How Government Can Help Manufacturers Export, Part 1

The vast majority of small- and mid-sized manufacturers (SMMs) do not do market research or written business plans. So how can government agencies help SMMs export?

By MIKE COLLINS, Author, Saving American Manufacturing

In 2009, President Obama set a goal of doubling exports in 5 years. The President portrayed his initiative as a boon for small companies. The large, publicly held companies are already exporting or have built plants in overseas markets. And, less than 4 percent of all service businesses export, according to the Small Business Administration. So, I am assuming the goal is really to assist small and midsize manufacturers (SMMs) to increase exports.

In the mid 1990s, I did a survey of small and midsize manufacturers who had completed a 20 page audit form for the Manufacturing Extension Partnership (An organization in the Commerce Department dedicated to improving competitiveness of manufacturers).  When asked “When was the last time you conducted market research?” 70 percent of the manufacturers answered “never.”  We also asked them if they had a written business plan that defined the company’s marketing strategies and 90 percent said “no.” These answers confirmed my own experiences and field work with manufacturers all over the U.S.  Any government program that wants to help them export should know that the vast majority of small and midsize manufacturers (SMMs) do not do market research or written business plans. So the question how can government agencies help SMMs export?

Jason Stoeker is the CEO of Airfloat LLC, which is a Manufacturing company in Illinois that manufactures an air bearing product that moves large products around the assembly floor for companies like Boeing, Caterpillar and Ford Motor Company. When I called Jason he had just come back from a long trip in Europe and from developing a partnership deal with a company in Italy.

Jason has found many of his foreign market opportunities by following many of his U.S. customers overseas.  His customers are often large American Manufacturers like Case Holland who build plants and set up sales offices in foreign markets.

He feels the best way to market his type of products into foreign markets is to look for potential partners. Specifically, Jason looks for similar companies who will distribute his products in foreign markets and he will sell their products in the U.S.  The partnership can be in the form of a licensing arrangement or joint venture.

I asked Jason if he had used any of the government agencies that want to help American manufacturers export. He said that he had tried to get government help but there were two big problems. First he said that there were too many government departments that were in the export business and it took a lot of networking time to find someone who could help him with his specific export problems. He also said that the answers he got from government agencies were too general and did not boil down to something that would help him get immediate orders.

Jason went on to explain that manufacturing companies below $30 million really do not have the people to either do market research or to interpret research results. To justify exploring foreign market they need to have a good chance of getting a good quotation and/or order from the visit.  That is why many SMMs want to attend foreign trade shows.

SMMs are action-oriented and they don’t like attending seminars or doing market research.  They want to visit foreign countries but visiting foreign countries is expensive.  Jason says “the fact is that if a company spends the time and money exploring foreign markets they will need orders to justify the expenses.”

Therefore, he feels that there are two ways the government can help them in exporting.  First, the government should spend more time and money helping the SMMs to protect their technology and intellectual property. Second, the government should invest their resources helping to offset the costs of visiting foreign countries and attending trade shows.  For instance, the state of Illinois paid for 50 percent of his travel expenses and his trade show booth costs when he visited Germany and England.

Jason summarized his thoughts by saying “most SMMs simply do not relate to seminars, research or export planning.  They are much more interested in the services and assistance that gets them closer to getting orders.”

What’s your take? Please feel free to comment below! Please tune into the Chemical Equipment Daily for part two of this two-part piece.