The Cornhuskers are Upping State Incentives and Exports

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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