This article appeared in the August 2020 issue of MiMfg Magazine. Read the full issue and find past issues online.
There’s no disputing the importance of global trade and exporting for manufacturers.
With 95 percent of the population, 92 percent of economic growth and 80 percent of the purchasing power outside of the U.S., plus Michigan alone being responsible for more than $53.1 billion in 2019 exported products, exporting must play a role in nearly every manufacturer’s current or long-term growth strategy.
Numerous events have shaken the foundation of global trade in recent years. There are concerns over tariffs from China and subsequent trade restrictions. The UK Brexit led to an uncertain future for the European Union while Germany and other nations pushed back against accepting US-made products. The adoption of the new United States-Mexico-Canada Agreement (USMCA) had a positive and stabilizing effect, but many manufacturers still face a steep learning curve.
The COVID-19 pandemic and its catastrophic impact on health and the economy continues to inflict damage, forcing manufacturers to deal with closure by executive order, employee health and safety concerns, declining demand, shifting priorities and uncertain supply chains. The virus and the worldwide response to it have resulted in new relationships, new methods of communication, and new protocols and procedures — each carrying with it severe cost implications and questions about where to locate capital and how to allocate resources.
“All of these challenges, experienced simultaneously, will have longstanding impact on what manufacturers can do; but many are finding unique opportunities even in a bleak landscape,” said John Walsh, MMA President & CEO. “The brilliance of Michigan manufacturing is that we’ve never let obstacles overwhelm us or barriers block us from achieving the extraordinary. With the right resources and the right mindset, Michigan’s manufacturers can find success on the global stage.”
Thankfully, business and industry leaders with Michigan roots and a global reach have provided leadership and remain willing to share their experience to help manufacturers find success in international trade and export.
Lessons Learned from the Front Lines of Global Trade
What do U.S. manufacturers — especially those with a footprint in Michigan — have to do to be among the winners in this new world of global trade? We asked high-performing manufacturers with deep experience in trade and service on the Michigan District Export Councils that very question.
Truck Hero Company
While it is undeniable that the COVID-19 pandemic has altered the global trade landscape, many business leaders remain confident that COVID-19 will one day be just a small blip in international trade.
“International business will recover and continue its ascendant trajectory. If anything, the pandemic has shown us how integrated and interdependent the world has become,” said Yannick Greiner, Director of International Sales for the Ruggedliner brand of Truck Hero Company and an adjunct professor of International Business and Marketing at Oakland University.
Representing this leading manufacturer and distributor of quality OEM truck accessories including truck bed liners, covers, and wheel well liners, Greiner believes that they will also become more resilient even if the supply chains shorten, and that COVID-19 and new trade agreements like the USMCA could be catalysts for a re-globalization.
“Cross-border trade will come back stronger, more diversified and empowered by digitalization,” predicted Greiner. “As with any major disruption, there will be winners and losers. We need to make sure U.S. manufacturers in general, and Michigan ones in particular are among the winners.”
Manufacturers emerging on the global stage should start with “low-hanging fruit,” according to Greiner. Canada and Mexico are neighbors and part of the newly enacted USMCA. Starting within your North American family will help new exporters sharpen and hone their international business skills and gain confidence with some early “wins.” These regions can also open doors to other areas — Quebec into France and Mexico into Central America and Latin America.
“Exporters can systematically increase their overall presence in more challenging global markets, once a solid international base has been achieved,” suggested Greiner.
As a large, global manufacturer Steelcase has 13 manufacturing centers and 14 distribution locations throughout North America, Asia, Europe and the Middle East. With business in more than 80 countries in 2019, it’s not always feasible to produce each product in each region.
“A critical factor of our success has been a result of trade and exporting — our customers require a range of solutions to support their unique needs,” said David Radle, Operations Manager — Logistics for Steelcase. “Exporting allows us to leverage our scale and capabilities locally while at the same time meeting the needs of our customers globally.”
The COVID-19 pandemic has had a significant impact on regional suppliers, manufacturing facilities and logistics and made normally reliable weekly shipment intervals much more difficult to secure.
“It has also impacted our schedules quite a bit,” explained Radle. “We are now actively preparing our supply chains for future delays by pulling ahead orders, adjusting inventories, expanding our carrier/lane combinations, leveraging multiple export locations, and booking ocean carrier capacity earlier, all to ensure we have the vessel space we need with multiple schedule options.”
International exporting allows Steelcase to leverage the capabilities of its West Michigan supply base on a global level and provide the same consistency and quality products to customers all over the world.
“In times like these, you need to have confidence in your networks and contacts,” Radle suggested. “Whether those networks and contacts are a broker/forwarder, a customer, a trade association, the Department of Commerce, or an industry group, those closest to the region will have the most useful knowledge to help guide your decision-making.”
RoMan Manufacturing, Inc.
RoMan is a global supplier for special water-cooled transformers and DC power supplies. The Grand Rapids-based operation has equipment in over 120 countries across Asia, South America, the EU, Canada, and Mexico. As any manufacturer with international ties will tell you, every region carries very different challenges.
“Brazil and India have high levels of bureaucracy while China carries with it concerns about tariffs and constant mood swings in Beijing,” said Don DeCorte, Vice President of RoMan Manufacturing, Inc. “At RoMan we know that we must be an exporter in order to survive and grow as a manufacturer, but we could write a book on all the potential pitfalls.”
Deemed an essential service provider during COVID-19, the company still had plenty of barriers along the way. Safety issues, constantly changing rules, and state shutdowns have added a tremendous amount of stress to RoMan’s people and added cost to operations.
“The worldwide reopening of business and markets is going to be “bumpy” and inconsistent,” DeCorte acknowledged. “Even the best economists are having a hard time estimating how and when the U.S. and world economy will bounce back. At RoMan we know we must be vigilant and agile regarding how the “wind is blowing” in order to keep up with the constant change we expect to see for a while.”
DeCorte continued, saying that despite the many issues surrounding global trade, “we also believe that being a global supplier makes us a better company. While there are always challenges, having to compete on a world scale is what challenges us to be better. If you can bear the bumpy road, stay the course. You may find excellent opportunity to become an exporter due to your foreign competitors not being ready to serve their markets. This means doing your homework on competitors and it also means “staying out there” regarding marketing and connections.”
With nearly 60 to 80 percent of its business done through exporting, Saginaw’s B&P Littleford has made this a top priority. As a designer of mixing, drying, compounding, reacting, extracting and centrifugal separation equipment, B&P has seen great success in China, where its core businesses are growing.
The COVID pandemic has resulted in projects being behind schedule — a ripple effect of lower demand and potential shutdown carrying huge implications.
“Needless to say, this is important to us,” said Bob Lytkowski, Director of International Sales for B&P Littleford. “One area we have seen an increase in is part sales. With companies operating at lower rates, they have the time and ability to service and repair equipment. Our bookings are ahead of previous years and this has resulted in a shift of our sales efforts.”
Lytkowski advises manufacturers of all sizes to prepare for potential delays and utilize contacts in local regions to gather insight into future trade prospects from those in-the-know in the absence of a timetable related to the COVID-19 crisis.
Michigan’s District Export Councils:
Your Single-Stop Source for Export Advice
Manufacturers must also stay looped in on all the aspects of trade & exporting that could affect their competitiveness. Few resources are more reliable than connecting with fellow manufacturers and industry stakeholders.
The East Michigan & West Michigan District Export Councils are volunteer organizations that encourage and support the strengthening of American businesses through export, U.S. economic growth, and job creation. The Councils are made up of business leaders from the local community whose knowledge of and expertise in international business provide practical, hands-on consulting, educational and resource services to assist small and medium-sized businesses to grow their businesses overseas.
Jean Schtokal is an international trade attorney for Foster Swift and chair of the West Michigan District Export Council since 2014. She regulary advises manufacturers to connect with low-cost or no-cost export assistance offered by the state of Michigan through the Michigan Economic Development Corporation (MEDC) STEP grant program and the U.S. Department of Commerce U.S. Commercial Service (USCS) in Michigan.
“Currently we are trying to get the word out that now through 9/30/20 many of USEAC (U.S. Export Assistance Centers) export services have no fee at all or a significantly reduced fee,” said Schtokal. “Michigan manufacturers should act now and consider signing up for those services.”
Schtokal reminds clients of Foster Swift and those working with their regional District Export Council that “there is no getting around it or trying to ignore it – business is globally connected. That is a good thing, both for our nation and for business profitability. The most profitable products and services require even higher degrees of specialization by way of talent, materials and equipment. Frequently, the best of those things aren’t all found in one country.”
Even in difficult times, it is always the right time for U.S. manufacturers to look at global trade and exporting — it makes good business sense and is good for our economy.
“Creating the connections manufacturers need to move onto the world stage or solidify their current footing is an essential step in raising Michigan’s competitive advantage both at home and abroad,” explained Walsh. “There are plenty of resources located across Michigan and the experts your peers work with every day are here for you as well. Whether you are brand-new to international trade or an old pro, now might be the best time to gain a much-needed advantage overseas.”
For more information on growing your company’s global footprint through trade and export and to locate more available resources, contact MMA’s Brett Gerrish.