After a down year in 2009, exports by Connecticut companies have grown by 16 percent so far in 2010, putting the state on track for a record year of selling to international markets.
Connecticut companies large and small discovered they can grow their revenues in foreign marketplaces and replace domestic losses during the recession. This year’s increases are part of the larger global trend in the millennium as international exports more than doubled, the dollar weakened and economies expanded in South America, Asia and Europe.
If the 16-percent increase is maintained every year, Connecticut companies will exceed their portion of President Barack Obama’s challenge made in January to double U.S. exports over five years.
“That trend will stay,” said Anne Evans, Connecticut district director for the U.S. Department of Commerce. “We’re pretty excited about recovering what we lost and then some.”
For the first 28 years of its existence, Suffield-based Metfin Shotblast Systems made 90 percent of its annual $5 million in revenues domestically, and the only international sales came from Canada and Mexico.
The past nine months turned the world upside down as the manufacturer of surface preparation equipment started pursuing markets in China, Vietnam, Ecuador and Israel. The 26-employee operation now generates half its sales from exports. That will generate revenue growth in 2010 as domestic sales are returning to pre-recession levels.
“We’re on track for a record year this year,” said George Giles, Metfin vice president of sales and marketing. “Our backlog is as big as it has ever been.”
Exports from Connecticut companies nearly doubled from $8 billion in 2000 to an all-time high of $15.4 billion in 2008, as foreign companies cashed in on the weak U.S. dollar. That record-breaking pace fell off as the national and world economies slowed in 2009, dropping exports more than 9 percent to $14.0 billion.
This year is turning out to be more than a recovery, as the $6.5 billion in Connecticut exports from January to May were up 16 percent over the same period in 2009 and 6 percent over the record pace in 2008.
International shipping of aircraft and spacecraft components continues to dominate Connecticut’s foreign selling, as those commodities account for 45 percent of the state’s exports. The sector was one of the few major commodity categories to grow in 2009.
East Hartford-based Pratt & Whitney makes about 30 percent of its $12.6 billion in sales from exports, which increased slightly in the recession year 2009, said Emily DeSantis, spokeswoman for Pratt & Whitney.
South America, particularly Brazil, is an emerging Connecticut trade partner. Guy Hatch, CEO of On Site Gas Systems in Newington said Brazil makes up one quarter of On Site Gas’ international sales, a market that grew from nothing three years ago.
One-third of On Site Gas’ $25 million in annual sales now comes from the international market, Hatch said. The company sells portable oxygen generating systems to militaries in Canada and other NATO countries; gas systems for coal and gold mining operations in China and Australia; commercial gas systems for hospitals and other operations in Brazil and possibly soon Russia and India.
“We’ve done a lot of prep work to attack those markets more vigorously than we have in the past,” Hatch said.
If Connecticut companies increase their international selling by 15 percent or more in each of the next five years, exporting will be a $28 billion industry in the state, exceeding Obama’s growth rate for the nation.
Those numbers don’t include services sold overseas, just goods that were shipped, Evans said. If the U.S. Department of Commerce included international sales of services — such as those from high-tech companies peddling software — the increases would be larger.
Trumbull-based Recovery Planner has sold its business continuity software in the past year to companies in Arab countries, Europe countries and Brazil, said George Liscinsky, senior vice president for Recovery Planner. More national governments require companies to have continuity plans in place for crisis management, and that has driven Recovery Planner’s sales.
Other than fear of venturing into the unknown, one of the biggest obstacles in international selling is finding the right representative in a foreign country to sell products and engage customers, said Richard Laurenzi, president of Prospect Machine Products, Inc., a 20-employee operation based in Prospect.
Prospect Machine is finding more business for its deep drawn stamping in Italy, particularly in the automotive parts industry. The company conducted a costly search with the help of the U.S. Department of Commerce for a sales representative and came out empty handed.
“The candidates just didn’t pan out,” Laurenzi said. “It was just very difficult.”
Still, Laurenzi said, the gains are worth the trouble. Most countries don’t have a lot of competition for deep drawn stamping — making sheet metal into three dimensional forms — giving Prospect Machine room to grow.
The company founded in 1950 with its original market limited to Connecticut and New York has grown its international revenue by 9 percent in the past 18 months.
Connecticut will take further steps to address another problem in international business: receiving timely payments from customers. European companies in particular look for more extended terms than most U.S. companies are willing to grant.
In the next several weeks, the Connecticut Development Authority will become a delegate lending authority of the Export-Import Bank of the United States, allowing Connecticut companies to take part in federal banking programs. All of the CDA loan officers will be fully trained in export lending by late fall.
“These federal programs do guarantee some payment for the companies and provide insurance against non-payment,” said Marie O’Brien, president of the Connecticut Development Authority.
