Officials hope export plan will help involve small businesses

The state of Utah is “probably average” when it comes to exporting, but a plan to boost Salt Lake County exports contains a goal to help more small and medium-sized Utah companies get into exporting sooner.

The state of Utah is “probably average” when it comes to exporting, but a plan to boost Salt Lake County exports contains a goal to help more small and medium-sized Utah companies get into exporting sooner.

Salt Lake County Mayor Ben McAdams and Derek Miller, president and chief executive officer of the World Trade Center Utah (WTCU), say two approaches to growing exports that are contained in the recently released Salt Lake County Regional Export Plan are diversifying the export portfolio and introducing more smaller companies to the world of exporting.

“We all know about Rio Tinto, we all know about Boeing, we all know about Fresenius and we know about these great tech companies that are involved in exports, but the world we live in today, it’s never been easier for small businesses to get involved in exporting, primarily when you think about e-commerce platforms,” Miller said during a briefing to the Governor’s Office of Economic Development (GOED) board.

Miller said many local companies are exporters but don’t consider themselves exporters. Many get into exporting by simply completing an order for a product to be sent overseas. “We want them to be a little bit more targeted and we want them to be a little bit more proactive and we want them to be a lot more successful,” he said.

Utah annually exports $13.5 billion in goods and services. The figure was $12.6 billion in 2014, putting Utah 30th among states. The Salt Lake City metro area had a $11.4 billion nominal export value in 2014. The county accounted for $10.24 billion, or 47 percent of Utah’s export activity. Sixty-either percent of the county total involved goods and 32 percent were services.

McAdams said Utah’s exporting advantages include people with strong language skills and an entrepreneurial climate that’s export-focused, especially among tech startups.

“We have such a great success story but I think there’s some low-hanging fruit where we can even be better in,” he said about quickening the timeline for smaller companies to become exporters.

“A lot of these small startups are just trying to keep their doors open and bills paid and things going, and to figure out the international regulatory climate for exports, they don’t have the time for it,” he said. “So I think that’s the case, if we can centralize some of that learning and bring them pre-packaged, export-type proposals that would just make them easy — like turnkey for them to export — we can help the survivability of our startups and help them to grow their companies and grow their exports even more.”

The export plan is part of the Global Cities Initiative, a joint project of Brookings and JPMorgan Chase. Among the report’s findings are that one-third of the region’s export portfolio is from primary metals, businesses are content with the domestic market and exporting is an afterthought, smaller regional companies have higher barriers to exporting, advanced industry clusters in the regional economy produce higher wages for workers, export support services are not understood and opportunities go unrecognized, the region has a multitude of available hard and soft assets to support export-related activities, and middle market firms represent strong potential for export growth.

Among the plan’s strategies for boosting exports are to identify and expand global competitiveness for middle market threshold exporters, create a global positioning strategy for targeted advanced industry clusters, expand and use the established export services ecosystem, build innovative mentorship opportunities for existing regional businesses, and enhance and improve the region’s transportation and freight infrastructure.

McAdams said Brookings has selected Salt Lake County to also develop a plan to attract more foreign direct investment.

Regarding exports, McAdams said “we stack up really probably average.” About one-third of Utah’s exports are primary metals, mostly from Rio Tinto.

“We believe that that is maybe an outlier,” he said. “While we’re certainly lucky to have that export infusion into our economy, it’s something that only within reason that we can control some of that fate of that. It really is more controlled by global minerals prices [and] global metals prices and the ebbs and flows of that.

“We believe that we need to build an export strategy, exclude the mining-related exports as maybe an outlier of our data, and once you’ve excluded that from our data, we’ve got some catch-up to do on our export strategy plan.”

“That’s great,” Miller said of the Rio Tinto contribution to exports, “but there’s not much that we can do to influence the price of gold or silver or copper or any other primarily metal on commodity markets. So we’re glad that we have it but we recognize we need to diversify.”

The next steps in the export plan process is implementation, where WTCU will take the lead role, supported by the county and likely third-party resources.

Both Miller and McAdams acknowledged that international trade has become politically charged, with neither of the presidential candidates favoring international trade agreements.

“Trade in general is sort of taking a beating in today’s political environment, which I think is unfortunate,” Miller said. “And often you hear the refrain — and, this was pointed out, from both sides of the political aisle — that the U.S. is getting killed when it comes to trade. That may or may not be true, but what I can tell you with certainty is that Utah is not getting killed when it comes to trade. In fact, Utah is killing it when it comes to trade.”

“It’s disappointing at the national level from, I think, both parties,” McAdams said of the trade agreement opposition. “The trade deficit is a problem — it’s not a problem in Utah but the national trade deficit is a problem — but the approach of saying, ‘We’re going to put our fingers in the dam of trade to reduce the deficit’ will harm us, and you’re not going to stop it anyway. To rebalance the trade deficit by growing exports is really the way to tackle that problem.”

Part of the export plan development involved surveying 45 companies, and nearly 60 percent of them do not consider themselves exporters. Many told of barriers to international trade, including foreign government regulations and policies, global sales contracts and a lack of export knowledge. Several companies had no desire to export. Lack of profitability was a commonly mentioned export barrier.

The report notes that firms that export goods and services pay about 18 percent higher wages, have lower unemployment levels and experience increased worker productivity, among other benefits. The report also indicates that increased exporting activity accounts for nearly 6,000 jobs created for each $1 billion in export value, and predicts that most future GDP growth will occur outside and U.S., with the world’s purchasing power being “significantly larger” than the domestic market.

The plan is available at www.slco.org/regional-export-plan.