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Wisconsin Manufacturers Grow Sales With Exports

Looking for new customers - and who isn't It may be time to take a hard look at opportunities to sell your products overseas or with neighboring Mexico and Canada.

Now that the dollar is falling against world currencies, prices for American goods are more competitive. "The 11% fall of the U.S. dollar since the first of the year against major trading currencies worldwide has improved our price competitiveness in all major markets," says Louis Janowski, a Madison-based outreach consultant with the Wisconsin Department of Commerce's international trade division. "The trend looks like it may be sustained."

In addition, Canada and Mexico offer significant export opportunities for Wisconsin manufacturers. NAFTA gives preferential treatment to U.S.- made products and the proximity helps keep shipping costs down.

"The Mexican economy is growing and relies heavily on the U.S. for imports," says Susan Dragotta, an international outreach consultant with the Wisconsin Department of Commerce. "Any company new to exporting should investigate Canada and Mexico."

Small manufacturers play a major role in U.S. exports. Ninety-three percent of exporting firms have less than 500 employees, and these firms are responsible for 30 percent of the nation's exports, according to SBA and U.S. Commerce Department data.

In Wisconsin, exports totaled $10.5 billion last year, essentially unchanged from a year earlier despite a global economic downturn, says Mark Pietrowiak, who specialized in international banking prior to joining WMEP. Sales to China were up 80 percent.

"When I talk to manufacturers, one of the top concerns is that sales are flat or down," Pietrowiak said. "If domestic sales are down, it certainly makes sense to explore your product's export potential."

International business demands vision, hard work and a substantial commitment of time and energy. Companies need to evaluate business opportunities, learn how to tap effective distribution channels and gain an understanding of legal, cultural and regulatory issues. But the rewards are well worth the effort.

"Certainly there are significant opportunities out there for Wisconsin manufacturers," says James Meinert, a WMEP alliance partner and international trade expert who has led dozens of trade missions to Europe, Asia and Mexico.

For many years, Meinert served as the international marketing director for Mequon-based Snider Mold Company, where exports shot up to 50 percent of sales in 1998 - a record high. Snider's export roots can be traced to the late 1960s, when a major seating manufacturer in Mexico asked the company to provide the molds used for stadium seating being built for the 1968 Olympics.

Companies tap new markets

Muskego-based Inpro Corp., which manufactures interior and exterior architectural products, decided to pursue a more aggressive export strategy five years ago, said Rafael Cortes, Inpro's manager of international sales and operations. The company in 1998 made a commitment to building a first class international staff, increasing the number of employees from five to eight in the past four years. These employees travel and build partnerships with qualified distributors around the world.

Five years ago, Inpro had a handful of distributors; today it has 40 arrayed around the globe, some as far away as Saudi Arabia, Australia and China. Today, exports represent 10 percent of sales and are growing.

"It takes time to find these partners around the globe and build these relationships," says Cortes. "We need to make sure our distributors share our goals and long-term strategy."

It's critical to meet these partners face to face, he advises, to avoid sham operations that are little more than a phone listing and/or web page. "We like to see who we're doing business with and if that person is someone we can trust representing our company," Cortes said.

Exports also are a part of Germantown-based Hampel Corp.'s growth strategy, and currently represent 15-20 percent of the company's $20 million in annual sales, said David Guerrero, Hampel's executive vice president and chief operating officer. The company's portable toilets and Calf-tel calf hutches are marketed around the world, from Korea to Spain to Mexico to Germany to South America.

"These are proven products that have found market acceptance in the U.S. and it only makes sense to promote the same product and benefits for overseas markets," said Guerrero.

A plus for Hampel in terms of overseas competitors is the high cost of entry into the thermoforming industry due to the expensive technology. "That's an advantage if you're an American firm in this field," Guerrero said.

Companies need to do their homework to assess market conditions, he adds. If a product is already produced outside the U.S. it's more difficult to compete.

The length of time it takes to launch a product in a new market varies widely, but a reasonable estimate is six months to two years, experts say.

Product export potential- How to know if your product has global appealHere are some questions to ask:

Is the product currently being sold in the market
Is it being produced in the market How much is produced
Is the product culturally acceptable in the market
Who are your likely competitors
What are the tariffs, taxes and other costs you will face when exporting to the market
How will your prices compare with competitors
Are there significant regulatory issues that may affect market entry

There are many resources to help Wisconsin manufacturers get the answers to these and other export questions. A good first start is the Wisconsin Department of Commerce web site www.commerce.state.wi.us , where you can get contact information for outreach consultants serving your area.

"We provide a range of services to companies," says Dragotta, including market research, agent/distributor searches, emergency assistance in solving export problems and general expertise on the export process.

"Manufacturers don't have to go it alone," says Dragotta. "Our offices here and abroad can help them fully evaluate export opportunities and resolve any issues and problems they encounter along the way."

Exports: The Basics

Gather information, tap state and federal resources
Evaluate your products export potential and target markets
Identify internal financial and human resources needed to launch export strategy
Identify potential partners - agents - distributors - in target markets
Visit target market and establish sales relationships
Confirm compliance with U.S. and foreign market regulations and standards
Negotiate payment, shipping and other issues
Start Growing your sales with exports

Copyright 2003 by WMEP.org

WMEP provides technical expertise and hands-on implementation assistance to small and midsize manufacturing firms on advanced manufacturing technologies and business practices includinglean manufacturing, ISO, value chain management, and strategic repositioning services for manufacturers and manufacturing facilities located in Wisconsin.

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