The U.S. economy hit a major milestone in May 2018 as it entered the second-longest economic expansion period on record as measured by the Bureau of Economic Research.
Companies are finding a robust customer base in the United States, and tariffs are further encouraging companies to seek domestic sales. Employment and wages have generally lagged behind productivity growth, so our employers are feeling increasing strain to do more with less. They are investing in efficiency tools and building record-breaking cash reserves, creating lean operations with cash on hand for strategic investments.
With such lean operations and a needy domestic market, it is difficult for employers to give much thought to developing an overseas customer base. However, diversification through exports will always be an important factor in a company’s longterm sustainability.
Our market will not always be as robust as it is today, and our foreign-sales channels will atrophy as our partners overseas find alternative suppliers in friendlier markets. It is important that our U.S. companies pursue an intentional strategy to develop trade relationships in other countries to ensure long-term sustainability, regardless of domestic market forces.
DOES EXPORTING MAKE SENSE FOR MY BUSINESS?
Manufacturers range broadly in terms of how much of their own design and intellectual property is in their product. Engineered designs can be the product, while other companies are performing contract production services with minimal design input. The more unique your intellectual property, the more demand you might find in foreign markets, and the purpose of exports is clear.
Manufacturing-services providers often have very focused geographic exposure, typically within specific drive-time limits. Does it make sense for them to diversify with exports? Maybe. Dependence on the manufacturing climate of any geography is risky. Exports for manufacturing-services providers may look different than a traditional export; for example, a manufacturing-services provider might:
- Offer its U.S.-based services to foreign companies
looking to enter the U.S. market by finding a contract
- Invest in a foreign-based operation to provide
ing services in a different market.
- Develop intellectual property in the form of a design or
productthat can be sold overseas.
A company may also choose to diversify in other ways, such as investments in other industries, to have assets that aren’t dependent on such a focused market
HOW DO I GET STARTED?
Like any major investment, developing exports requires an intentional strategy with its own vision that is aligned with that of the company and is based on current and accurate market intelligence.
Research is foundational to a good strategy, and it can be done internally or through contracted service providers. Small Business Development Centers across the Midwest have International Trade Centers available at no cost to help companies develop export plans. Additional resources are available through regional chambers of commerce and private consulting firms.
“The more unique your intellectual property, the more demand you might find in foreign markets, and the purpose of exports is clear.”