The national approach to international trade policies is in a major state of flux. At the same time President Obama is targeting a doubling of exports in five years, he is also looking to consolidate the many national agencies which support the exporting community.
Conversely in Connecticut, the new Malloy administration and its newly appointed commissioner of economic development have an opportunity to review the activities of the International Division and determine a new course of action that will lead to economic growth here in our state.
Exporting is a complicated activity which requires, first and foremost, the strong personal commitment of the business owner and or CEO. Long before a company can export, it must prepare itself to address a number of important issues including the competitiveness of its products, a foreign market analysis, its entry method, legal issues, product support, financial terms and risks.
While the typical exporter will need to obtain professional and legal advice both here and abroad, the local and overseas employees of the U.S. Commerce Department are the provider of many key resources: a database on foreign markets by industry; export control regulations and help searching for local representatives.
But not all companies have access to the services of the Commerce Department. Typically only companies which have prior exporting experience or fall in the range of 50 to 400 employees are serviced.
The International Division of the State of Connecticut also supports the export activities of local companies. Of late, their efforts, greatly diminished by cuts in staff and travel, have focused on the sponsorship of two global trade shows: the Aerospace Trade Show, which alternates between London and Paris, and the Medica Trade Show in Germany. Both these events are worthwhile activities which focus on support of two key economic clusters of our state economy and should be continued.
I see two major issues which require the attention of the new commissioner of DECD:
1. Develop a strategy designed to recruit foreign companies into Connecticut;
2. Identify resources that will support the export activities of companies with fewer than 50 employees.
In the 1970’s, under the leadership of Commissioner Stockton, Connecticut began a major effort to recruit foreign companies into our state. The results were outstanding and the great majority of the over 1,000 companies owned by foreign parents based in our state and which provide close to 100,000 well paid jobs, were recruited during those years. None of this would have been possible without the strong support of Gov. Ella Grasso first and her successor, Gov. Bill O’Neil.
I would hope that new efforts are undertaken to make our state once again a force to be reckoned with in the recruitment of foreign companies and that Governor Malloy and Commissioner Smith will allocate more human and financial resources to this endeavor. And specifically, I would challenge the Malloy administration to commit itself to the objective of recruiting one foreign owned company as part of its “ First Five” economic initiative.
None of this will be possible unless we have the human resources and travel budget that will allow DECD’s staff to visit companies in their countries and to sell Connecticut.
The second challenge is more difficult to address but could provide significant longer term returns. Estimates indicate that some 80 percent of Connecticut-based companies have fewer than 50 employees. While it is true that small retailers make up the largest portion of this number, it is also true that the number includes many small manufacturing and services companies which could indeed export. These small companies don’t receive much organized support from federal or state agencies. Allocation of significant human resources to this endeavor is not expected given the financial difficulties in our state and so we have to find a better way to accomplish this worthwhile activity. I would propose that we utilize Small Business Development Center’s for this purpose.
The SBDC is a collaboration of the U.S. Small Business Administration, the Connecticut State University System, public and private partners throughout Connecticut. It provides a wide array of management and technical assistance to business owners and entrepreneurs. I would recommend that SBDC be required to maintain on staff, from its total current allocation, at least two individuals who have the ability to provide export assistance to companies with fewer than 50 people and new to exporting. Integrating export support activities into existing small business support functions will allow for an efficient and effective outreach program.
According to U.S. Commerce Secretary Locke, “only 1 percent of American companies export. Of those companies that do, 58 percent only send their goods and services to one market.”
Germany, a country with 82 million people exports annually approximately $1.3 trillion, a per capita export of $ 16,000, while the U.S. with a population of 311 million exports approximately $1.2 trillion, a per capita export of only $4,100.
A doubling of our per capita exports is indeed possible but can only be achieved through greater participation of small companies. Let us start to provide the support they need.
Paul Pirrotta is president of Paul Pirrotta International in Glastonbury. He writes frequently on international trade issues. Reach him through the company’s website at: http://italy-usatraderep.com/aboutus.html
