The Importance of Exporting
By: Rich Rovito, Content Specialist for Wisconsin Manufacturing Extension Partnership
Exporting is an important, an often overlooked, option for Wisconsin manufacturers and other companies of all sizes looking to grow and diversify their businesses.
“It’s not only large companies that benefit from exporting. Small and mid-size companies are learning about exporting and are experiencing extraordinary success by expanding their markets and competing internationally,” said Roxanne Baumann, Director Global Engagement for the Wisconsin Manufacturing Extension Partnership.
With 95 percent of the world’s consumers located outside of the United States, exporting can be a profitable endeavor for businesses that want to expand, said Baumann, who recently was honored by the National Association of Small Business International Trade Educators International for her efforts to advance international trade.
Exporting tends to boost the value of a company while providing a diversified revenue source. It’s also an important option in bringing new products to market, she added.
To begin reaping the benefits of exporting, companies need to take the following steps, which the WMEP classifies as the 5 Ps:
- Develop a PLAN, regardless of whether a company is currently exporting, with the aim of benefitting from a potential boost in revenue tied to shipping products to foreign markets.
- Understand the PROCESS for creating increased revenue through exporting.
- Identify a company’s best in-demand PRODUCT and determine whether it, or other items, have the best chance of export success.
- Determine which PEOPLE need to be involved, whether it’s internal personnel or channel partners.
- Find and work with knowledgeable PARTNERS
Wisconsin businesses exported $22.3 billion in goods and services to 202 countries in 2017, a 6.1 percent increase over 2016. The state’s export growth in 2017 stemmed from significant increases in shipments to Canada, Mexico and China, the state’s three largest export destinations.
Industrial machinery continued to be Wisconsin’s top export product category at $5.4 billion, accounting for 24 percent of all state exports. Tied for second were electrical machinery and medical and scientific instruments, both at $2.2 billion – and each garnering 10 percent of the total exports.
Programs like the WMEP’s ExporTech have assisted Wisconsin companies in growing their businesses through exporting. Graduates of the ExporTech program have achieved sales increases averaging $900,000 within six to nine months after completing the program.
ExporTech guides executives through the process of building an export expansion plan.
“We bring in resources that are pertinent, valuable, and well-referenced,” Baumann said. “We customize the approach with individualized coaching and the final plan is vetted by real-world exporters.”
Exporting wasn’t new to Waukesha manufacturer Hydro-Thermal Corp. when it attended ExporTech. In fact, the company has been successfully shipping its products to foreign markets since 2000. However, the program offered an added boost to Hydro-Thermal’s business outside of the United States.
“This is a case of a small manufacturer that came to ExporTech to broaden that knowledge and develop an export expansion plan with a wider engagement of the leadership team,” Baumann said.
Hydro-Thermal develops and manufactures hydroheaters used in a variety of industries to precisely and efficiently heat water and process fluids. About 30 percent of Hydro-Thermal’s business is in foreign markets.
Exporting has allowed Hydro-Thermal to grow and to diversify while also creating a safety net of sorts, so that when business in one country isn’t going well, the company can rely on another market, thus providing greater overall stability for the business.