washington State China Relations Council, World Trade Center Tacoma, International Trade Alliance-Spokane, and the number of ethnic chambers such as the Washington State China Chamber of Commerce, African Chamber of Commerce of the Pacific Northwest and the Greater Seattle Vietnam Association.

“TDA, our sister organization, works one-on-one with businesses to help them find customers and build global trade relationships,” says Eric Schinfeld, WCIT president. “They lead trade delegations around the world and host inbound delegates coming to Washington that want to make connections for trade or inward investment.”

In fact, Schinfeld calls Greater Seattle the most internationally tied region in the United States, given its key industries that range aerospace, IT, biotech and clean tech.

“Much of [Washington’s] economy is built on a vibrant foundation of world-class research, a diverse, highly skilled workforce and a network of business and trade services,” he says. “This is where the world comes to build our tomorrow.”

The Facts

Merchandise export value for Seattle-Tacoma-Bellevue, WA: 2011, $41.1 billion; 2012, $50.3 billion, up 22.3 percent.

Electric rates for Seattle and its metro area: 9.5 cents per kilowatt hour—one of the lowest rates of any metro area in the U.S.

Together, the Ports of Seattle/Tacoma are the second-largest container transshipment point in the U.S., shipping a combined $20.4 billion of U.S. products in 2011. Its multimodal freight transport system includes the Ports of Seattle, Tacoma, and Everett; Sea-Tac International Airport; BNSF and Union Pacific; and Interstates 5, 405, and 90.

Other key seaports: Port of Olympia and Port of Vancouver USA, largely break-bulk ports.

Seattle-Tacoma International Airport is the nation’s 16th largest passenger airport, serving more than 33 million passengers in 2012, a record for the airport.



FTZ No. 85


FTZ No. 86 & No. 212


FTZ No. 5

Port of Olympia: FTZ No. 216



The aroma of fresh coffee, a beignet and a little jazz may entice some to New Orleans, but when Folgers executives caught the scent of Louisiana’s aggressive package of incentives, the nation’s largest coffee company was assured it was making the right decision to invest $70 million to be near the Big Easy.

After all, making the Crescent City the company’s exclusive entrepôt increases New Orleans’ cachet as a distribution hub and coffee town.

Folgers had already been part of the New Orleans community for 50 years. But parent company J.M. Smucker was instigating a $220 million restructuring effort to cut costs and improve company-wide efficiency. This meant expanding production and capacity at three New Orleans facilities at the cost of closing plants in Sherman, Texas, and Kansas City, Missouri. The effort would shave $60 million from Folgers’ expenses.

A statement from Folgers called the Louisiana expansion “a major factor in the continued growth and success of our Folgers coffee business.” The plan was to invest $70 million in Folgers’ New Orleans manufacturing plants and a distribution center (DC), of which around $62 million was earmarked for new equipment and approximately $7 million for a remake of the DC’s interior to accommodate more products.

To sweeten the deal, Louisiana Economic Development (LED) offered Folgers incentives of nearly $6 million. The package included a $3 million performance-based grant for relocation costs, a $2.1 million refundable state tax credit for capital investment through the state’s Retention and Modernization Program, and a $500,000 public infrastructure grant to pay for drainage and surface improvements. LED also supported Folgers’ application for $65 million in Gulf Opportunity Zone bonds.

Seen as a boon Port of New Orleans business, port officials worked diligently to support Folgers’ investment. This meant ensuring ample space for additional coffee shipments coming to the port—even those arriving by rail since much of the coffee imported from Asia is discharged, for now, in California and railed to New Orleans.

New Orleans operates as one of the country’s leading coffee ports, equal to New York.

“We worked with ocean carriers to make sure they knew Folgers was going to need additional capacity,” recalls Robert M. Landry, the seaport’s chief commercial officer.

An added plus, the expanded Panama Canal, scheduled to open in 2015, will ensure that the larger post-Panamax ships from Asia finally will be able to transit the canal for Gulf and East Coast ports. “This brings opportunities for Folgers to bring coffee to New Orleans direct, rather than mini landbridge from the West Coast,” Landry says. Much of that coffee currently comes from Vietnam, now the world’s second-largest coffee producer. “The expansion will increase the frequency of container ships coming through the Panama Canal and also expand the number of services.”

A big plus, Folgers green coffee beans are stored and blended by Silocaf, which operates the world’s largest storage and blending facility, controlled by Folgers and situated next to the port’s Napoleon Avenue Container Terminal in New Orleans. It represents more than $1 billion in coffee sales per year.

“New Orleans is the nation’s premier coffee handling port, and we have a robust ecosystem of companies that participate in every aspect of the coffee supply chain—from processing, storage and distribution, to trading,” says Rodrick Miller, president and CEO, New Orleans Business Alliance.

The supply-chain savings that Folgers’ New Orleans location offers is a reason for other locally based coffee brands to locate there as well. These include CDM and Luzianne (owned by parent company Reily Foods) and PJ’s Coffee, a franchise coffee chain with locations across the United States. Zephyr Green Coffee also operates as a coffee trader and importer there. The company opened its doors in New Orleans in 2006, less than a year after Hurricane Katrina left its mark on the city.

“Considering New Orleans’ history of coffee trading, strong logistics infrastructure at the port and advantageous location on the Gulf Coast, coffee manufacturing and import/export activity are well positioned for continued growth,” Miller says.

Louisiana’s strategic Gulf location supports other industries as well. One is the processing of peppers into hot sauce for such brands as well-known and globally sold Tabasco.

Manufactured by McIlhenny Co. on Avery Island, the pepper sauce has been around some 140 years. “The family that created the pepper sauce married into the family that owned Avery Island,” explains Betts Theriot, McIlhenny senior manager for International Market. “It started here and will stay here.”

According to Theriot, McIlhenny’s growing operations have expanded to 10 countries in Central and South America. “That’s to protect us from crops damaged by weather, insect infestation or plant disease,” she explains. “But all seeds that are used to grow those plants overseas originate from plants on Avery Island.”

Despite the fact McIlhenny’s Tabasco product is shipped globally, its Louisiana operation employs less than 200 people. “And our brand is as large as Hershey or Coke,” Theriot exclaims.

Key to its success: all sales people in the United States work around the world, plus the firm employs direct sales personnel and regional managers in specific markets.

“Regional managers do the ground work,” Theriot explains. “They investigate the market in their established territory, look to see what other company brands are exporting into those countries and figure out who wants to import Tabasco.”

Much of the work, she says, is word of mouth. “But since we have a huge network of import partners, we are able to ask who sells what in a particular country and who the importer is. We can get a quick list of the different companies.”

As a result, McIlhenny now sells Tabasco in 160 countries and territories worldwide. It’s been selling in Japan since the 1950s, and now is expanding into emerging markets. “We just hired an importer in Jordan and another in Kazakhstan,” Theriot says. “We’re also researching importers in Georgia, Romania, Azerbaijani and Bolivia.”

To help, McIlhenny utilizes funding from the Southern United States Trade Association (SUSTA), headquartered in New Orleans. SUSTA provides branded marketing programs, generic industry promotions and chef training programs.

“They help us with brand awareness and trade shows,” Theriot says.

While McIlhenny has managed well without use of state assistance, LED has been active in providing help to other well known companies throughout the state.

Lockheed Martin announced in March that it will make a $3 million capital investment at NASA’s Michoud Assembly Facility to manufacture cryogenic tanks for liquefied natural gas (LNG). The tanks are part of the company’s increased emphasis on converting defense technology to commercial applications.

At 832 acres, the facility is one of the nation’s largest indoor manufacturing complexes. Lockheed previously used the site to manufacture external fuel tanks for NASA’s shuttle program. It also plans to use the facility for a slate of new technologies such as Ocean Thermal Energy Conversion (OTEC) heat exchangers.

LED is offering a variety of incentives and programs to help Lockheed with the projects. These include Louisiana’s Competitive Projects Payroll Incentive, which entails a payroll rebate of up to 12 percent for eligible jobs in advanced manufacturing, the Industrial Ad Valorem Tax Exemption Program (ITEP), as well as LED’s FastStart program.

FastStart, a popular program administered free of charge by LED, provides customized employee recruitment, screening, training development and training delivery for eligible, new or expanding companies. Based on a company’s immediate and long-term workforce needs, the FastStart team crafts unique training programs to ensure high-quality, flexible workers are prepared from day one.

ITEP is an original state program which offers an attractive tax incentive for manufacturers within the state. The program abates, up to 10 years, local property taxes (Ad Valorem) on a manufacturer’s new investment and annual capitalized additions related to the manufacturing site.

Louisiana’s prize new project, however, is South African-based Sasol, which is proposing to build a gas-to-liquids and ethane cracker complex in Westlake. With a $21 billion price tag, this project is regarded as the largest investment by a foreign-based company in U.S. history.

Not only are thousands of new jobs anticipated as a result of the deal, the project could make Louisiana the No. 1 exporting state for years to come.

“Probably not since the Ship Channel was dug in the late 1920s or we began the petrochemical industry here in World War II has there been a bigger announcement in Southwest Louisiana,” says George Swift of the Southwest Louisiana Economic Development Alliance.

Underlying the historic announcement is another key ingredient that many say is catalyzing an industrial renaissance in the United States: the advent of low, stable natural gas prices.

Louisiana’s extensive pipeline infrastructure and favorable natural gas climate should give fuel to at least $50 billion in new manufacturing projects in the state within the next three to four years, meaning that more news is on the way for Louisiana purchases.