Letter from the Editor: Launchpad

R.J. King
R.J. King

At first blush, the export of domestic goods and services is impressive: In 2014, more than $2.4 trillion in products and services was sold overseas, up $760 billion since 2009, according to the U.S. Department of Commerce. Our nation’s largest trading partners are right next door, namely Canada and Mexico. Other top trading partners include China, Japan, and Germany.

U.S. exports support in excess of 11 million jobs, and small- and medium-sized businesses account for 98 percent of all such trade activity. But a closer look at the numbers reveals a startling statistic. Of the 30 million companies operating in the U.S., less than 1 percent exports a product or service (vehicles, chemicals, food, financial services, or fees for use of intellectual property, among other sectors).

While Michigan, at 1.7 percent, beats the national export average, it’s hardly a cause for celebration. If ever there was an opportunity for growth, exports offer unrealized potential for a domestic economy that has been lagging in recent years due, in large part, to more rules, regulations, taxes, and tariffs. The challenge of cultural and language barriers also plays a role in limiting opportunities overseas. So how can more companies sell their goods and services overseas at a profitable margin?

“It’s takes the right plan, the right resources, and the right approach,” says Jeff Jorge, a principal at Baker Tilly in Southfield, one of the largest certified public accounting and advisory firms in the U.S. “If it was easy, everyone would be doing it. But when you consider 50 percent of American companies that start exporting fail in the first year, it’s easy to pull back and focus on domestic sales.” 

A native of Brazil and now a U.S. citizen, Jorge is one of the nation’s foremost experts in export trading. Last June, when Jorge, founder of Global Development Partners in Troy, merged his global market advisory group with Baker Tilly, he had built up a client roster that, combined, accounted for more than $4 billion in annual revenue.

“I had worked for TRW, and was able to advance my career early on by volunteering to translate trade documents,” Jorge says. “I also spent time with Delphi, with their medical device group. Over the last 15 years, I’ve worked in Mexico, Brazil, and Spain. In 2006, I started Global Development Partners in a spare bedroom. I had a cell phone and a laptop.” 

Jorge says companies that export successfully share a few common attributes. “The main point is to develop a strategy and then execute it,” he says. “The market is out there, because American-made goods and services are in high demand — but it takes creativity, at times, and a good understanding of a particular region or country’s business and government climate.”

There’s also the work around. For example, one reason why more automakers are expanding production facilities in Mexico is to avoid direct tariffs and fees set by various countries in Latin and South America. In other words, Mexico offers a low-cost launchpad into other markets in the region. 

Other trade opportunities will open up once the Trans-Pacific Partnership between the U.S. and 11 other nations receives congressional approval, likely in 2017. Still, there’s no time like the present to realize overseas opportunities, especially when 99 percent of American businesses possess unrealized potential.

— R.J. King, rjking@dbusiness.com