For Pennsylvania companies making everything from heavy vehicles and aerospace equipment to snowboards and candy, international markets are boosting the bottom line. But exporting goods and services across the globe can be daunting, especially for smaller companies. Language barriers, shipping logistics, currency fluctuations, and myriad rules, regulations and restrictions can keep them from even considering sales outside U.S. borders.
Pennsylvania is working to change that. By 2014, the state was already ranked tenth among states in the value of its exported goods ($39.9 billion) and services ($19.8 billion), according to Business Roundtable. Of the more than 15,000 Pennsylvania companies that exported in 2013, 89 percent were small- and medium-sized companies with fewer than 500 employees. The Roundtable also reports that more than 1.6 million Pennsylvania jobs are supported by trade.
It’s no coincidence then that the Commonwealth has one of the largest, most comprehensive export development programs in the country, a network under the auspices of the Pennsylvania Department of Community & Economic Development (DCED). According to Joseph Burke, DCED’s deputy secretary for international business development, the goal is to help shed an outdated reputation as a “Rust Belt, insular, non-innovative” state and communicate that Pennsylvania is exporting to around 210 countries and territories around the world.
To that end, once a year DCED and its Office of International Business Development (OIBD) take their show on the road. Running September 12 to 23, the 2016 Bringing the World to PA Tour is like speed dating for exporters. At 10 locations across the state, companies can have a one-on-one, half-hour meeting with an authorized trade representative (ATR) for an introduction to exporting or to discuss how to expand their existing international operations. Representatives from countries including Australia, Canada, Germany, Indonesia, Israel, Mexico, Saudi Arabia, South Korea, the United Arab Emirates and the United Kingdom will be on hand. Altogether, Pennsylvania’s 15 ATRs represent 51 countries.
These exporting experts can offer country-specific, on-the-ground insights. Dale Foote of the World Trade Center of Greater Philadelphia (WTCGP), one 10 regional export network (REN) partners statewide, says typical questions include: “Is there potential for my product in your country? Is there local or foreign competition? Are there product compliance regulations or government approvals required before importing my product? Can you assist me in finding a commission agent or distributor to import my product?”
Nancy Ward, Pennsylvania’s ATR in Canada, the commonwealth’s top export partner (followed in order by Mexico, China, Japan and the UK), will be on the tour.
“While the Canadian market is the closest in proximity and business culture to Pennsylvania, it is still an international market [and] I often get asked regulatory questions,” she says. “This year especially I anticipate questions about the oil and gas industry, which has been a very strong sector for Pennsylvania exports in the past, but has shown significant weakness in the last year as a result of low oil prices.”
Once a company meets with an ATR, they are referred for follow-up to the REN partner in their region. Services include trade counseling and support, market entry strategies, access to grants and financing programs, market intelligence and research, trade missions and shows, educational seminars and networking events.
According to Foote, there are exciting export opportunities for Southeastern Pennsylvania companies in pharmaceutical and medical equipment, chemicals, computers, and electronics, among others.
At the opposite end of the state, Dorte Heffernan of the Northwest Commission in Oil City says the major hot spots in Northwest Pennsylvania include industrial machinery and equipment, fabricated and precision metal products, hardwood lumber and secondary wood products, plastics, electrical equipment and transportation equipment.
“That said, we serve many small- to medium-sized companies that have very unique products,” she adds. “Fitness equipment, acoustic headsets, fire hydrants or fishing line.”
One such niche exporter is Gilson Snowboards in Winfield, which is expanding beyond South Korea, its first overseas market, to Australia and New Zealand.
“Our markets are reasonably easy to identify — they have both mountains and snow,” explains CEO Nicholas Gilson. “We’ve recently kicked off a collaborative partnership with Johnny Romeo, Australia’s leading pop artist, and we’re developing a board line for the southern hemisphere.”
Gilson is lavish in his praise for SEDA-Council of Governments, the Central Pennsylvania REN that “has been hugely helpful in accessing and learning about those markets.”
Pottstown’s VideoRay has been exporting its underwater robots or “remotely operated vehicles” (ROVs) since the company was established in 1999. Overseas sales grew significantly after 9/11, when VideoRay began supplying ROVs to Homeland Security and the Coast Guard to protect U.S. ports. Since then, the company has shipped products to the navies and coast guards of 15 nations. Today, international markets account for about half of the company’s sales.
Yet even for an experienced exporter like VideoRay, challenges remain.
“As the U.S. dollar has gained strength, our prices have increased significantly around the world,” says Chris Gibson, vice president of sales and marketing. “We have moved to fixed pricing in multiple currencies, which helps our customers who typically go through a sales cycle that can be around a year.”
The company continues to rely on the WTCGP to assist with worldwide dealer recruitment, vetting and training, and for other consulting services.
Still, the challenges of exporting pale in comparison to the potential payoff. A full 6.5 percent of Pennsylvania’s GDP is already attributable to exports, DCED reports. And trade-related employment is growing much faster than total employment (4.3 times faster from 2004 to 2014), according to Business Roundtable.
“Canadian customers and partners seek value added innovations in all industry segments from heavy equipment to consumer health and wellness,” adds Canada ATR Ward. “Pennsylvania companies with innovative products and services that visit the market, service their distribution and rep partners, and get to know their customers’ needs have a very strong potential for success in Canada.”
Bringing the World to PA runs September 12 to 23, 2016; visit the website to find the networking event in your region.
ELISE VIDER is news editor of Keystone Edge.