Oklahoma is helping manufacturers like Mills Machine Co. grow at home and expand internationally
Chuck Mills may have been too anxious and too naive to start selling directly to overseas companies when, as the third generation, he took over the family business as president of Shawnee, Oklahoma-based Mills Machine Co. in 1979 after graduating with a Bachelors of Business Administration from the University of Central Oklahoma.
Mills Machine, a custom manufacturer of earth drilling tools, bits, valves and related accessories, had previously made few export sales, all through export trading companies that handled everything.
“I had a great interest in selling internationally,” Mills explains. “It sounds silly. It’s almost the romance of selling to other countries that you’ve never visited and have an image of, or would like to visit or work with the cultures. So we started establishing some relationships, started doing a little advertising in some trade publications, started making some connections.”
The first order came from a company in South Africa.
“Naively enough, we sold with an open account and actually got paid,” he recollects. “Then they ordered the same things six months later and never paid. That was a valuable lesson about really not knowing what you’re doing.
“So then we said that we’d better look around to see if there’s anyone that can assist us, and we got hooked up with the Oklahoma Department of Commerce, which was able to help us with their resources. And we joined organizations and associations and talked to other exporters. All that was the real key.”
Mills joined the now-defunct Oklahoma City International Trade Association—Shawnee is 35 miles east of Oklahoma City—of which he became president. He also joined the State Chamber and now chairs the State Chamber’s International Committee. For the past 25 years he has also been a member of the Oklahoma District Export Council (DEC), as an appointee of the U.S. Secretary of Commerce, and has been its chairman for the past seven years. The DECs, established in 1973, are organizations of leaders from local business communities whose knowledge of international business provides sources of professional advice for local firms.
He also chairs the Oklahoma governor’s international team, which is comprised of educators, manufacturers, service providers, attorneys and others, and seeks to coordinate all the export-oriented entities in the state.
“After the South African debacle, we worked through lines of credit and cash in advance,” Mills says. “We now also use the Ex-Im Bank. We started working with them just a couple years ago to extend credit to customers that we’ve been dealing with a long time. That has expanded our international sales quite a bit. So we’re going to continue to try to develop more business using that safety net.”
For company executives interested in exporting, Mills says that “they need to go to two places that are either free or very inexpensive: either their state’s Department of Commerce, or the U.S. Export Assistance Center, which is the international service arm under the U.S. Department of Commerce.
“The Export Assistance Center is the sponsor of the District Export Councils. They have such great programs and much of their educational information is free,” he points out. “They’ll come and counsel you for free. They have very inexpensive programs like agent distributor searches, and they’ll use the embassies and offices that we have around the world to get you the local information that you need. It’s definitely the way to go.”
Last year at Mills Machine—which has now exported to more than 70 countries—exports accounted for almost 25 percent of total sales, with the figure reaching as high as 50 percent some months, Mills says.
“After our South African experience, we started selling more into Europe and, even before NAFTA, we sold to Canada and Mexico just because they were very close,” he explains. “We treat Canada almost like a domestic customer. It’s just easy to deal with them. Mexico is still a little difficult. You have to be very careful, but we have a lot of sales there. And South America is now the emerging market for us. We’ve sold there before, but it’s getting a little better for us now.”
Mills says that he tries to raise awareness of global export opportunities for businesses in Oklahoma.
“Some people are slow to catch on as to how good the opportunities are,” he admits, “but we just keep promoting anyway. Others understand it. We’ve got a really good support system to help and support them, and we try to work with new-to- market exporters.”
Oklahoma, through its Department of Commerce, has its Quality Jobs Act, which reimburses companies for up to 5 percent of new payroll for up to 10 years. The state also has an Aerospace Industry Engineer Workforce Tax Credit that provides tax credits of up to 10 percent of the compensation paid to engineers during their first five years of employment. Through its PrimeWin Prime Contractor Incentive, the state even offers cash rebates of up to 2 percent of labor costs to companies that are subcontractors to federal prime contractors, the only such incentive program in the nation.
Limco Airepair Inc., a Tulsa-based aerospace manufacturer of heat transfer units, was able to take advantage of the QJA program. The company rebuilt its employee roster to 180, having shrunk to 135 after plans for a move to North Carolina were announced and then canceled, explains Mary Dowdy, vice president and chief financial officer. During that two-and-a-half year period, annual sales increased to $27.6 million from $17 million, with exports accounting for 20 percent of total sales, she says.
“The State of Oklahoma is really working toward rewarding businesses that remain in the state and then grow and add to their payrolls,” Dowdy explains.
Also, Oklahoma is retaining more of its higher education graduates, according to preliminary U.S. Census data, reversing an outward migration trend. And the Oklahoma State Regents for Higher Education reports that more bachelor’s degree recipients are remaining in jobs in the state than was the case a decade ago.
Jim Fram, senior vice president of economic development for the Tulsa Chamber, points to “the educational system here with our career tech programs, our community colleges and then the three major universities that have presence here.” All that, he says, “really helps develop a great work force.”
But in the past, numerous state business leaders admit, many university graduates left Oklahoma for Texas, a situation that no longer exists.
The State of Oklahoma and its two major cities, Tulsa and Oklahoma City, regularly appear among the top 10 places for economic performance, operating a business and for living conditions in reports by such specialized magazines as Area Development, Business Facilities and Site Selection as well as RelocateAmerica, The Brookings Institution’s Metropolitan Policy Program, the Business Journals, Thumbtack.com and CNBC. In a survey released this past May, Thumbtack, in partnership with the Ewing Marion Kauffman Foundation, rated the state A+ for overall friendliness for business and for ease of starting a business, an A for hiring costs, regulations licensing and employment, an A- for training programs and a B+ for networking programs. And a research report by the State Chamber released early this year showed that Oklahoma has the lowest cost of unemployment insurance in the nation and the sixth-lowest cost of doing business.
For assistance to start-ups, including affordable lease space and administrative services, the state has 52 certified business incubators.
All of these are factors, says the Tulsa Chamber’s Fram, as to why he is now working with nearly 50 companies looking to open facilities in the Tulsa area, including more than 20 out-of-state companies.
Fram also notes that companies in similar fields or industries like to cluster together, “because they want to take advantage of that [existing] workforce.” In Tulsa, this is the case with the aerospace and the oil industries.
That is why Michael Murray, vice president of marketing and international operations for year-old start-up Summit ESP, LLP, says Tulsa was chosen for the headquarters of his company, which manufactures electric submersible pumping systems for the oil industry. “I would think that our Tulsa location makes us more attractive to overseas markets,” he says.
The location is also making it easier to find experienced skilled workers without being forced to train workers, an expense it cannot afford as a new start-up, Murray explains. He points out, “From a talent pool basis, it made a lot of sense to be here in the Tulsa area.”
Oklahoma even has a port, the Port of Catoosa, on the eastern edge of Tulsa.
“We’ve been here 40 years,” says Port Director Bob Portis, “but there’s still a lot of folks who say, ‘You have a what, where?’”
From the port, barge traffic, thanks to a series of locks and dams, goes down the Verdigris River into the Arkansas River and then into the Mississippi River, where it can go down to the Gulf of Mexico or up the Mississippi to numerous cities, or even up the Ohio River.
The port handles, Portis says, “pretty high-valued machinery that goes to the petro-chemical industry in the U.S. and abroad.”
The Tulsa Chamber’s Fram also points to his city’s “nice international airport”—with its 16 daily direct flights, including to hubs from where one can get direct flights to anywhere in the world—as an attraction for business development.
Exporting, Mills says, is the last frontier for great opportunity.
“Because the world has shrunk, we’re competing with other states’ business for domestic sales, and internationally we’re doing the same thing,” he explains. “But there are a lot of people in other states that don’t have the advantages for business and for living that we have here in Oklahoma.”
State of Emergence