Every country in the world trades to some extent, none more than the U.S. Yet while their country is the largest importer and exporter, involving a whopping $2.3 trillion in goods and services last year, some Americans aren’t aware of what an important role trade plays for that business just around the corner.
Trade is often perceived as the domain of multinationals, exchanging shipping containers worth of goods across the ocean. Yet in fact, America’s small businesses make up the vast majority of overseas sellers.
Similarly, many people may not realize that their local museum functions as a sort of trading hub, since the money tourists spend in the gift shop actually counts as a U.S. export. And while imports are sometimes perceived as a threat to U.S. manufacturers, the fact is that over half of all goods brought into the country as used as components for American-made goods.
Bottom line: Trade is a critical, yet often misunderstood, part of the U.S. economy. To help put some light — even a face— on the issue, we’ve compiled some stories from entrepreneurs involved in trade.
Exports as Engine of Recovery
When the Great Recession hit in 2008 and U.S. consumers tightened their purse strings, many once-thriving businesses faced a start choice: cut back on expenses and staffing, or look for new sources of demand for their goods and services.
Geotech wasn’t the only U.S. business to tap into external markets to take up slack during the recession. From mid-2009 through the end of last year, exports accounted for a third of U.S. economic growth. More importantly, the number of jobs supported by those sales grew by 1.6 million over that period, to 11.3 million.
America is in the midst of a manufacturing renaissance. It may not produce — or export — the same type of stuff it used to, but U.S. manufacturers continue to lead in a range of technologically advanced goods and services. Analytical Graphics Inc. (AGI) of Exton, PA is doing its part to support the resurgence in American innovation, developing software for tasks such as identifying space debris and tracking satellite orbits.
“Expanding our product offerings to foreign markets has really helped to grow our business,” says Paul Graziani, CEO of AGI. “In turn, we have been able to create more high-tech, high-paying jobs,” Indeed, since export-intensive industries tend to invest heavily in technology and capital, they pay about 13 percent to 18 percent more on average than jobs not involved in exports.
A Little Know-How Goes a Long Way
Beyond the transition toward more advanced manufacturing technologies, the U.S. has become a knowledge economy in other ways, as well. In fact, American innovative services — from IT and finance to entertainment — are increasingly in demand worldwide.
Just ask Kinetic, which over the past four decades has evolved from a digital imaging company to an international provider of a range of globalization and translation services. The latest innovation from the Louisville, KY-based business is a centralized software translation platform being used by companies in 40 countries. “In an environment where translation services are considered a commodity, we applied innovation,” says Scott Carothers, senior globalization executive at Kinetic.
Due in part to the success of businesses such as Kinetic, the U.S. sells a lot more of its services than it imports. That trade surplus in services, which increased by $26 billion last year due to record-setting exports, helped to offset some of the deficit in oil and manufactured goods. Every $1 billion in services exports is estimated to support about 4,000 U.S. jobs.
Exporting is Small Business
It may be easier to trade if you’re an international conglomerate operating in dozens of countries, but that hasn’t stopped America’s small businesses from getting into the game.
Jenny Fulton and Ashlee Furr certainly weren’t going to let a little global competition intimidate them. After losing their jobs in the financial industry in 2009, the duo decided to take their fate in their own hands, launching Miss Jenny’s Pickles on the strength of a family recipe.
After knocking on the doors of independent grocers to sell the pickles they made at the local YMCA in Winston-Salem. N.C., Fulton and Furr expanded quickly — more than 800 stores carried Miss Jenny’s Pickles by the end of 2012. Yet they weren’t satisfied, taking the leap to start selling to China.
“Trade is crucial to our success — 95 percent of the world lives outside of the United States,” says Fulton, who is also expanding to Canada, Hong Kong, and Germany.
She’s not alone in recognizing that the global market offers a lucrative opportunity for small businesses. Of the 300,000-plus U.S. companies that export, about 98 percent are small or mid-size companies. Exports from these smaller businesses are growing rapidly, rising more than 40 percent from 2009 to 2011, and now account for a third of all U.S. goods exports.
As Fulton explains it, “The world needs North Carolina goodness in a jar.”
It’s hard to argue with that fact.