REUTERS/Larry Downing

President Obama presents the Presidential Medal of Freedom to German Chancellor Angela Merkel at an official State Dinner in the Rose Garden on Tuesday.

WASHINGTON — Minnetonka-based American Medical Systems has a corporate goal to expand their market. In Europe, it’s used Germany as a staging ground.

Western European markets are generally the easiest for American companies to expand into first, AMS Chief Financial Officer Mark Heggestad said. So when AMS, a medical device developer, manufacturer and seller, looked to go international, they made Germany one of their main operation centers.

AMS’s German sales force of more than 20 people is their largest internationally. They’ve also used the German market to test new sales techniques, such as salespeople specializing in certain device types. AMS had $542 million in sales in 2010; 30 percent of it internationally with their $25 million in German business the largest share of that.

“Germany is by far one of our biggest opportunities,” Heggestad said. The company’s philosophy: “If we can be successful there, we’ll expand into other markets.”

The United States is a year into President Obama’s plan to double the country’s exports within five years, though businesses in Minnesota say federal policy is unlikely to help dramatically stimulate trade with an ally as close as Germany. Regardless, trade was on the agenda during bilateral meetings with German Chancellor Angela Merkel at the White House Tuesday.

During 2010, U.S. exports increased 20.6 percent to $1.28 trillion. At the same time, Minnesota’s manufactured exports increased 17.3 percent, or about $2.5 billion, according to the Minnesota Trade Office. The state’s exports to Germany increased 12 percent — faster than the 9 percent national average to that country — making it the state’s fifth biggest destination for exports.

At a Tuesday press conference with Merkel, Obama opined on the financial relationship between the two companies.

“Germany is one of our largest trading partners,” he said, “and we discussed how to keep our economies growing and create the jobs that our people need.”

‘By far one of our biggest opportunities’
Minnesota exports to Germany total $727 million, and top products include computers and electronics ($302 million), miscellaneous goods, such as medical technology ($109 million) and machinery ($101 million).

Lübbert Kruizenga, president of the Minnesota Chapter of the German-American Chamber of Commerce, said he couldn’t point to one specific reason why Minnesota has become an increased target for German imports.

But one key, he said, is the shared heritage of the people.

At Tuesday’s press conference, Merkel said one-fifth of Americans have some form of German ancestry. In Minnesota, that German bond is even stronger: more Minnesotans are German descendents than any other ethnic group, and six towns have German sister cities, according to the Trade Office.

So how does that encourage companies from the homeland to invest in Minnesota products?

“Minnesota is moderate when it comes to pricing and negotiations,” Kurizenga said, pointing to a common trait Minnesotans and Germans share. “The business climate is way better than it is on the East Coast, for example.”

Shrinking European manufacturing
Even with an increased federal emphasis on exports, market forces still play a vital role in dictating where companies send their goods.

FSI International, a Chaska company that distributes equipment to semiconductor manufacturers, used to net nearly half of its revenue from European manufacturing companies.

But today, semiconductor companies generally outsource their manufacturing to factories that do contract work. Most of those are cropping up in Asia.

Today, FSI works with only one German firm. Everything else goes across the Pacific and into Asia, where about 70 percent of its business originates, Executive Vice President Benno Sand said.

Despite their companies’ opposite trajectories in Germany, Heggestad and Sand tended to agree that there isn’t much the federal government can do to change their export fortunes.

Heggestad said there is no significant barrier, such as tariffs or regulations, that stops AMS’s European operation. In fact, given the speed with which Europe approves medical devices, markets sometimes open quicker there than they do in the United States.

Sand, meanwhile, said the semiconductor manufacturing market has simply shifted from Europe to Asia, and there is little the government can do to stop that. “It’s the plight of manufacturing,” he said.

Kuizenga said he hasn’t projected any possible Minnesota-Germany trade trends going forward, but he warned that Minnesota’s higher-than-average taxes could become a trade deterrent in the future.

In terms of federal policies, Kuizenga said free markets and open communication will foster better international business relationships.

Though Obama and Merkel didn’t make too much news on the trade front with their Tuesday press conference, Obama said the two did discuss “the need to eliminate regulations and barriers so we can unleash even more trade and investment,” specifically mentioning the electric vehicle market.

Merkel was more vague on the countries’ trade relationship, saying only that Germany is an “interesting economic partner for the United States.”

Devin Henry can be reached at dhenry@minnpost.com.