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For Small and Rural Businesses, the Time to Export Is Now
Only 3.9 percent of small businesses in the United States are exporting, according to the International Trade Commission, a significantly lower number than many of our competitors. Smaller companies, particularly those located in nonurban, rural areas, can benefit from the wide variety of export services offered by the U.S. Department of Commerce to begin, or expand, sales overseas. (Main Street, Galena, Illinois; photo © Solange Zangiacomo/iStock)
Traditionally, small and medium-sized businesses, particularly those located in rural areas, have been less likely to export. But now, with overseas markets growing and the demand for U.S. products and services high, there are many unexploited opportunities for these companies.
by Carrie Bevis
Small and medium-sized enterprises (SMEs) play an important role in the United States, not only from an economic standpoint, but also as an object of inspiration in the culture at large. President Barack Obama acknowledged this role in May, when he proclaimed Small Business Week, noting that “small businesses embody the promise of America: that if you have a good idea and are willing to work hard enough, you can succeed in our country.”
The challenges facing SMEs, though, are formidable—especially for those that are looking to break into exporting. But with foreign consumers making up 95 percent of the world market, so SMEs have a world of opportunity. And today, the federal government, energized by the National Export Initiative, is helping to give SMEs the resources to seize those opportunities.
Markets Near and Far
Resources for Exporters: How to Access Them
U.S. companies looking for export counseling and assistance can turn to the Department of Commerce’s Trade Information Center (TIC). Located in Washington, D.C., the center operates a toll-free 800 number that takes calls from companies with questions about almost any aspect of trade. Contact the center at 1-800-USA-TRAD(E) (1-800-872-8723).
Among the newer online resources is a series of Webinars. Currently 25 of these one-hour seminars are available for downloading by U.S. companies that have registered on the site. The Webinars focus on topics such as export planning, navigating regulations, and obtaining market-specific profiles.
ITA maintains the federal government’s export Web portal at www.export.gov. The Web site offers a wide variety of resources to help exporters, including listings of upcoming trade events, links to local offices, and videos on trade topics.
Another resource for export assistance is the network of more than 100 U.S. Export Assistance Centers. The U.S. and Foreign Commercial Service also has commercial officers and counselors at more than 75 overseas locations, usually working from a U.S. embassy or consulate. Links to those offices can be found on www.export.gov.
In 2009, according to the Census Bureau, SMEs comprised 97.6 percent of all identified U.S. exporting companies and accounted for 32.8 percent of all export value. The exporters were located in every state, with California, Florida, New York, and Texas having the highest number of exporters. Those four states accounted for 36.7 percent of total U.S. export value in 2009.
Where are most exports headed? According to a survey by the Organization for Economic Cooperation and Development, the top export destinations in the world are the United States, followed by China and India, which are the two fastest-growing developing nations.
Although China and India are large and diverse, U.S. SMEs have found that two of the best export markets are just over the border in Canada and Mexico, with our North American Free Trade Agreement partners. In 2010, SMEs exported $40 billion worth of U.S. goods to Canada and $39 billion to Mexico.
There are many reasons that certain countries are export destinations of choice. In May, the 2011 National Export Strategy noted that, apart from proximity, cultural and socioeconomic similarities are significant factors in determining where to export. Thus, not surprisingly, Canada and the United Kingdom were the top export destinations in 2009 for U.S. SMEs.
Room to Grow
Although those numbers are encouraging, U.S. SMEs, compared to their counterparts in other developed economies, have plenty of room to grow when it comes to exporting. According to the International Trade Commission, only 3.9 percent of U.S. SMEs exported in 2011. In contrast, 8 percent of European Union SMEs exported. This differential holds in other countries. For example, 8 percent of Canadian SMEs export. And in Australia, although a smaller percentage—4 percent—of SMEs export, the rate still exceeds that for U.S. SMEs.
Those figures suggest that many U.S. SMEs have yet to take advantage of the worldwide consumer base, while other nations’ businesses are busy seizing those market opportunities.
Local Delivery of Services
One way of helping SMEs achieve their export potential is by better coordinating the export promotion services already offered by multiple federal agencies. This effort received a big boost in early 2010 when President Obama announced the National Export Initiative, with his goal of doubling U.S. exports by the end of 2014.
The International Trade Administration is at the forefront of delivering export counseling and assistance services to U.S. companies. It does so primarily through the more than 100 U.S. Export Assistance Centers (USEACs) that are located across the country. The centers employ trade specialists from the U.S. and Foreign Commercial Service (USFCS), which is a unit of the International Trade Administration. The specialists work closely with their counterparts in other federal agencies, such as the Small Business Administration and the Export–Import Bank of the United States, as well as with state and local economic development agencies.
USEACs serve as one-stop shops for SMEs lacking the resources and contacts available to larger corporations by helping the businesses plug into a global support network. According to Bill Fanjoy, director of the USEAC in Arlington, Virginia, “I make sure that when a small enterprise contacts my office, they are assessed for export readiness, put in touch with exactly who can help them, and made aware of the resources and programs that we offer to them, many of which are free.”
As an SME prepares for international trade, its regional USEAC will track the company’s progress to help ensure a smooth transition into exporting. “Local USEACs can help turn small firms into big players on the global field,” said Fanjoy.
In 2010, the USFCS counseled more than 18,000 U.S. companies and helped approximately 5,500 (about 30 percent) to export for the first time, to enter a new market, or to increase their market penetration. The overwhelming majority of those firms were SMEs.
Getting the Word Out
One of the challenges that USEACs face is how to increase awareness of their services to SMEs. A study conducted for the Department of Commerce in 2009 revealed that more than third of SME manufacturers were unaware of export assistance programs available to them.
This lack of knowledge is common with companies located in rural areas. As a result, the specialists at the USEACs, which are usually located in urban areas, continuously conduct outreach to potential exporters located in outlying areas. For instance, although the USEAC in Arlington, Virginia, is located in a metropolitan area, its trade specialists regularly travel to rural towns throughout southern Virginia to increase contact with companies that may have export potential.
The combination of top-notch counseling with continuing outreach is a key element of the Obama administration’s export promotion push. Those efforts certainly contributed to the 17 percent growth in U.S. goods and services exports that was posted in 2010.
According to Francisco Sánchez, under secretary of commerce for international trade, “It’s not enough for the federal government to offer exceptional information and expert export assistance services to U.S. companies. We must also work to spread awareness about what we can offer U.S. businesses, especially small businesses.” It is an effort that will help make exporting an attainable goal for more and more U.S. businesses in the years ahead.
Carrie Bevis is an intern in the International Trade Administration’s Office of Public Affairs.
Heather Ranck (right), director of the U.S. Export Assistance Center in Fargo, North Dakota, with other government trade specialists promoting U.S. exports at Nampo Harvest Day, an agricultural trade show held in South Africa in May 2010. Export assistance is important to rural companies, according to Ranck. “We can connect [them] to resources that are perceived as distant.” (U.S. Department of Commerce photo)
Many of the U.S. Export Assistance Centers (USEACs) are small offices that serve a wide territory mainly made up of rural communities. The specialists at these offices must be flexible, resourceful, and willing to accommodate the needs of a diverse clientele. Recently, three of them spoke with International Trade Update about their work: Carey Hester, director of the Missoula, Montana, USEAC; Cinnamon King, director of the Sioux Falls, South Dakota, USEAC; and Heather Ranck, director of the Fargo, North Dakota, USEAC.
According to Ranck, the USEACs play a greater role in rural areas. “We become a precious resource to businesses because we can connect companies to resources that are perceived as distant, through our amazing network.” Hester added that “often, small rural companies are less familiar and less trusting of trade, thus requiring support from their Commercial Service contact. We really have to sell the idea of exporting to these companies. I am the face of the federal government to a lot of the companies out here.”
Personal contact is very important, according to Ranck. “Our work with clients is very relationship based. You have to drive out to visit them, learn about their company, and build trust before you begin export assistance. A lot of our clients become our friends.”
King emphasizes that trade specialists at the USEACs need to be ready to handle a wide diversity of businesses. “Being in a stand-alone office, you need knowledge of everything. One day I have to figure out how to get a load of frozen sheep heads to Mexico, and the next how to ship prairie dogs to a pet store in Japan!”
Hester agreed: “It’s the diversity that keeps this job so new and fun for us; it’s never boring.”
All spoke of the extra time and personal attention that their work demanded, but agreed that seeing the significance of their work makes it well worth the effort. According to Ranck, “There are companies that I know wouldn’t be exporting if it weren’t for us, and as a public servant that generates a great feeling of pride.”
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