Hochberg: We could do better at exporting

When one thinks about the United States’ economic peers, the nations of Rwanda and Haiti likely would not come to mind. But the countries are similar when it comes to how much of the nations’ GDP comes from exporting. Despite the U.S. figure being at its highest level ever, exports account for only about 14 percent of U.S. GDP.

When one thinks about the United States’ economic peers, the nations of Rwanda and Haiti likely would not come to mind.

But the countries are similar when it comes to how much of the nations’ GDP comes from exporting. Despite the U.S. figure being at its highest level ever, exports account for only about 14 percent of U.S. GDP.

And that rankles Fred P. Hochberg, chairman and president of the Export-Import Bank of the United States, also known as EXIM Bank.

“I would submit,” he recently told a Salt Lake City crowd, “we could do a little better than that.”

Speaking at the EXIM Bank Global Access Forum at the World Trade Center Utah, Hochberg said that Germany’s exports are 52 percent of its economy, China’s are about 32 percent, the United Kingdom’s are 30 percent and Korea’s are 15 percent.

Hochberg’s visit was, in part, to highlight how the EXIM Bank can help Utah small businesses to sell their goods and services globally. The federal agency, which provides export financing and works to reduce exporters’ risk, supported $5 million of Utah exports in fiscal 2015, with nearly 90 percent involving small businesses.

Hochberg stressed that a growing global middle class represents an opportunity for U.S. exporters.

“The global middle class is growing at a rate we have never seen, and why is that important? Because, in the United States, products and services we make are essentially selling to that global middle class.”

For example, Bangladesh, a country with 160 million people, in a few years will have 33 million middle-class residents.

“What do they want? They want something we take for granted: electricity 24 hours a day, seven days a week. They want transportation, they want a better diet, they want better medical equipment and better medical treatment — all the kinds of things that we sell and supply,” Hochberg said.

“So the growing middle class has a huge potential for the United States, and they very much want to buy ‘Made in the United States.’”

Hochberg emphasized that business opportunity lies with foreign markets, where 95 percent of the world population lives, and suggested that Canada and Mexico are “a nice place to start” for new U.S. exporters.

“This is a good time — an ideal time — to be looking at how do you capture those customers that live outside of our borders,” he said.

And for the U.S. as a whole, boosting exports as a percentage of GDP has several benefits, he added.

“[If] we do a little bit more exporting — we get that from 14 or 15 percent — and we do a little less consumption, what do we do? We put more people to work, we fix the balance of trade, we fix a whole of things in our whole society, our whole economy, [that] fall into line with just a little more exporting,” he said.

Utah has seen steady export growth the past few years. Exports last year reached $13.38 billion, up $1 billion, or 8 percent, from the prior year. With a strong U.S. dollar, and violence and terrorism around the world, “when you consider those external factors and then think about the fact that we increased exports in this state by 8 percent, it is quite remarkable,” said Derek Miller, president and chief executive officer of the World Trade Center Utah.

“If you can increase your business 8 percent a year,” Gov. Gary Herbert said, “you know you’re doing something pretty good.”

Ninety-five percent of Utah exporters are small businesses. Utah exporting directly supports 100,000 jobs, and when induced jobs are added, exporting supports 22 percent of the state workforce.

Herbert said Utah companies are exporting to more than 200 countries. Utah “hosted the world” during the 2002 Winter Olympic Games, “and now what we’re saying is, let’s take Utah to the world,” he said.

During a forum discussion about exporting, panelists described obstacles to international trade. For example, Dan Maybey, chief business development officer at Code-Jet Inc., said that in China, some “private” companies are owned by the Chinese government. “They get preference; they get opportunities; they don’t have the same duties, tariffs and barriers we have, and so that happens all over the world,” he said.

Maybey stressed that U.S. companies need specialized business plans for specific markets. Opportunities abound in India, for example, which has a bigger middle class than the U.S. population.

“So, get ready to get beat up a little bit,” he said. “Don’t be shy. Don’t be afraid to work in the wrong time zones. Engage those marketplaces and it’s a lot of fun.”

Tarek Mango, managing director of Mango Enterprises, said “doing international business and trade is not for the weak of heart.” Exporters need to know their partners and distributors in foreign countries and understand the markets. For example, in the Middle East, where his company represents 72 brands, things happen slowly and methodically.

“The point is,” he said. “if you’re going to basically export to international markets, do your homework.”

The forum was hosted by the EXIM Bank, the World Trade Center Utah, the Salt Lake Chamber and the Governor’s Office of Economic Development.