You name it, Minnesota’s small businesses make it. From feed buckets and cattle prods to trenchless digging machines and sailboats, the state’s small companies manufacture a wide array of products across multiple industries.
But small businesses typically don’t export much of what they make outside the United States.
Mistrust; fear of getting paid; lack of knowledge of potential customers, markets and distribution channels; and regulations — on top of language barriers — all are cited as inhibiting small-business exports.
“The simple fact is the more companies export, the more they produce. The more they produce the more workers they need, and that means jobs – good-wage-paying jobs,” declared Secretary of Commerce Gary Locke, who headed up the delegation at Thursday’s export “road show.”
First stop on year-long tour
Minneapolis is the first stop in a year-long effort titled “New Markets, New Jobs” to increase export awareness among 3,500 small and medium businesses around the United States.
An all-star lineup of federal, state and local officials, politicians, consultants and international trade representatives spent the day exhorting more than 250 “export-ready” executives from the Minnesota small-business community to sell more of the stuff they make to customers outside the United States.
The daylong event was spent explaining the financing, marketing, regulatory and research help the government can provide to small businesses interested in exporting.
In addition to the Department of Commerce, representatives from the Department of Agriculture, Small Business Administration, U.S. Trade Representative and Export Import Bank were on hand to meet with business executives and answer questions.
When asked why the Obama Administration chose Minneapolis to launch its road show, Locke said “Minnesota has a profile similar to the nation” where only a very small percentage of companies export at all, and of those that do, the majority export to only one country, typically border neighbors. “We want to get them to look beyond Canada and Mexico to Europe, South America and Asia,” he explained.
In addition, Locke pointed out that a large number of local companies are suppliers to major corporations, such as 3M and Medtronic, but could also look to corporations outside the United States as potential customers as well.
Participants were selected based on their “export readiness,” according to one staffer. The Commerce Department has enlisted the help of FedEx and UPS to identify companies that export to only one country. And based on the volume, frequency and value of goods they ship, Commerce officials are reaching out to companies that have the potential to expand into additional markets, Locke said.
Gov. Mark Dayton, who introduced Locke, pledged his support for helping small businesses find new markets.
The governor said Minnesota already has an international reputation to build on, recounting a meeting he had with a Chinese official who indicated his familiarity with Minnesota by pointing to the Medtronic pacemaker implanted in his chest.
Dayton noted his planned August agricultural trade mission to China, with a possible follow-up visit in the fall for Minnesota manufacturers.
Rybak touts advantage of area’s cultural diversity
Minneapolis Mayor R.T. Rybak described business advantages offered by the Twin Cities’ cultural diversity, with its large Somali, Hispanic and Asian populations coming through the public schools. He encouraged business leaders to hire student workers over the summer as a way to expand their companies’ “cultural competency.”
“If we do this right, we will have the most globally competent workforce anywhere in the country,” he said.
The Obama Administration set an ambitious goal to double U.S. exports from 2010 to 2015, as a key plank in its economic recovery strategy announced last year. The role of small-business exports was a major element of the effort.
“Exports support nearly 10 million job in America … more than one in three manufacturing jobs and nearly one in five agricultural jobs are tied directly to exports, paying some 15 percent more than the typical wage,” Locke said.
In an interview, Locke acknowledged that productivity gains have enabled U.S. output of manufactured goods to expand while manufacturing employment has declined over the past decade. Nevertheless, he said, increased export of manufactured goods should lead to increased employment.
“Yes, for a given amount of production, we’re becoming more efficient. But if you double your production [because of exports] you’ll need more people.”
Exports fell dramatically in 2009, as the economy skidded. U.S. exports fell 18 percent to just more than $1.067 billion. The state’s exports dropped nearly 16 percent to $14.6 billion but have rebounded in 2010.
Total U.S. exports of goods and services grew nearly 17 percent in 2010, the second-largest annual total on record and the largest year-to-year percentage change in more than 20 years, Locke said. Exports contributed nearly half of GDP growth, he added. Minnesota’s export of goods rose 18 percent to $12.6 billion through the first nine months of 2010.