NORTH CAROLINA IS MAKING SURE ITS GLOBAL BUSINESSES ARE WELL HEELED
Advanced Superabrasives, Inc., (ASI) had made several unsuccessful attempts to expand its export business into China before trying to break in through a joint venture with a Chinese company. That not only failed, the Chinese freight forwarder held a container of the company’s machinery used to make abrasive wheels and “tried to extort money from us” for its return, says Jonathan Szucs, general manager of the Mars Hill, North Carolina-based company’s international division.
“We were really naïve when we started exporting,” he now admits.
But the North Carolina Export Assistance Center (EAC), part of the U.S. Department of Commerce, provided advice and assistance to retrieve the container for what ASI actually owed and put Szucs in contact with “a real freight forwarder who was able to tell me things I needed to do.” Afterward, the EAC also helped him file a grievance with the maritime law authorities against the offending freight forwarder.
It was the beginning of ASI’s ongoing relationship with the EAC and its Export University, which has trained numerous ASI employees. And if U.S. Commerce can’t help, North Carolina’s Commerce Department can, Szucs says. “We use both interchangeably.”
The state has a trade office in Hong Kong that he says has provided great market assessments. “I also had them do background checks on a couple customers in China to make sure I wasn’t selling to the wrong people.”
China now is ASI’s top export destination, followed by Brazil and Canada, which once was the company’s sole export market. Szucs worked closely with a representative in the Brazilian trade office of the North Carolina Commerce Department’s International Trade Division (ITD) who has kept him informed on the country’s changing import laws.
The ITD was instrumental in ASI expanding its export program to 16 countries, destinations often opened through recommended contacts and market assessments. As a result of its growing exports, the company received the President’s “E” Award for export expansion in 2013.
North Carolina’s ITD also has trade offices in Mexico City, Toronto, Frankfurt, Tokyo and Shanghai, with staff who know the local language and business environment. It’s a “tremendous asset,” says David S. Robinson, special counsel in the Raleigh office of the law firm Nexsen Pruet PLLC, a provider of legal and other assistance to exporters. The foreign offices, Robinson explains, show that North Carolina is committed to developing business relations with these countries and regions.
“Some states are now pulling back their international offices or their investments in global operations,” he says. “But North Carolina continues to fund its international offices, which we make use of all the time.”
The ITD organizes trade missions and often has exhibition space at trade shows to promote North Carolina and specific companies serving that trade.
“Throughout many administrations,” says ITD director Jean Davis, “funding for the Division has been maintained.”
In September 2013, the North Carolina Commerce Department led a trade mission to Turkey, and two more—second trips to both India and China—are in the planning stages, according to ITD’s Davis. “We do about two big trade missions a year,” she says, noting that they are led by either the governor or commerce secretary.
Michael Viniconis, president of Charlotte-based Argus Fire Control Inc., praises another of ITD’s services. “One of the things the Trade Division does is let you know when there’s a trade show coming up that would be in our market,” he says. “In China and Mexico we actually were in booths operated by the state.”
Teams from ITD attend more than 21 trade shows annually, often bringing officials from North Carolina companies with them, says Davis.
Argus, which manufactures customized fire protection equipment primarily for the textile industry, now does business in 50 countries thanks to state and federal help identifying potential distributors, Viniconis explains. “That was a key part of our original growth,” he says.
Stephan Janz, vice president of Business Development and International Sales at Leland-based Flow Sciences Inc., says his company obtained lists of potential distributors in other countries from both the U.S. and North Carolina commerce departments.
“Going to trade shows in our target countries allowed us to start developing relationships and screening some candidates,” says Janz, whose company designs and manufactures containment enclosures for toxic or noxious materials that require safe handling in laboratories. Janz adds that the presence of U.S. and North Carolina commerce departments at these shows meant he “always had a place to hang my hat and grab a cup of coffee.”
North Carolina has “a long history of pulling our industries together, especially around global challenges,” says ITD’s Davis. “A group of small North Carolina companies called American Search Exporters has banded together to try things like eight furniture companies hiring one rep in Mexico to represent all eight of their furniture lines. That kind of collaboration is amazing. So we’ve seen growth in companies learning how to increase international sales.”
The volume of North Carolina’s exports continues to grow, totaling $14.8 billion in the first half of 2013, up 6 percent from $14.1 billion for the first half of 2012.
Janz says he received a grant through the state’s STEP program that helped him with the costs of attending a conference in Singapore, where he connected with a new distributor. Now he is seeking a second grant for travel costs to Belgium in hopes of finding another distributor.
“Right now we have export dealings in about 25 countries,” he says. “Ten years ago it was like three.”
Janz has also worked with the Small Business Technology Development Center (SBTDC) at the University of North Carolina at Wilmington. A service of the University of North Carolina, the SBTDC is administered by North Carolina State University in partnership with the SBA with the aim of providing “export-related guidance and assistance to small and mid-sized businesses.”
It consists of 10 regional service centers and development units at 16 constituent institutions, all of which operate as a single program statewide, making it, the program boasts, “the most fully-integrated [small business development center] program in the country.”
The North Carolina Lawyers for Entrepreneurs Program—known as NC LEAP—provides free business-related legal advice to “low-wealth entrepreneurs and business owners;” a unique endeavor in that it serves all of the state’s 100 counties.
“While many other states have programs similar to ours or even modeled after ours, it’s my understanding that there are no statewide programs such as ours,” says Mary A. Horowitz, director of Public Service & Pro Bono Activities, at the North Carolina Bar Association Foundation.
Free mentoring is offered to new and young companies throughout the state by the Blackstone Entrepreneurs Network (BEN), which has partnered with Duke University, North Carolina Central University, North Carolina State University and University of North Carolina at Chapel Hill.
Yet another sign of statewide cooperation: All 68 of North Carolina’s community colleges have been engaged by the ITD to “help us do training for companies outside of metropolitan areas,” says Davis.
EAC’s Export University has helped ASI and North Carolina companies such as Charlotte-based Refiner Products Manufacturing (RPM), which builds equipment that grinds wood chips into individual fibers for the manufacture of paper and fiber board.
“That Export University thing is a really good program,” says Richard X. Taylor, co-owner of RPM. “Different experts speak on topics you have to know in order to export efficiently.”
The courses are designed by the U.S. Commercial Services and the volunteer non-profit North Carolina District Export Council, which also provides other benefits to business leaders, including Argus’ Viniconis and Flow Sciences’ Janz, who are members.
Also a North Carolina focus, helped by federal commerce officials, is to encourage companies to join the DEC and apply for President’s “E” Awards. Having received a President’s “E” Award for export achievements and been a member of the DEC, Flow Science’s Janz says both have helped him gain export business.
“Part of being on the District Export Council allows me to show someone that I have gone through some learning,” he says.
The “E” Award, he points out, “gives us additional credibility when we want to enter foreign markets. When you are talking with distributors and show them a federal award that has a gold eagle on it, that makes them feel better. It says the government says we’ve achieved something. Most people then say, ‘Let’s do business.’”
That inviting attitude also applies to North Carolina. In 2013 it was ranked the third-best state for business by Chief Executive magazine and the third-most competitive state by Site Selection magazine, which had ranked it No. 1 for best business climate in 2012. That same year, Forbes ranked North Carolina the fourth-best state for business and a CNBC survey ranked it fourth among America’s Top States for Business.
Located between port-heavy states Virginia and South Carolina, the Tar Heel state offers exporters many choices.
For export shipments, the North Carolina State Ports Authority operates ports in Wilmington and Morehead City, plus inland intermodal ports in Charlotte and Greensboro—although some North Carolina companies use more convenient and larger ports in South Carolina and Virginia.
Deborah Murray, executive director of the Caldwell County Economic Development Commission says, “The state is working to broaden our exporting opportunities by opening up the Port of Virginia to North Carolina businesses.”
The Virginia port has terminals in Newport News, Norfolk and Portsmouth, all just across the border from North Carolina.
Two major railroads, CSX and Norfolk Southern (NS), and several small short-line railroads serve the state. NS has intermodal facilities in Greensboro and Charlotte, though the land-locked facility in Charlotte is to be replaced with a larger one at the Charlotte-Douglas International Airport.
“That’s part of our Crescent Corridor project,” says Norfolk Southern spokesman Robin Chapman. “Most of the freight that travels on that corridor is hauled by truck so there’s a tremendous opportunity to get more of that freight off the highways and onto rail.”
Developing that intermodal facility for train, truck and plane, says North Carolina Commerce Department Secretary Sharon Decker, is “going to be incredibly important for North Carolina’s economy.
“North Carolina is a very attractive place to do business,” she concludes, “and we want to make it even more so.”
State of Emergence