U.S. Export Weakness Hampers Growth

Strong dollar and global economic strains undermine foreign trade in goods and services

By MARK PETERS and BEN LEUBSDORF, WSJ.com

Hopes for an American export boom are wilting under the weight of a strong dollar and global economic strains.

U.S. exports are on track to decline this year for the first time since the financial crisis, undermining a national push to boost shipments abroad. Through July, exports of goods and services were down 3.5% compared with the same period last year. New data released Tuesday by the Commerce Department showed that exports of U.S. goods sank a seasonally adjusted 3.2% in August to their lowest level in years.

The weak trade performance is restraining overall economic growth, a sign of how troubles in China and other major economies are dinging the U.S. economy.

“Foreign demand remains the weakest part of the economy,” said Jim O’Sullivan, chief U.S. economist at consulting firm High Frequency Economics.
It didn’t seem that way in 2010, when President Barack Obama set a goal of doubling exports over five years. Some big cities took up the challenge, including Portland, Ore.

Facing a battered economy at home, Vanessa Keitges, president of Portland-based Columbia Green Technologies, lined up sales in Belgium and New Zealand. In Canada, she chased public-building projects and Wal-Marts. Within three years, one-quarter of the green-roofing company’s sales were outside the U.S.

But that proved to be a high-water mark for the company’s foreign ambitions. Ms. Keitges is now focusing on the strengthening domestic market for the company’s rooftop planters as weak growth abroad tempers demand and a strong dollar creates pricing problems.

Exports seemed a golden opportunity as Portland and the rest of the nation emerged from the 2007-09 recession. Foreign sales were a major contributor to U.S. economic growth in 2010 and 2011, outstripping past recoveries. Political leaders hoped selling goods and services abroad would offer a sustained boost to the job market at home.

But the dream of an export boom has faded.

As unemployment has declined, American consumers have reasserted their dominant role in driving economic growth. And a strong dollar and weakness overseas have helped turn international trade into a drain on overall economic growth in four of the past six quarters.

The Federal Reserve worries exports will be a persistent drag on the broader economy going forward. Fed Vice Chairman Stanley Fischer in August said it was “plausible to think that the rise in the dollar over the past year would restrain growth…through 2016 and perhaps into 2017.” If the Fed begins to raise short-term interest rates later this year, that could provide new fuel to push the dollar’s value even higher.

Exports of goods and services grew 80% from 2003 to 2008, but then expanded only 48% from 2009 to 2014, according to Census Bureau data.

A Commerce Department official described President Obama’s export-growth initiative as “catalytic and a success,” driving exports “despite strong global economic headwinds and macroeconomic factors outside our control.”

The administration is looking to spur trade growth through agreements such as the Trans-Pacific Partnership. Senior officials from around the world are meeting in Atlanta, trying to complete the expansive trade deal after talks stalled earlier this year.

It isn’t just the U.S. where exports have been a disappointment in recent years. Globally, growth in trade volume is set to trail the pace of economic growth for the third year in a row, and trade growth has been averaging just half its pre-financial crisis pace. In the immediate aftermath of the recession, confronted by weakness in the domestic economy, U.S. policy makers saw opportunity in global markets.

Following Mr. Obama’s lead, the Portland metro region in 2012 set its own goal to double its exports in five years. “This is how we fight for jobs in the next economy,” then-Portland Mayor Sam Adams declared. In the past year, Portland has quietly shelved that aim. The value of Portland-area exports actually declined slightly between 2012 and 2014, according to tallies from the Commerce Department and the Brookings Institution, a Washington think tank.

After Portland set its goal, economic conditions started to shift. The value of major currencies declined relative to the dollar, making American-made goods more expensive for foreign customers. Growth slowed in key markets such as China and Canada. At home, the U.S. economy regained its footing.

Over the past year, Portland first was caught up in a labor dispute that caused gridlock at ports along the West Coast, then it lost regular ocean-bound container service. Local officials also came to realize export growth depended overwhelmingly on chip maker Intel Corp., MMINTCMM which has extensive facilities in the Portland suburbs.

Exports of computer and electronic products helped drive a more than doubling of the metro area’s exports between 2003 and 2008, according to Brookings. But Intel has suffered from a slowdown in demand for personal computers.Measurable gains from smaller companies are likely to take years to materialize. Federal estimates show only about 5% of U.S. firms export, with nearly two-thirds of the annual value concentrated among 500 companies.

Hand-tool maker Astro Tool Corp. in the Portland suburb of Beaverton has seen many of the challenges up close. Over the past year, general manager Mike Barnes dedicated half his time to chasing foreign customers, while still overseeing day-to-day operations of the 30-employee company. He faced a steep learning curve. “We, A, didn’t know how to do it, and B, we didn’t have the money to do it,” he said. “You can’t just go to the Internet and say, ‘Where do we find foreign opportunities?’ ”

He eventually landed a small grant to hire a consultant and tapped connections for advice. The share of Astro’s business coming from overseas climbed over the past year to 25% from 15%. But he also watched at a trade show as a foreign competitor sold a cheap, knockoff version of a product similar to his.

The Portland region is trying to court foreign companies that already incorporate exports into their business model. But those companies aren’t immune to global pressures.

Two years ago, exports were nearing 70% of the sales of Shimadzu USA Manufacturing Inc., a subsidiary of the Japanese maker of instruments to test everything from wine fermentation to the urine of Olympic athletes. Now the plant in an industrial park at the far southern edge of metro Portland is getting closer to 50-50 as domestic growth outpaces sales gains abroad.

Foreign customers “can get it cheaper from Japan now than they can from the United States. We’re not as competitive as we were,” said Joe Shaddix, vice president of operations and manager of the factory, referencing the strong dollar.

At the same time, domestic demand for test instruments is developing among marijuana growers as states move to legalize the drug. The factory has expanded what it can make, becoming U.S. Food and Drug Administration registered.

Mr. Adams, the former mayor, remains a strong advocate for the goal of doubling exports—if not by 2017, then eventually. He worries the Portland economy isn’t keeping up with the quality of life that draws twenty- and thirty-somethings at an enviable rate.

“Obviously the timeline will move, but keeping that goal front and center is key,” he said.

Write to Mark Peters at mark.peters@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

http://www.wsj.com/articles/u-s-export-weakness-hampers-growth-1443576283

My Dad, JFK, Was for Free Trade. Democrats Today Should Be Too.

(From the Publisher. When it comes to foreign and domestic policies, there are very few things I agree on with the Democrats and especially with our President.  Yet, sometimes (3 times total:) Mr. Obama and some key party members get something right. This is one of those times. Below, is an excellent summary by Caroline Kennedy, US Ambassador to Japan)

            Lead image by AP Photo.

By CAROLINE KENNEDY, Politico.com

Serving as the U.S. ambassador to Japan has given me a chance to experience first-hand how our country is perceived in Asia. It has been a deeply moving experience to see how much the American dream still matters from 7,000 miles away.

The people of this region are eager for American involvement of all kinds—they cherish the free expression that we sometimes take for granted, their workers are seeking the kinds of hard-won protections the U.S. labor movement has gained, entrepreneurs are eager to innovate and young people are desperate to connect with us on a free and open internet that protects intellectual property and cybersecurity.

With assistance from the United States, Japan and other nations, developing countries throughout Asia are working to educate girls and young women and to protect their environments so future generations can reduce the risk of natural disasters and live sustainably.

This is a dynamic region that, right now, is at peace. It is also growing, presenting enormous economic opportunities for Americans. With a continued focus on President Barack Obama’s “rebalance to Asia,” we can keep it that way for generations to come.

A vitally important part of that strategy is the Trans Pacific Partnership. This ambitious, 12-nation trade agreement, now in the final stages of negotiation, has the potential to knit the United States and our allies into the world’s strongest, most prosperous partnership.

Yet, there are some who are reluctant to change the status quo and embrace the future. This is nothing new. But there is a proud Democratic free-trade tradition that we should not forget. For my father, President John F. Kennedy, expanding trade was integral to America’s prosperity and security. As he told Congress on January 11, 1962, when asking for a precursor to the same authority President Obama is requesting today, “Our decision could well affect the unity of the West, the course of the Cold War, and the economic growth of our Nation for a generation to come.”

The debate raged again when NAFTA was brought forward 20 years ago. Critics argued that it would kill jobs, lower wages, and erode the middle class. In fact, NAFTA has helped create jobs—and higher-paying export-related jobs—but it has also added to pressures for change in the U.S. economy, according to the Council on Foreign Relations. The trade agreements the United States is negotiating today give us the opportunity to shape how globalization affects our economy and its impact on our trading partners.

Throughout more than 45 years in the U.S. Senate, there was no greater champion of American workers than my uncle, Senator Edward Kennedy. He shared the concern of those fearing the effects of globalization, and fought hard to mitigate them. Yet like my father, Uncle Teddy always looked to the future. After an impassioned speech on the Senate floor outlining his concerns about NAFTA, he supported his President and voted for the agreement.

“Standing against all these arguments against NAFTA, is a larger overriding truth—all of the problems that working families face because of the nation’s inability and unwillingness to deal with the dislocations they are suffering will be even worse if NAFTA is defeated,” he said. “Massachusetts, like America, has prospered over the years because of trade, and we can prosper in the years ahead because of trade. Our challenge is to see that trade is fair as well as free.”

That is precisely what President Obama has committed to do through TPP. Simply put, it is the most progressive trade deal in history. It will require high standards in digital trade, environmental protections, worker’s rights and other critical areas. It will lower barriers to U.S. goods and services in the world’s fastest growing markets, providing new access to long-protected agricultural markets, such as Japan, for American farmers and ranchers.

TPP will also level the playing field for American firms and workers. It will give businesses competing with state-owned enterprises a fair shot and protect the 40 million Americans whose jobs are dependent on innovation. By increasing our exports, TPP will support more jobs that pay higher wages here at home.

In addition to the limitless economic possibilities, TPP also carries significant strategic benefits. Countries in the region are looking to the U.S. to help maintain the freedom of navigation, commerce and trade that have made the Asian miracle possible. They are eager to expand our alliances and strengthen our security partnerships. Young generations are looking to the United States for stability, opportunity and hope.

To realize the economic and strategic benefits of TPP, Congress needs to pass Trade Promotion Authority. That’s how Congress has worked with American presidents of both parties for decades.

American leadership is essential. With TPP, we can ensure that global trade is fair to American workers and based on the values of individual freedom and opportunity that still inspire the world. As my uncle, Senator Kennedy, said two decades ago, “We cannot turn our backs on progress or cast our votes against the future.”

Caroline Kennedy is the U.S. ambassador to Japan.

Read more: http://www.politico.com/magazine/story/2015/06/dad-jfk-free-trade-democrats-today-should-be-too-tpp-kennedy-118888.html#ixzz3cweU1G00

Wine-Infused Ice Cream Boosts U.S. Small Company Exports

By Jeff Kearns , Bloomberg

Mercer’s Dairy in Boonville, New York. Mercer’s manufactures all of its products in Boonville for distribution throughout the world.Photographer: Mike Bradley/Bloomberg

Used to be, Mercer’s ice cream wasn’t found far from the 60-year-old dairy in Boonville, a town of about 4,500 in central New York.

Now Mercer’s Dairy owners Ruth Mignerey and Roxaina Hurlburt and their 25 employees ship specialtywine-infused ice cream in a half-dozen flavors, including Cherry Merlot and Riesling, to 14 nationsincluding China, Indonesia, the Netherlands, Seychelles and Trinidad and Tobago. The product was conceived at a 2005 event sponsored by then-U.S. Senator Hillary Clinton and sales began two years later. Exports started in 2008 and now account for about a quarter of annual sales of more than $1 million. Employment is up from 20 four years ago.

“We went from being a local institution with maybe a 100-mile radius of people knowing Mercer to building a global brand,” Mignerey says by phone amid preparations to expand on four continents. “There are so many people who say something can’t be done and it can. Just don’t take no for an answer.”

Photographer: Mike Bradley/Bloomberg  Half gallon cans of wine ice cream at Mercer’s Dairy in Boonville, New York, 

 

Foreign sales by small companies like Mercer’s are becoming a focus for economic development officials in upstate New York and other U.S. regions who are seeking a bigger slice of record exports to boost growth. Shipments abroad by businesses with fewer than 500 employees accounted for 32.9 percent of the U.S. total in 2012, up from 29.2 percent in 2005, according to Census Bureau data.

Continuing to move the needle means persuading more such companies that it’s possible to sell outside of the country. President Barack Obama, who pledged in his 2010 State of the Union speech to double exports in five years, created the National Export Initiative, in part to help small businesses sell abroad.

Photographer: Mike Bradley/Bloomberg

One Country

There’s still plenty of room for improvement. Less than 1 percent of the nation’s 30 million companies ship outside the U.S., significantly less than other developed countries, according to the Commerce Department’s International Trade Administration. Of those that do, 58 percent sell to just one country.

U.S. exports rose last year to a fourth-straight record of $2.28 trillion, increasing by almost $700 billion from 2009 to account for 13.5 percent of the $16.8 trillion gross domestic product, according to Commerce Department data. Selling goods and services abroad supports 11.3 million jobs, the datashow.

A report today showed confidence among small businesses increased in July. The National Federation of Independent Business’s optimism index increased by 0.7 point to 95.7, close to the almost seven-year high of 96.6 reached in May. A net 13 percent of respondents said they planned to hire, the highest share since September 2007.

Skepticism Challenge

Skepticism is the main challenge in working with small firms to expand beyond the nation’s borders, according to Robert Simpson, president of the CenterState Corporation for Economic Opportunity in Syracuse, New York.

He said he often tells business leaders more than 95 percent of the world’s population is outside the U.S. Demand from the global middle class will soar to $56 trillion by 2030 from $21 trillion in 2010, according to a report from the Organization for Economic Co-operation and Development.

“Antipathy toward the global market is the single-biggest hurdle we have,” Simpson said in a presentation at a recent Federal Reserve Bank of Philadelphia community development conference. “Companies don’t yet fully understand how their products can compete internationally.”

Toni Corsini, who helps jump-start exports by smaller firms as a New York-based loan officer for the U.S. Small Business Administration’s Office of International Trade, shares Simpson’s mission. She says her three-biggest obstacles among small business owners are fear, financing, and lack of faith.

One-Stop Shop

She works to alleviate all three from the Export Assistance Center in lower Manhattan, one of about 100 regional centers around the country. The office (called USEAC, which stands for US Export Assistance Center sic) also is home to other federal agencies that assist with exports(among them US Commercial Service and the Export Import Bank of the United States – US ExIm, the main Agency which finances and insures exports for large and small business exporters sic), making it a kind of one-stop shop.

“We’re available, don’t be afraid, come to us,” she says of her message to business owners. “If you are serious about continuing your business and growing your business, you better understand this is a global marketplace.”

Frigid Fluid Co. took advantage of a Commerce Department program to help expand exports of its funeral products to 16 nations, adding Italy, Mexico, Poland and Spain over the past two years. President Brian Yeazel, whose family has had the Chicago-area firm for 122 years and five generations, says he’s turning to predominantly Catholic countries more geared to traditional burials as Americans increasingly choose cremation.

Buyer Meetings

Yeazel used Commerce’s Gold Key Service, which gives firms market research and arranges meetings with buyers on visits to the country. Trips cost $700 for small companies like Frigid Fluid, which has 17 employees; first-time users pay half price. Commerce Department specialists in 80 countries plan trips, attend meetings, and provide translators.

Exports of products like embalming fluid and casket-lowering devices have grown to make up 34 percent of Frigid Fluid’s $4 million in annual sales, he said.

While such small businesses add to exports, there probably aren’t enough of them to help Obama reach the 2015 goal of $3.1 trillion.

Caroline Freund, a senior fellow at the Peterson Institute for International Economics in Washington, calls Obama’s initiative focusing on small firms misguided and impractical, given the export dominance of bigger companies such as Chicago-based Boeing Co., the largest U.S. exporter.

Large Businesses

“Exporting is by its nature dominated by large businesses,” Freund, a former economist at the Federal Reserve, World Bank and International Monetary Fund, wrote in a February research report. A strategy built around small companies does “little to lift exports because only the most productive firms can compete globally, and such highly productive firms grow to be large firms precisely because they are so efficient.”

Yet boosting exports is the missing piece of the full-fledged recovery in the U.S. economy, according to Ludovic Subran, chief economist at Euler Hermes Group. The Paris-based credit insurer pays companies if foreign customers don’t, tracking risk through 1,500 underwriters.

“There is a misconception about the potential to grow outside of the U.S.,” he said. “People don’t realize they can make the big bucks if they go to Latin America or Asia.”

Some business owners have doubts about repayment, a consideration when one big unpaid bill can threaten their future, said Laurel Delaney, the Chicago-based founder of GlobeTrade who’s been helping entrepreneurs sell abroad since 1985. Still, she says insurance can cut risk.

‘Growth Potential’

“They’re just not realizing their growth potential,” she said. “You need to develop a global mindset.”

At Mercer’s, Mignerey is working to expand in new markets, including Australia, Kenya, Puerto Rico,South Africa, South Korea, the U.K., Philippines and Suriname. Classification makes approval complicated because some jurisdictions call its wine ice cream food, others label it alcohol. Packaging needs vary.

The hybrid product was born at a 2005 Washington event promoting New York Farm Day sponsored by Clinton. When attendees made ice cream floats with the wine from the next booth, Clinton and others suggested it may have a commercial future.

Labeling Products

Mignerey and Hurlburt, her aunt, introduced wine ice cream, which has about 5 percent alcohol content, in 2007. At a New York City trade show the same year, they met a Dutch distributor, who arranged their first foreign deals. They weren’t worried about payment because it was done in advance, but they were concerned about simple labeling errors, Mignerey says. Exports of the wine flavors began in 2008 with the Netherlands, though the company wants to also sell more traditional varieties abroad.

Foreign sales help take the seasonality out of the ice cream business. In the production facility, four employees work year-round where previously winter staffing fell to two full-time and one part-time. In the office, four workers help with export-related administration, up from two.

“It can be done,” Mignerey says. “But it’s a lot of work.”

To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.net; Gail DeGeorge at gdegeorge@bloomberg.net; Carlos Torres at ctorres2@bloomberg.net Gail DeGeorge, Carlos Torres

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“Fly Me To The Moon” UA-USA Air & Space Forum Program Announced

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U.S. Seeks to Revise Rules on Gas-Export Projects

Proposal Could Push Back Approval Process for Some Companies’ LNG Permit Requests

By ALICIA MUNDY and ALISON SIDER  WSJ.com

Cheniere is well-positioned to export liquefied natural gas. Pictured, its LNG terminal in Louisiana last year. Cheniere Energy/Bloomberg News
The Obama administration said it would perform a more rigorous upfront review of proposals to export liquefied natural gas, offering a mixed bag for the roughly two dozen projects seeking federal approval.

The U.S., which is enjoying a natural-gas boom, is expected to start exporting LNG in significant volume next year. The administration has only approved one export facility, but about 25 additional proposed projects are under review. A few projects far along in the approval process could benefit from the proposed rules change because they could be cleared as others are delayed by the new requirements.

The Energy Department said Thursday that the proposed revisions would require export-terminal proposals to first undergo a more expensive regulatory review by the Federal Energy Regulatory Commission involving an environmental impact assessment before the DOE reviews the permit application. The DOE previously was granting conditional approval either parallel to or before completion of the environmental review, a process that allowed companies to get a project started with a smaller financial commitment.

The proposal could push back the approval process for some companies’ LNG permit requests, while more-advanced proposed projects are expected to be able to jump forward in the queue.

“The proposed changes to the manner in which LNG applications are ordered and processed will ensure our process is efficient by prioritizing resources on the more commercially advanced projects,” DOE Assistant Secretary Christopher Smith wrote in a blog post on the department’s website.

Kevin Book, of ClearView Energy Partners LLC, said under the proposal, energy companies will need to clear the environmental review before they can raise capital or secure loans to build LNG export terminals.

Houston-based Cheniere Energy Inc. LNG +8.94% is the only company that has already attained all the required permits to export natural gas from the U.S. to any country in the world. Its Gulf Coast plant in Louisiana is under construction and on track to begin shipping LNG in late 2015.

Oregon LNG’s proposed export facility in Warrenton, Ore., is the next one in the Energy Department’s queue. Chief Executive Peter Hansen said the company’s request for conditional export approval is probably just weeks away, based on how the department has processed other applications. He said it wasn’t clear whether the revised procedure could change the timeline. Oregon LNG is in good shape to move forward with Asian and North American partners, once the permits are in place, he said.

Mr. Hansen said the DOE’s proposal makes sense; as it stands, coordination between the DOE and FERC could be improved. “When you do sort of look at the fact that a lot of the projects that are fairly high up on DOE’s list—some of those haven’t done much yet. They’re barely real. And yet there are projects that are clearly real much further down,” he said. “Maybe the DOE queue wasn’t really reflective of the real world.”

The proposal is subject to a 45-day public review and comment period before the rules can be made final.

Write to Alicia Mundy at alicia.mundy@wsj.com and Alison Sider at alison.sider@wsj.com

TurboBoosting American Exports – Disruption of The World’s Second Most Ancient Profession

ExportBoost™ dovetails with the NEI/Next Announced By Hon. Penny Pritzker, The Secretary of Commerce

By: Alexander Gordin

International trade is thought to have its roots in 19th century BC with Assyrian merchants. Over centuries the business of exports  changed dramatically with evolution in transport modes,  advent of incoterms, standardized shipping containers and  computerized customs clearance. Yet for all the progress and record $2.3 trillion amount, exports in the US still remain a complex and not terribly efficient process.  Multiple players involved in exports are still largely silo(ed). Even at large companies export related functions like international sales, legal, shipping, banking, financing and insurance often have difficulty communicating with one another. Concepts such as international payment protection mechanisms, US content policy, or US flag shipping requirements are often misunderstood.

Generally, business approach to managing export transactions is reactive, rather than proactive. Situation is even more difficult in small and mid-size businesses where resources are significantly more scant. A relatively small percentage of businesses export. Of those that do, a large portion exports to only one country. Expanded exports of goods and services represent amazing possibilities not only to help companies grow their profits and shareholder returns, but also to benefit our nation’s economy by creating new jobs and generating additional tax revenues.

President Obama’s National Export Initiative has served as a catalyst to spur job growth and along with general economic recovery led to a resurgence of manufacturing activity. More needs to be done, and companies should focus on exports as a fundamental part of their business activities, rather than an afterthought. The entire export ecosystem is ripe for disruption and entry into the technological age. I can envision a day in the very near future when shipping containers of foodstuffs, plane loads of licensed computer equipment, dozens of Ro Ro tractors, or construction cranes will be as simple as buying individual items on eBay or Amazon.  Of course handling export transactions is infinitely more complex and requires signed multilingual contracts, letters of credit, export credit and freight insurance, licensing, quality inspections and complex shipping arrangements. Thus the disruption process that is being put in  place needs to account for the nuanced complexity that characterizes exports.

A week ago the world witnessed the first step in this transformation. ExportBoost™ – a new curated service guaranteed to help small and mid-size companies to at least double their present exports in 18 months – was  recently unveiled  by the Broad Street Capital Group (“BSCG”) at the Annual Conference of the Export – Import Bank of the United States (“US Ex-Im Bank”). Specifically developed for US manufacturers and distributors with revenues of between $5 and $750 million and for providers of professional services , ExportBoost™ uses proprietary export building methodology and tools such as: Fi3E™ Export Indices, XPORTINSURE™, FinanceABLE™ and EZShip™  to greatly simplify export operations and mitigate international business risks. ExportBoost™ was designed to help small and medium companies who are either experienced exporters, or just looking to start their international expansion to significantly grow their exports.

ExportBoost™ service has two tiers – one where the exporter is guided by the Broad Street Capital’s professionals and implements the program internally and the second where Broad Street Capital Group implements ExportBoost™ on its client’s behalf. In either case, the clients will be offered a unique guarantee, should they follow the program and their exports do not at least double in 18 months, Broad Street Capital Group will refund all the fees paid by the clients for the ExportBoost™ service. ExportBoost™ is the first product of the very ambitious project being developed by the Broad Street Capital Group and its partners to greatly streamline international trading operations. The project codenamed “Barbell” is scheduled to be unveiled at the Broad Street’s annual conference later this year.

Why Exports Will Help More American Businesses Thrive

Hon. Penny Pritzker, LinkedIn

American businesses are driving economic growth and creating good jobs through exporting.

The President’s National Export Initiative (NEI) has been a remarkable success:

The United States has had four straight record-breaking years of exports. We hit an all-time high of $2.3 trillion dollars last year – up $700 billion from 2009.
Nearly one-third of our economic growth since mid-2009 has been driven by exports.
Nearly 30,000 businesses have started exporting for the first time.
And most importantly, 1.6 million more Americans have export-supported jobs, bringing the total to 11.3 million – the highest in 20 years.
In addition, exports have been the driving force behind growth in communities across the country. In fact, exports account for nearly all of the post-recession growth in cities like Albuquerque, Youngstown, Detroit, and Kansas City.

Clearly, foreign demand for U.S. goods and services is helping American families gain economic security – buying more homes and cars, saving for college and retirement, or simply heading for a night out.

Each day, more Americans appreciate the fact that 95 percent of the world’s customers are outside our borders. Our trade partners want what U.S. businesses have to offer – from consumer goods to infrastructure products – and everything in between.

Yesterday, we unveiled NEI/NEXT – the next phase of the National Export Initiative. This is a data-based, customer service-driven initiative to ensure that more American businesses can fully capitalize on markets that are opening up around the world.

NEI/NEXT is focused on 5 strategies:

We will help businesses find their NEXT customer abroad.
We will increase the efficiency of a company’s first and NEXT shipment.
We will help firms finance their NEXT order.
We will help communities integrate trade and investment into their NEXT growth plans.
And we will open up the NEXT big markets around the world while ensuring a level playing field.
In a number of these areas, we are already making progress. For example, we are customizing our export promotion efforts through initiatives such as:

Look South, which is focused on maximizing the potential of our 11 free trade agreements in Latin America. Already, our Look South team has created more than 100 tailored guides that show where American products are in highest demand across the region – from auto parts in Honduras to medical devices in Colombia. Therefore, a company expanding into one Latin American market can expand into all 11 with only a little extra effort.
In addition, the Department of Homeland Security is spearheading the implementation of the “single window” by the end of 2016. This effort will enable businesses to use just one electronic platform to complete the forms needed by dozens of federal agencies. It also is smart regulatory reform that will streamline, simplify, and automate processes – saving government and businesses precious time and money. In a fiercely competitive global economy, there is no room for unnecessary delays at borders and entry points.
Also as part of NEI/NEXT, the Small Business Administration and the Export-Import Bank will equip more community banks to offer federal export-financing tools. Traditional credit is still hard-to-find for too many potential exporters – even for creditworthy firms with eager customers waiting abroad. Through NEI/NEXT, we will increase the number of partners in the financial industry who offer federally-backed working-capital loans, loan guarantees, and insurance.

Finally, the Administration will continue to advocate for an overall environment in which American exporters and their workers can thrive. In particular, we are encouraging Congress to invest more in infrastructure and to support trade agreements that reflect our values – such as the Trans Pacific Partnership.

For America to remain competitive, we need more businesses to see the success stories of companies like JWB Manufacturing, based in Tempe, Arizona. This firm produces blades for carpentry tools and precision machinery and our commercial service team helped them break into new markets. In fact, JWB now sells in 12 countries in every corner of the world – including Mexico, Malaysia, Brazil, and Australia – and exports now account for 40 percent of their business. Owner Jeff Barth recently told us that “there is nothing to fear in exporting outside our borders. My international clients have been nothing but gracious, and I encourage other small businesses to realize the power of exports to help their business succeed.”

Ultimately, NEI/NEXT will help create the environment in which more businesses of every size – and their workers – adopt that same mindset.

My commitment is that this Administration will continue to support American businesses as we roll out NEI/NEXT… as our exporters create even more good jobs… and as we continue to send the clear message that America is Open for Business.

Let’s get to work.

Photo: Pixomar/Shutterstock

ExportBoost™- a program designed to help exporters double their exports every 18 months – announced at the U.S. Ex-Im Bank’s Annual Conference

EXCLUSIVE! Tomorrow’s news today.

Washington, DC – New York City

April 24th, 2014

ExportBoost™ – a new service guaranteed to help small and mid-size companies to at least double their present exports in 18 months – is being unveiled today by the Broad Street Capital Group (“BSCG”) at the Annual Conference of the Export – Import Bank of the United States (“US Ex-Im Bank”).  Specifically developed for US manufacturers and distributors with revenues of between $5 and $750 million and for providers of professional services , ExportBoost™ uses proprietary export building methodology and tools such as: Fi3E™ Export Indices, XPORTINSURE™, FinanceABLE™ and EZShip™ that were developed by BSCG’s subsidiaries  Fluent In Foreign Academy™, AMEX Import Export and Broad Street Capital  to greatly simplify export operations and mitigate international business risks.

“There are enormous opportunities for companies both large and small, to sell goods and services overseas,” said Alexander Gordin, Managing Director of The Broad Street Capital Group and Author of the book Fluent In Foreign Business. ” Expanded exports represent amazing possibilities not only to help companies grow their profits and shareholder returns, but also to benefit our nation’s economy by creating new jobs and generating additional tax revenues. President Obama’s National Export Initiative has served as a catalyst to spur job growth and led to a resurgence of manufacturing activity. More needs to be done, and companies should focus on exports as a fundamental part of their business activities, rather than an afterthought. Thus ExportBoost™ was designed to help small and medium companies who are either experienced exporters, or just looking to start their international expansion to significantly grow their exports. ExportBoost™ service has two tiers – one  where the exporter is guided by the Broad Street Capital’s professionals and implements the program internally and the second where Broad Street Capital Group implements ExportBoost™ on its client’s behalf.  In either case, the clients will be offered a unique guarantee, should they follow the program and their exports do not at least double in 18 months, Broad Street Capital Group will refund all the fees paid by the clients for the ExportBoost™ service.

ExportBoost™ is the first product of the very ambitious project being developed by the Broad Street Capital Group and its partners to greatly streamline international trading operations. The project codenamed “Barbell” is scheduled to be unveiled at the Broad Street’s annual conference later this year.

Based in the heart of New York City’s financial district and serving business community since 1988, Broad Street Capital Group is a private merchant bank providing strategic international business development, cross-border financing, risk mitigation and export management services. The firm’s professionals have extensive expertise in working with all trade and development agencies of the US government, in developing and financing complex export transactions and projects.  Utilizing unique Develop, Finance Supply and Insure™ approach to international business Broad Street Capital provides coverage in 180 countries earning it a moniker of the “Merchant Bankers to the World”. For more information, please visit www.broadstreetcap.com or www.fluentinforeignacademy.com

When introducing sanctions, it is important not to throw the baby out with the bath water.

Over the last week and a half, the crisis in Crimea, Ukraine has riveted the world’s attention and has caused US, EU, Canada and Russia to cross diplomatic swords over the issue. The situation is akin to that of a propane gas being allowed to fill an enclosed room and several sides involved playing with lighters nearby, but hoping the sparks generated as the result will not  trigger a massive explosion.

Although there exists an absolutely clear diplomatic solution, which I think will be achieved in this situation barring any potential military flare up triggered by some sort of a local  incident that spins out of control, the US has taken an approach of the stick over the carrot to try and resolve the crisis, or to at least to get the parties into a meaningful diplomatic discussion.

Sanctions are a viable political tool, which have proven effective in multiple situations (think Iran, Cuba, Lybia, the Soviet Union). Mild sanctions, like the ones announced by President Obama on Thursday, are designed to try and force parties to the negotiations table and presumably have the specific parties against whom the actions are introduced, lobby their government for reprieve and certain acquiescence during the negotiation process. Yet even mild sanctions will trigger what Russia calls an asymmetrical response that will likely sting the imposing side. The response and the low effect of the original sanctions are likely to trigger imposition of even stronger economic and political sanction by the US and Canada(note EU has thus far carefully abstained from getting involved in this). The problem with using strong sanctions against Russia today, is that over the last two and half decades since the fall of the Soviet Union, there has been a tremendous fusion of economic, business, political, personal and cultural interests between Russia and US and certainly between  EU, Canada and Russia.  Thus almost inevitably, introduction of any meaningful sanctions will result in unintended collateral damage and will inflict meaningful pain on the businesses, individuals and cultural institutions of the country imposing the sanctions.

Lets look at some examples of collateral effects on the US economy :

• Asymmetrical response being considered by Russia will allow the Russian government to randomly seize US assets of companies and individuals operating in Russia. Not only this threatens real economic well-being of multiple US companies and expatriates there, but has potential to cripple direct foreign investment for years to come. Ditto for US real estate sector,franchising sector, financial markets and factories, as well as  business purchased by Russian individuals in the US. This will result in the loss of business and tax revenues. Billions of dollars in lost economic effect are at stake.
• US exporters, manufacturers, freight forwards and shippers are at risk of losing hundreds of million of dollars in revenue and thousands of American jobs will be affected if trade restrictions are imposed by the State Department, or by the Russian authorities.
• US hospitality industry and retail sector will be effected by the visa restrictions and will lose millions in revenues from the visiting and free spending Russian tourists.
• Educational institutions, sports and entertainment arenas will be affected by the patriotic backlash, lost revenue and lost opportunity for cross-cultural diplomacy, should sanctions be introduced. Even though in 1980, when US boycotted the Moscow Olympics, it was much simpler to contain the collateral damage due to an isolated nature of the Soviet regime, the effect on athletes, as well as economic and political fallout still were substantial. Today it would be an order of magnitude worse.
• Politically, critical issues where US and Russia cooperate – counterterrorism, containment of Iran nuclear proliferation, removal of chemical weapons in Syria, will be affected to the detriment of both sides and our allies.

Strong sanctions definitely have a place in resolving geopolitical crises, but they should be the option of the next to last resort, imposed before military action is invoked, and at no other time. A credible diplomatic solution for the Crimean crisis is available and needs to be pursued in earnest, otherwise introducing sanctions into highly intertwined relationship between Russia and its Western counterparts risks throwing out the baby with the bath water and cause more problems than it will solve.

A businessman’s opinion on the events in Crimea and what Ukraine, Russia, US, EU should do

The world’s news have exploded over the last few days with Russia’s ostensible invasion of Crimea snubbing its nose at the Ukraine’s newly elected government and largely ignoring threats from the US and EU. It could lead to a disaster of epic proportions (I am even afraid to think, never mind utter words WWIII out loud), yet I dare to say none of the parties involved wants a war and there IS a way out of this mess.

What qualifies me to write this article? I have done uninterrupted business in Russia, Ukraine and multiple countries in Eastern and Central Europe/Central Asia over the last twenty-four years. I have also worked closely with all three Trade and Development Agencies of the US Government, with the Department of Commerce, as well as with senior government officials of several Eastern European  and Central Asian countries and have come to understand the geopolitical forces tugging at the region. I have been on official US Government Trade Missions to Georgia right after the war with Russia, and to Crimea. I worked as part of UNDP’s outreach to Belarus and managed an US public company with interests in Moldova. Although, I try to stay away from politics, business and politics in that region are inextricably linked, so I will offer my thoughts of what needs to happen in order for the ongoing crisis not to turn into a disaster.

REFOCUS ON WHAT ARE THE UNDERLYING INTERESTS OF THE PARTIES INVOLVED IN THE CONFLICT

Let’s call a spade a spade. For the Western world to try and embarrass Russia by putting democracies in its back yard creates a source of perennial irritation. US never liked having a Communist country 90 miles off its shores, why would we for a moment assume that having the West back Georgia, Moldova, or Ukraine would bring joy and comfort to the Russian leadership?

It is Putin’s interest to have Ukraine come into Russia’s sphere of influence, OR AT LEAST NOT ALLOW the country to fall into under the Western control.

The West’s interest is to have Ukraine come into its sphere of influence (EU, NATO),  OR AT LEAST have it remain democratic and territorially whole without the west having to engage militarily.

So how do all sides get what they want?

LET UKRAINE BE!

Both sides should immediately agree to leave Ukraine alone and STOP pulling it into their respective orbits. Ukraine under its second president Kuchma has been able to masterfully balance the interests of both forces, while remaining independent and prospering economically. The same thing should take place now. Let business and economics be the drivers and the free market will work to balance respective interests out. ALL sides should stop stoking the separatist tensions and agree to STOP pulling Independent Ukraine into their respective orbits. The country is large enough and rich enough and can certainly regain its rightful place in the geopolitical arena.

JOINTLY ADDRESS UKRAINE’S ECONOMIC RECOVERY AND FOCUS ON REBUILDING THE COUNTRY

Simultaneously, BOTH US/EU block and RUSSIA should provide joint economic aid to Ukraine to let it come out of the economic liquidity crisis, which resulted as result of looting and mismanagement by the previous administration.  Tit for tat response should be moved from the missile offensive to the economic aid arena. Each side (EU, Us, Russia) should commit $15 billion and that would total to $45 billion in badly needed economic aid for Ukraine.  Let the country rebuild itself, as the economic stakes are enormous. Exxon, Shell, Chevron, Cargill, EBRD, Franklin Templeton have billions committed in direct investment, as do EU countries and Russia which have massive equity stakes or interests in the oil gas, aerospace, agriculture, coal extraction, retail and telecom sectors.  US end European Exporters have billions at stake from losing Ukrainian markets for agricultural, extraction and production equipment. Ukrainian steel, pipe and agricultural producers have vast market opportunities in Russia, EU and Asian countries.  Undermining their ability to export will further choke off much needed tax revenues and foreign currency inflows.

CHANGE THE GAME

Although I foresee a possibility of NATO putting an aircraft carrier group in Bosphorus to block exit from the Black sea, or have its own military exercises somewhere, let’s say in Poland, as a show of counter force to the Russian troop deployment, US and its allies need to refocus the entire game plan. Going toe to toe and engaging militarily is a losing proposition. Both sides should agree to a stalemate, have Russia pull the troops out and proceed along the non-interfeence policy. At the same time Russia and US should refocus their cooperation in areas where common ground exists between them: preventing nuclear weapons in Iran, stopping spread of radical terrorism globally, deepening trade and economic ties between them.  The way things are going right now, Putin is playing chess, while the West is playing checkers. Both sides need to start playing Monopoly and stop antagonizing each other.

Sounds simplistic? Not really, yet very difficult to implement. However, if the basic tenants and philosophies similar to the ones outlined herein are adopted by all sides involved, a peaceful resolution is very very possible given the fact that over the last 25 years there has been tremendous  fusion of assets, people and cross-border economic and cultural ties between Russia, US, EU and Ukraine.  Let the cooler heads prevail.

When Expanding Overseas, it is ALL About Commitment and Risk Mitigation

As I read the article below, I could not help, but shake my head. Presumption by the authors that international sales should somehow be less challenging, just because more businesses are now exporting, simply does not make sense.

International business has and will always be challenging and fraught with peril. Not only the risk of not getting paid is there, but there are also numerous other risks to worry about – from political upheavals, customs, shipping and currency devaluation, to fraud, corruption and intellectual property infringement. The list is by no means exhaustive. Yet anyone doing business domestically also faces a myriad of risks. The trick is to understand the risks and be able to mitigate them. A risk of non-payment for instance is just as real in domestic business, as it is in exporting. The reason businesspeople here do not consider it to be such major challenge is that they learned to use the tools available in the U.S. such as credit reports, references and legal system to mitigate this particular risk.

When it comes to exporting, a different set of tools is needed and such a set is fully available to any exporter. Thus in order to successfully export,  businesses either need to become fluent in foreign risk or hire someone who can manage their exports for them.  For those wishing to do it themselves a number of tools, such as credit insurance that is available through the Export-Import Bank of the United States (US EX-Im), or  from private carriers. International Company Profiles (ICPs) on potential business partners are available from the U.S. Commercial Service. Of Course, letters of credit and prepayments remain as perennial options.

But it is not only about getting paid, it is about exporters’s commitment to international business. Over the last 25 years of international business in over 35 countries, we have seen multiple situations where US companies failed or succeeded based on their ability to understand and mitigate risks.

For those who don’t want to commit, but still want international sales, we offer complete Export Management Services. For those who want to understand foreign risks and ways to mitigate them we developed entire Fluent In Foreign Business program complete with the eponymous Book, Fi180 Global Business Atlas and Fi3 Export Appeal Index™ rating ease of exporting to 180 countries. Like any other serious activity preparation is key. For those who prepare, exporting can become one of the most profitable and enjoyable activities in their business.

In addition to the article, this post also includes an excerpt from the Fluent In Foreign Business

The Cost of Expanding Overseas

As More Small Businesses Sell Goods Abroad, They Encounter Challenges—Like Getting Paid

By RHONDA COLVIN, WSJ.com

Selling goods and services abroad is getting easier for small U.S. businesses, but they still face challenges.

Just last week President Barack Obama signed an executive order accelerating the process of getting government approval to export U.S.-made cargo. The goal is to create a new International Trade Data System eliminating some of the paperwork required in sending cargo abroad. In theory, such a system could speed the shipment of products overseas, cutting approval wait times to transport goods to minutes from days.

Small companies comprise the majority of U.S. exporters. Businesses with fewer than 500 employees accounted for 294,589 of 301,238 U.S. exporters in 2012, or about 97%, according to preliminary data released by the U.S. Census Bureau in December. Just over half were small manufacturers and wholesalers, and together they generated $460 billion in foreign trade, a $10 billion increase from the previous year, or about 34% of total U.S. exports, according to the data.

While paperwork is a headache for some small companies, it’s not their biggest concern, according to a survey of small businesses fielded in 2013 by the National Small Business Association and the Small Business Exporters Association. Asked to identify what they consider to be the largest challenges to selling goods and services to foreign customers, 41% of respondents selected “I worry about getting paid.” That’s up from only 26% of respondents in 2010 who said payment was an issue for them.

“I think the biggest issue is getting a staff up” overseas, as well as the cost of business travel, and of communication with far-flung clients, said Chris Coccio, chief executive ofSono-Tek Corp. SOTK 0.00% , a Milton, N.Y., developer of ultrasonic spray coating technology. His primary overseas clients include contract manufacturers for electronic companies and medical firms. He said about 60% of his roughly $10 million in annual revenue comes from sales to non-U.S. markets.

Chris Coccio, CEO of Sono-Tek, remains an advocate of exporting. Meredith Heuer for The Wall Street Journal

Mr. Coccio said Sono-Tek exports widely in Europe as well as many parts of Asia including China, Japan and the Philippines. His products can also be found in Mexico and Brazil. About 80% of the company’s sales and marketing budget is spent on international sales, “so there clearly is extra cost per sales dollar,” he said.

When considering potential international markets, such as Russia or expanding his business with electronics in Japan, Mr. Coccio said “we re-evaluate our success rate” after one or two quarters and “decide if we want to stay the course.” On the whole, he remains an advocate for exporting. Without it, “we would be one-third of our size,” he said. Receiving payment is a regular concern when exporting goods, he said, but “to deal with this our payment terms are front-end loaded with most of the payment prior to shipment.”

Laurel Delaney, a marketing consultant based in Chicago and author of the upcoming book “Exporting: The Definitive Guide to Selling Abroad Profitably,” said if a company is already exporting, it should “continue down that path.” She also said business owners should routinely evaluate if they have enough capital to continue exporting, as small-business owners often have much less to fall back on than larger firms.

Larry Lieberman, the owner of Vision Quest Lighting, a 30-employee decorative lighting company in Long Island, N.Y., said during the recession, sales to foreign markets including much of Europe, China, and Japan were a lifeline. “If we only had domestic sales we would have been in big trouble in 2012,” he said.

Vision Quest Lighting reaped the benefits of exporting during that time because a fair amount of revenue came as the company provided lighting for several national brands, such as Limited Brands, LB -0.88% Ann Taylor and Abercrombie and Fitch,ANF -2.96% as they expanded their international presence.

Mr. Lieberman is currently working on exporting solar-powered trailers to Haiti and South Africa and estimates that project will bring in $10 million to $20 million of revenue within the next two to three years.

However, he said his main concern for the year ahead is managing business in some foreign markets, specifically China. Fred Hochberg, chairman and president of Export-Import Bank of the U.S., an export credit agency, said: “The financial reporting is not the same as Western companies or the United States so it’s hard to evaluate the creditworthiness of companies [in China].”

Leah Martin, the co-owner of Corona, Calif.-based FireBlast Global, just started exporting her products last year. The 40-employee company, which makes equipment used in fire-training demonstrations, markets its goods to local governments and commercial airports in China, Japan and South Korea. Ms. Martin’s main concern this year is “making sure that the product can get delivered appropriately through the different exporting channels.”

Like others, Ms. Martin said she has had concerns about getting paid but worked with her bank to secure letters of credits that would act as surety bonds for payment of her company’s goods.

FireBlast is now planning to expand into Middle Eastern markets. Ms. Martin said it is too early for her to assess what impact exporting has had on her company’s growth, but she looks forward to growing the business. “I think it will be a completely significant increase in revenue based on what we’ve seen from our competition,” she said.

—Angus Loten contributed to this article.

Write to Rhonda Colvin at rhonda.colvin@dowjones.com

EXCERPT FROM FLUENT IN FOREIGN BUSINESS

Chapter 1

Why Go Global?

For any business in today’s world (and I am not talking about mom and pop shops here), not to expand internationally is practically a sin. Not only does global expansion provide diversification and additional revenue, it exposes one to different methods of doing business. In addition, the U.S. business back home can benefit from increased cultural sensitivity, competitive intelligence, new opportunities and better management.

International markets vary politically, economically, and socially. Depending on the market context, non-state market actors like multinational corporations and NGOs (non-governmental organizations) offer financial, networking, information exchange, advocacy and protection resources that can help a business of almost any size create a solid framework for entering a foreign market. What’s more, many of these resources are either free or nominal in cost.

One of the obvious reasons to expand overseas is diversification. Although we live in a global economic society and cross-border slowdowns affect us all, different countries are at different stages of their economic development. Markets that are ultra-competitive and mature in the U.S. are either still emerging, or don’t even exist yet, in many countries. This disparity allows businesses to become less dependent on their country’s economic situation and affirmatively exploit their own competencies in emerging overseas markets.

Another reason, of course, is a company’s financial growth. Foreign markets offer one of the best sources for revenue and profit margin expansion. It is no secret that the emerging markets of Brazil, China, Russia, India and Africa offer enormous business potential for all kinds of businesses and industries.

A lot has been written about the BRIC economies and their enormous populations and growing purchasing power. Today, expanding into these markets requires significant resources and a very strong competitive advantage.

The same can be said for the Western European countries and the markets of Australia and South Africa. Although numerous opportunities still exist in many existing or emerging market segments, businesses that are only now thinking of international expansion, especially those companies that are small to medium in size, would be well advised to consider beginning their international foray with smaller markets in countries such as Vietnam, Ukraine, Romania, Bulgaria, Poland, Hungary, Turkey, Kazakhstan, Georgia, Turkmenistan, Costa Rica, Panama, Chile, the Caribbean Basin and the region of Sub-Saharan Africa.  The list is long and each country can provide additional revenue and profits to any U.S. company that takes the time and effort to study the markets and carefully enter them.

At this point you may be asking, “How do I choose the right markets?” “How many countries can my company enter at once?” “What financial, human and administrative resources will we need?” “What would be our return on investment if we do this?” These and similar questions are absolutely normal.

I have seen businesses enter foreign markets completely opportunistically, for example after meeting someone from a country at a trade show or being contacted by a foreign customer. I have also seen companies do it thorough systematic analysis and marketing research prior to their market entry. Somewhere in the middle is the right way to go. Developing an effective market entry strategy requires information and a thorough analysis of local, regional and global market forces. But the perfect opportunity for your organization can be missed if you don’t exploit the real life chance opportunities.

Perhaps most importantly, you must have a high level of commitment to break into a foreign market. It will take time, persistence and serious resources. Once you decide to expand internationally, commit to and the expansion process and introduce it into your organization’s culture. That’s when things will start to happen and overseas business opportunities will open up. The challenge will be to separate the wheat from the chaff and to eliminate unscrupulous buyers and tire kickers. Once you identify an opportunity, make sure you thoroughly understand the proposed transaction while you manage the expectations of all the parties involved.

Look in the mirror. Ask yourself whether you really want it and whether your company is ready. International expansion can be exciting, cool, and profitable. But if you or your organization lacks patience, commitment, a desire to learn, and a strong value proposition, international expansion can be a most painful and costly undertaking.

As with any significant operation, you must set realistic goals. Ask yourself why you want it and what are you hoping to accomplish for yourself and for your organization. Quantify your objectives in terms of additional revenue and market positions, both short- and long-term. Will expansion affect your present operations? If yes, how? And how will you finance the undertaking? Understand your expectations. Are they realistic? A good rule of thumb is to triple any “realistic” timeframe you come up with. Things always take longer overseas, and in some countries they take much, much longer.

Are you ready for multiple, grueling flights, jet lag, bad hotels, unfamiliar food (sometimes amazing and sometimes inedible), and unpaved, hazardous roads? Is your company prepared to commit the human and financial resources to developing and implementing its international strategy? If you responded with a convincing “Yes” to the above questions, then pack light and enjoy the trip.

Want to know more write info@fluentinforeign.com