Should your business be exporting more? A guide for your exploration of global markets
Friday, June 06, 2014 6:00 AM
Salih Hamid has a message for Central Iowa businesses that are not exporting:
Getting started: Who to call
Greater Des Moines Partnership
Ryan Carroll, international trade manager
Iowa Economic Development Authority
Kathy Hill, team leader
U.S. Department of Commerce/Commercial Service
Des Moines U.S. Export Assistance Center
Patricia Cook, director
Iowa Small Business Development Center for International Trade
Debbie Franklin, center director
“There’s money to be made overseas, so start researching global markets. And then just get started.”
Hamid knows a thing or two about building export markets. As the export sales manager for Dee Zee Inc., Hamid has helped the company, which manufactures accessories for pickup trucks, greatly increase its export sales. Though export sales are still a small percentage of the company’s overall sales – less than 5 percent – export sales have grown by more than 20 percent in the past two years. The company’s core market is here in the United States, but Dee Zee recognized opportunities to go overseas more, and as a result “we are expanding and exporting more.”
Dee Zee’s story is one the Greater Des Moines Partnership would like to see duplicated in Central Iowa. In the past, the Partnership has helped Dee Zee and other companies with education on how to do more exporting business. Late last year, the Partnership formally launched a plan aimed at increasing both the number of companies exporting and the number of overseas markets to which they export.
The Greater Des Moines Regional Export Plan brings together the resources of the Partnership, along with the U.S. Commerce Department and the Brookings Institution’s Metropolitan Export Initiative. Des Moines is one of 12 metro areas chosen by Brookings within the past two years to develop a regional export plan. (See details on page 13).
Central Iowa businesses are exporting, and the amount of exports grow every year, said Ryan Carroll, international trade manager at the Partnership.
But, “we’re not at the point we could be with (exporting),” Carroll said. “I think there are opportunities out there.”
Why focus on exporting?
The Partnership’s position is that increasing exports is part of making Iowa more globally engaged. “We’re trying to increase exports, we’re trying to increase foreign direct investment into our region, and we’re also trying to attract international talent into Central Iowa,” Carroll said.
Experts like Patricia Cook contend that 95 percent of potential customers for U.S. goods and services are living outside the United States. Cook is the director of U.S. Commercial Service Iowa, which is part of the U.S. Department of Commerce. In that job, she helps Iowa companies set up 45-minute phone calls with representatives from U.S. embassies overseas to talk about the potential for those companies to sell in those markets.
For many businesses that Cook works with, exporting turns into a competitive advantage. She often tells them if they aren’t exporting, their competitors are.
The calls that Cook helps set up are free, and for a $700 fee for small businesses, they can book a meeting at the embassy with potential business partners.
“The embassy vets the people, they know that they’re capable, and that’s when we see sales go from $5,000 overseas a year to $500,000 theoretically,” Cook said. “If we can help 40 Iowa companies make $500,000-plus in sales, that is a pretty nice thing.”
What are best practices?
GATHER INFORMATION: It may seem intimidating to some businesses to jump into overseas markets, but the Partnership and other local organizations have started offering educational opportunities to business people who have questions and need answers. Last year, for example, the Partnership and U.S. Commercial Service held an Export University, a three-day training session that included sessions on everything from international contract law to regulation and documentation training.
Elements of the Partnership’s plan include offering more training for businesses with groups such as the Iowa Economic Development Authority’s International Trade Office, the Iowa Small Business Development Center and the U.S. Commercial Service, and to alert businesses to existing resources those groups provide.
TALK TO THOSE WHO’VE DONE IT: The Partnership is putting together a mentorship program in which knowledgeable companies, such as Bridgestone Firestone, share their experiences.
One experience that Hamid from Dee Zee shares: Do your due diligence up front. Compliance and regulatory requirements vary from country to country.
EASE INTO IT: Dave Coslin, president of Compressor Controls Corp. in Urbandale, recommends that companies work to understand what they are getting into before jumping into a market. A lot of opportunities sound good, but you need to be able to balance the risks and potential rewards, and if you don’t have that expertise, you may need to hire someone who does.
“Don’t try to take a big bite of the apple at one time would be my biggest caution,” Coslin said. “Stick your toe in some of this stuff first and see if that’s what you really want to do. Especially if you are a small business, it doesn’t make sense to go all-in.”
What are common roadblocks?
LACK OF UNDERSTANDING: Exporting can be a complex issue for a small or medium-sized company to get a handle on, said Carroll. The Partnership aims to help with its plan by connecting businesses to educational resources.
LANGUAGE BARRIERS: Hamid and Coslin both mentioned communication as a roadblock. Sometimes, Hamid said, you just have to stay on the phone until you get someone who can speak English.
REGULATORY DIFFERENCES: Ambiguous regulations provide one of the biggest roadblocks to exporting, said Coslin of Urbandale’s Compressor Controls. Not only are regulations different in different countries, but they also can be different within the same country depending on certain types of ownership. Regulations also can change quickly.
LACK OF COMMITMENT: One of the largest barriers to entry, Cook said, is that business owners just don’t allow their employees to take the time to take advantage of resources such as speakers and classes. Sometimes businesses don’t seem to fully grasp the importance of exploring the potential of exporting, or are intimidated by it.
“If business owners assume that this is just too hard to figure out, then they never begin,” Cook said.
Two companies that are doing it well
Dee Zee INC.
About two years ago, Dee Zee Inc., which manufactures accessories for pickup trucks, started to get more requests from overseas for its products. Dee Zee officials hired Salih Hamid to take care of the company’s exporting business. Originally from Sudan but a graduate of Iowa State University, Hamid first focused on reviewing overseas accounts and on finding ways to reach new potential customers.
“They used to do small shipments, but when it comes to documentation, regulations, those kinds of things, you would need someone always focused in the business,” Hamid said. “It’s not a small thing to do.”
For the past two years, Hamid has gone to the Specialty Equipment Market Association Show in Las Vegas, an important show for auto industry speciality products. He used resources through organizations such as the U.S. Department of Commerce through Patricia Cook. And sometimes he just calls overseas chambers of commerce to get a list of companies in the market.
His strategy is to find big companies in other countries to sell Dee Zee products. For the most part, Dee Zee avoids working with one dealership or wholesaler exclusively, at least until there is a multiyear relationship, but it does help to ship to large companies that can distribute larger shipments, rather than distributing multiple small shipments.
The export business has grown, and Dee Zee is considering hiring more people to help Hamid with exporting.
Dee Zee is now actively exporting to six countries and plans to expand to two or three more in the near future. The company has particularly had success in Middle Eastern countries, Hamid said, as around 80 percent of its export business comes from that region.
“It’s really a good market because that area has a lot of wealth; people like to change their vehicles every two to three years,” he said.
Compressor Controls CORP.
Urbandale-based Compressor Controls Corp. has built its business around exporting. The company makes and installs control systems for oil and gas refineries around the world.
Compressor Controls’ business is a little different than a company like Dee Zee’s. The company exports physical products, said President Dave Coslin, and services them as well. The company installs and performs maintenance on its systems, meaning that it works with companies for several decades.
Though it has a worldwide presence, the company puts many of its new installations in developing countries in the Middle East and the Asia-Pacific region. It also has a large presence in Russia, where it performed most of its installations in the 1990s.
Coslin and his company’s knowledge of doing business overseas might be more extensive than the knowledge possessed by a company like Dee Zee, which is just discovering the power of exporting, but many of the challenges are the same, Coslin said. It is a task to keep up with regulations, and even more challenging is dealing with sometimes rocky geopolitical landscapes. Sometimes the company will avoid getting into certain markets because the geopolitical climate is unstable or dangerous.
Compressor Controls now has about 40,000 installations around the globe, Coslin said, and 350 employees globally. More than 80 percent of its business is done internationally. To give an idea of the reach that Compressor Controls has, about a quarter to a half of all natural gas used in Europe is controlled by systems the company installed 20 years ago.
Greater Des Moines Regional Export Plan goals
- Help at least 45 more companies begin exporting and add 19 new
markets by 2019. About 4,500 Central Iowa companies now are exporting to 190 overseas markets.
- Help companies become proactive about going after exporting opportunities, rather than just reacting when overseas customers contact them.
- Improve collaborative efforts between existing organizations that help companies export more. Those organizations include the Greater
Des Moines Partnership, the Iowa Economic Development Authority, International Traders of Iowa and the U.S. Department of Commerce.
- Improve understanding of exactly what local businesses are doing in
different export markets and the obstacles they are facing.
- Create an international council, composed of representatives from larger firms with expertise in exporting, to move the plan forward.