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Going Global

Utah Programs Give Companies a Leg Up in Exporting

By By Di Lewis

Franz Kolb knows what he’s supposed to do: “The role of government is to create the international business environment and then step back and let business do business,” he says.

It’s this attitude that helped set the stage for the boom in international trade and exporting Utah has seen in the last few years, says Kolb, Regional Director of International Trade and Diplomacy for the Governor’s Office of Economic Development (GOED).

The business-friendly State government works hard to set the stage for success and then let companies grow.

Home-grown Strengths

Ask business owners why Utah is such a great place to be and the first answer from most is a government that understands and works with business.

When it comes to exporting, there’s even more to the story. Starting with the pioneers that came to Utah, residents of the State have an underlying entrepreneurial spirit, says Miguel Rovira, Regional Director of International Trade and Diplomacy for GOED. “Utah is a predominantly entrepreneurial culture,” he says, “which is permeated by a Western pioneer mentality.”

That mindset allows Utahns to take calculated risks to achieve a greater goal.
The world was introduced to the State’s culture during the 2002 Winter Olympics, Kolb says, and it helped build international bridges. By putting Salt Lake City on the map worldwide, Utah businesses have an edge on the competition

But international awareness alone won’t cover everything. Having a large portion of the State able to speak two or more languages really gives companies an advantage. “One-quarter of the population is bilingual,” Rovira says. “That allows us a breadth that higher-population states don’t have.”

International trade, more so than domestic sales, relies on strong relationships, says Benjamin Card, President of Arlington Scientific, Inc (ASI). Having someone who can communicate with guests and export partners in their own language is a big asset.

Card moved ASI to Utah from Texas for quality of life reasons, but soon discovered the many other business perks the State affords.

One of the best advantages exporters have is how well the State government works with other organizations and the federal government to promote exporting, says Lew Cramer, World Trade Center Utah (WTC Utah) President and CEO. WTC Utah is a public/private entity that works very closely with universities, local chambers of commerce, GOED and the Economic Development Corporation Utah (EDCUtah).

“The only way we know this can work is if we collaborate, cooperate and communicate together. We really are partners with other folks here,” Cramer says.

Kolb agrees, saying, “We’re the envy of larger states that aren’t able to do that because they are too big.”

The cooperation between state and federal government is very strong, Card says, and it’s helpful to have them partner to advance international trade in Utah.

A Helping Hand

Building on an already strong foundation for international trade, GOED offers a variety of services to companies interested in exporting for the first time or expanding existing international trade activities.

Only about 3,000 of the more than 300,000 businesses in Utah are exporters. Of those 3,000, 56 percent export to only one country. That creates a two-fold mission, Cramer says. His organization works on getting companies that have never exported into the international marketplace while also taking companies that are only in one country into multiple countries.

Cramer says many people are too intimidated to try exporting and don’t take advantage of the seminars, advice, connections and trade missions that can help them make an easy transition into international markets.

GOED is in its third year of offering monthly seminars on exporting, Rovira says. The seminars are co-hosted with GOED partner agencies and provide timely, fundamental advice on international trade as well as cultural briefings for specific countries.

In addition to seminars, roundtables and other group activities, individual consulting is available.

“What’s important for companies when they go international is that they have a mentor,” Kolb says. That kind of personal advice and attention is invaluable in the beginning. Companies can get off on the right foot by getting involved with the experts right from the start.

While advice and planning is essential, relationships are equally important, Card says. Domestically, doing business is more scheduled and hurried. Internationally, it’s about understanding the culture, making connections and spending time with people.

Having a government employee making introductions confers a seal of approval that can really open doors, Card says. It provides credibility to the relationship that wouldn’t otherwise be there.

Especially in the early days of exporting, having help from groups like GOED or WTC Utah can be invaluable in finding distributors and other international support, says Richard Hendrickson, President of Lifetime Products. “Those first few steps, those first few contacts—it’s really important that you do your homework.”

Hendrickson praises the Governor’s office, saying during all the decades Lifetime Products has been in business, Utah governors have been very helpful. Not only do they provide encouragement and incentives for businesses to be in Utah, they are very willing to work diplomatically for companies.

“There’s always been a focus on and commitment to international trade,” Kolb says. “How many states have a governor that becomes ambassador to China?” But former Gov. Jon Huntsman is not the only one with an eye abroad. Kolb says all the Utah governors have understood the importance of exports and supported the work by doing things like trade missions.

Trade missions can be an invaluable asset for companies, Rovira says. “We do focused trade missions with a small enough scope that companies get the benefit.”

Positioned for Success

Utah has used its strong foundation and many export resources to set the stage for future growth. The State has more than doubled exports from $6.8 billion in 2006 to $13.57 billion in 2010. Kolb says one of the reasons Utah was successful when other states struggled was because it was strongly positioned for international business.

The hard work and pro-business planning is paying off. In 2011, Utah had its best year yet with nearly $19 billion in exports. It helps that Utah’s primary exports are in industries that are growing in price or demand.

“Our number one export sector for 120 years is primary metals—gold, molybdenum, copper—and the price is going up. And the second-leading export is high-tech products. That’s our fastest-growing area and that’s where we think our real growth will be,” Cramer says.

Utah’s exports “come from mines and minds,” he says, adding that the State’s support of tech companies is setting the State up for even greater growth in a global market.

Take the Plunge

It can be intimidating for companies to consider entering the international arena. The expense, knowledge gap and regulatory hurdles can make anybody second-guess the effort. But by making a solid plan, investigating overseas markets, asking for help and making sure the dedication is there, exporting doesn’t have to be cause for worry.

Businesses can’t see exports as just gravy, says Rovira. They have to have a solid international business plan that comes from the management level and is grounded in realistic expectations.

However, because of the help available from public and private organizations, strong government support of business, and the many advantages the State offers, the future of Utah exports is golden.

FOREIGN DIRECT INVESTMENT

In addition to sending its resources abroad, Utah has also been the recipient of international investments. The state has seen the benefit of foreign direct investment, which is a physical investment, such as factories, mines or land, from a foreign country.

The U.S. is the world’s largest recipient of foreign direct investment, totaling $194 billion in 2010. By globalizing the economy, the United States strengthens international ties and diversifies the economy.

Utah’s economy gets  the same advantage. Like London-based Rio Tinto, foreign companies with investments int the state bring high-paying jobs and more international trade, says Franz Kolb, Regional Director of International Trade and Diplomacy for the Governor’s Office of Economic Development (GOED).

The influx of jobs and payroll from foreign businesses are not only helpful because they directly bring money and jobs. Foreign direct investment also has the added benefit of increasing U.S. exports because of better access to multinational distribution networks, he says.