Growth in exports helped this small Minnesota firm weather recession

The recession was tough on his business, Staging Concepts CEO Mike Hayden admitted to U.S. Sen. Amy Klobuchar and other guests visiting his Brooklyn Park-based company.

The company, which manufactures lightweight, portable performance-stage platforms, seating risers and railings, saw revenues slide 30 percent at the depth of the recession, he said.

But Hayden is optimistic about the future, having recently returned from a sales prospecting trip to Saudi Arabia, United Arab Emirates, Oman, Qatar and Turkey, where he met with potential customers and distributors. Despite the turmoil in parts of the Middle East, “people are ready for business,” he said. The Mideast trip was organized with the help of the U.S. Department of Commerce’s Export Assistance Center.

Hayden pointed out that Staging Concepts did not have to resort to layoffs of permanent employees to make it through the recession. He was able to manage his labor costs by using temporary employees. The company is hiring again, he said, now that it is back on a growth track, posting about $25 million in revenue in 2010.

Klobuchar, who sits on the Senate Commerce Committee and chairs the Subcommittee on Competitiveness, Innovation and Export Promotion, was touring Staging Concepts along with representatives of the U.S. Commerce Department and Enterprise Minnesota to highlight export opportunities for smaller companies. Small business exports are a key element of President Obama’s National Export Initiative, which has set a goal of doubling U.S. exports from 2010 to 2015.

Hayden’s company, founded in 1990, has been exporting products for 15 years and the workforce of 60 employees is busy filling customer orders from around the globe. Fifteen percent of Staging Concepts’ sales came from exports in 2010, and Hayden has a target to grow that to 25 percent in five years. If he meets those goals, he estimated he could add 15 to 20 percent to his employee base.

Key markets
The company’s current export markets include the United Kingdom, Japan, Canada, the Caribbean, Poland and Latin America. Hayden sees his largest growth opportunities in the Mideast, Malaysia, Singapore, Latin America and Korea.

While he credits his product quality, service and help from the Commerce Department, Hayden also takes a pragmatic macroeconomic view of his export growth. “The cheap dollar is great – very helpful,” he said.

Exports would have to grow nearly 15 percent a year to double in five years, and so far they are on track to meet the administration’s goal.

U.S. export of goods and services grew 16.8 percent in 2010 to $1.8 trillion and 14.9 percent in the first quarter of 2011 to $505.2 billion. Minnesota’s export of goods (but not including services) grew 21.9 percent to $18.9 billion, according to the Commerce Department. Over the same period imports increased 19.7 percent to nearly $2.4 trillion, driven by rising oil prices and swelling the trade deficit to $495 billion in 2010.

Minnesota’s top five export markets in 2010 were Canada, China, Japan, Mexico and Germany. Minnesota will report its first quarter export of goods sometime in June, according to DEED spokesperson.

Ryan Kane — Minneapolis director of the U.S. Commerce Department’s Export Assistance Center and also touring the plant — pointed out that, unlike 3M, Medtronic, Cargill or General Mills, smaller Minnesota companies do not typically have the internal resources or market reach to drive international sales. “They can’t do it alone,” he said.

His office acts as a clearing house of information, drawing on consular staff in target countries to help companies identify potential customers before making a trip overseas. He also points them to export finance assistance in other agencies such as the Export-Import Bank and the Small Business Administration.

‘Big challenge’
Robert Kill, CEO of Enterprise Minnesota, also on the tour, sees the administration’s target of doubling exports in five years as “a big challenge.” He cited the most recent Minnesota State of Manufacturing Survey that found fewer than 16 percent of manufacturers in the state report exports in excess of 10 percent of sales, lagging behind the national average.

To encourage more small business to export, Enterprise Minnesota has staged ExportTech, a series of three full-day sessions that helps company executives develop an export strategy. The next session is scheduled for June 15 in Mankato.

Klobuchar, who said she has made export growth by small business a priority, voted to fund additional employees in the Commerce Department’s U.S. and Foreign Commercial Service Officers to assist U.S. companies in promoting products abroad. According to information provided by her office, the Department of Commerce projects that each dollar it spends supports $57 in U.S. exports.

She pointed out that accelerating export of professional services, and tourism in particular, are also key. Export of goods is more than twice as large as service exports and growing faster.

Klobuchar pointed to congressional action in 2009 that added a $10 fee to tourist visas to create the Corporation for Travel Promotion as a way to boost tourism not at taxpayer expense. She also favors increasing consular staff to speed up processing of tourist visas.

International tourism to the United States totaled $134 billion last year, according to the U.S. Travel Association, and is the single largest export category. But the U.S. share of international tourism spending has fallen from 17 percent in 2000 to 12.4 percent last year.

In 2008, small businesses (those with fewer than 500 employees) generated 20 percent of Minnesota exports, according to the U.S. Department of Commerce, while 19.5 percent of manufacturing workers in Minnesota, representing more than 6 percent of the total state workforce, were dependent on exports for their jobs.

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