Training, assistance and grants help local companies develop international markets

Story by Sean Fitzgerald, New North B2B publisher

While there are literally dozens of approaches government and economic development officials have proposed to lift the economy out of its slump and create a number of well-paying jobs in Wisconsin, few of those ideas look beyond our borders.

Even though our economy is still limping along compared with its break-neck speed of a decade ago, that doesn’t mean other regions around the world are in the same boat. On the contrary, demographic trends and new political regimes are creating an economic climate allowing certain Third World countries to transform into consumers with distinguished tastes for luxuries we take for granted, but they likely never realized existed. That demand opens new doors of opportunity for manufacturers of such products, many of which are made by or can be made by Wisconsin companies.

Coupled with a low value of the U.S. Dollar compared with various other currencies around the globe – which puts U.S.-made products on sale for the rest of the world – and the recipe to grow business comes together by targeting new customers abroad.

On the whole, Wisconsin has been growing its exports sales steadily throughout the past decade. Exports from the Badger State were nearly $19.8 billion in 2010 – the most recent data available (2011 figures will be released in April) – down slightly from the all-time high of $20.5 billion in 2008 and close to double the $10.5 billion recorded back in 2001.

But the figures pale in comparison to other neighboring Midwestern states with industrial and agricultural bases similar to what Wisconsin has to offer. Export data from the U.S. Census Bureau indicates Illinois, Michigan and Ohio all exceeded $40 billion in sales abroad in 2010, while Indiana registered $28.7 million in exports, nearly 50 percent more than Wisconsin.

Many argue Wisconsin businesses simply don’t have the global mindset to think about expanding market development efforts beyond the comfort of U.S. borders. Others might argue a number of Wisconsin companies that should be selling their products and services abroad haven’t because of a lack of experience and a lack of knowledge of the basic premises of selling outside the U.S.

That’s where assistance and training from resources like Wisconsin Economic Development Corp., the U.S. Department of Commerce, local technical colleges and local chambers of commerce can help make a difference.

Growing state jobs

The state’s international business development team has been helping open doors and open ports for Wisconsin companies into foreign markets for more than 20 years, and the resource has thrived despite seemingly little respect from state legislators through budget appropriations. Budget cuts in past biennial cycles limited opportunities to open outreach offices in Europe and Asia, and in certain instances, former Gov. Jim Doyle used the threat of cutting off funding for international development services altogether as a bargaining chip during statewide budget negotiations. It was hardly viewed as or given the resources to be much of an engine for economic growth.

“International was only kind of an add-on piece,” said Lora Klenke, the vice president of international business development for the Wisconsin Economic Development Corp., the new quasi-public agency that evolved from the state Department of Commerce during 2011 after Gov. Scott Walker took office. “Now we’re looking to change the mindset that export growth is the next step in a company’s growth.”

Under the guise of an entirely new organization and new leadership from the top down, it’s clear to Klenke there’s a dedication to support her office to help Wisconsin manufacturers create jobs by growing sales abroad. The office has a clear goal of increasing the number of companies exporting from the state as well as increasing the dollar amount of exported goods.

How will they achieve those goals?

A new Global Business Development grant program rolled out just a few weeks ago will offer up to $3,000 for a company for tasks such as translating their Web site or various marketing literature into another language, or to help cover the cost of obtaining various certifications required to sell manufactured goods in other countries, particularly in Europe, which has different electrical standards than in the U.S. Klenke also said up to $10,000 is available for travel to determine and arrange market access to a corner of the world in which a Wisconsin company hasn’t sold before.

In addition, the agency has arranged three development missions this year to India, South America and Southeast Asia to help businesses uncover opportunities and better navigate regulatory hurdles when they do go to market in these emerging economies. Klenke said these areas in particular represent more than one billion people who are evolving from developing countries into the middle class and making more discriminating decisions when it comes to the non-essential products they’re looking to buy. And Wisconsin manufacturers already have a growing relationship in key areas of South America – Brazil ranked eighth as a state trade partner in 2010 with $559 million in exports, while Chile came in at No. 10 with $422 million in exports.

“The decisions we make on where our resources go really rely on where the global opportunities are,” Klenke said.

In addition, the office still maintains four development directors dedicated to outreach in Canada, Mexico, China and Brazil, and supports outreach coordinators in various regions through the state.

Now through a new affiliation with Wisconsin Manufacturing Extension Partnership, WEDC plans to proactively identify state companies that have the capacity to export and approach those firms about pursuing foreign opportunities.

Learning the ropes

Companies that have never sold products outside the U.S. before can often be intimidated by the variety of challenges associated with exporting. Marketing and selling are tasks that are heavily rooted in culture. Take the same approach to selling a two-stroke combustion engine to a customer in the U.S. and use that tactic in Japan, one might find themselves unintentionally offending the potential customer.

Regulatory issues vary from country to country. Tariffs are set at varying rates among countries. Legal systems vary. So, too, do banking and finance systems. Not to mention the barrage of language barriers.

Fortunately, there are resources available for local companies to learn the basics of exporting, or sharpen their edge when it comes to expanding beyond an already successful global business experience.

Fox Valley Technical College in Appleton launched a Global Business Professional certificate program in 2009 that allows working professionals to take up to six one-credit, two-week courses focusing on various aspects of international trade. Once completed, students are prepared and can sit for the North American Small Business International Trade Educators (NASBITE) certification exam, according to Marie Martin, director of global education and services for FVTC.

The program is designed to provide education in global sales and marketing, global banking and finance, global supply chain and logistics management, and global operations management, among other areas. The seminars are available online to accommodate the schedule of participants who might often be traveling for work.

The program helped strengthen the rules and practices used by VF Outdoor to manage its letters of credit, said Adam Jaehnig, the organization’s international credit manager who completed the global business certificate program through FVTC in 2009. He then went on to earn his NASBITE certification.

Jaehnig, who works from VF’s Jansport office in Appleton but manages international business for its Vans, Reef, Jansport, The North Face and Eagle Creek brands, said the company had a protocol in place for letters of credit, but discovered during the seminar on global banking that its practices could have lead to unforeseen problems. So, he helped to tighten those practices so that its letters of credit would be more secure as the company expands its global outreach. Jaehnig said the company has taken steps to expand the exposure of some of its popular brands into central and South America in recent years, which led him toward the course and the eventual certification.

“It was nice that they covered all areas of international business,” said Jaehnig, who noted that even though he doesn’t have certain responsibilities internationally like marketing or managing operations, it’s helpful to know how each component of international business fits into the bigger picture, which is especially helpful to a company moving into international markets for the first time.

“(The global business certificate program) gives them some sort of structure on where to begin and how to get started,” he said.

Navigating through the challenges of selling abroad without any help is possible, but it often is accompanied by a lot of mistakes, lost time and can often prove costly. That’s how Frank Verhagen started out when Appleton-based Pacon Corp. first began selling into the United Kingdom in 2001. Today – through the help of lessons learned along the way and outreach from the state’s international trade office – the paper converter of art and educational products ships its goods to 57 countries around the world.

Verhagen, the international sales manager for Pacon, said tariffs and regulations vary from country to country, both of which ultimately have an impact on pricing strategies and other aspects of making a sale internationally.

“Going into it, you’re not going to know these nuances right away,” he said. “You’re going to learn it as you go. There’s a huge pool of resources that people don’t even know are out there.”

Verhagen also completed the Global Business Professional program through FVTC and earned his NASBITE certification, even though he already came into the program with several years experience in international sales, freight, finance and management. He said the course helped prepare him for his certification exam, and helped identify other resources available for specific export assistance.

Leading the way

Green Bay-based Paradocs Embryo Transfer, Inc. has been on the cutting edge of bovine embryo transfer since the dawn of the industry back in the early 1980s. And since that time, it’s also become a leader in exporting frozen embryos to foreign countries where there’s a high demand for world-class, disease free cows bred in Wisconsin and the Midwest.

During the last 20 of those years, Paradocs has exported to a variety of countries, though its biggest markets continue to be Germany, Japan, and China. In 2009 the small company received one of the Governor’s Export Achievement Awards for its service to Wisconsin dairy farmers.

“We’re trying to provide a way of exporting genetics in a complicated world market,” said Dr. Scott Armbrust, a veterinarian by training and president and owner of Paradocs. “Our biggest problem is that we don’t have enough product to meet demand.”

In 2011, the company exported 2,100 bovine embryos to a handful of foreign countries. In doing so, the company has to comply with rigorous regulations from both the U.S. Department of Agriculture and the U.S. Department of Homeland Security as well as import authorities in the countries where their buyers are located. All paperwork needs to be correct, insurance needs to be up to date, and certifications and inspections need to be renewed regularly.

There’s substantial demand for more bovine embryos from the region to farmers and breeders abroad, Armbrust said, and all indication that Wisconsin and other Midwest farmers can meet that demand. The problem, he said, is working with the governments of these importing countries to allow frozen embryos from the U.S. Some simply won’t allow it, he said.

“If we can share these genetics (with developing countries), they can feed their people. They can lead better lives,” Armbrust said.

And that’s the basis for developing nations to become healthier, move into the middle class, and ultimately demand and be able to afford products made in Wisconsin and the U.S.