Small Items From Small Towns Are Now Big Part of US Exports
Every year, Detroit exports thousands of cars. Silicon Valley sends abroad billions of dollars in computer chips. But whose exports rose the fastest last year?
Small-town America's. Places like La Crosse, Wis., and Florence, S.C., are jumping boldly into world markets. This diversification should help stabilize America's up-and-down trade figures. It also means the United States is selling some unexpected things abroad.
Like window screens.
"There's so much need out there," says Darrell Raubenstine, standing in front of a world map in his office in Hanover, Pa. (population 14,936). "We could put people into every country."
Nine years ago, Hanover Wire Cloth hired Mr. Raubenstine to sell its screens abroad. Working alone at first, he attended foreign trade shows and began drumming up sales in Europe and Asia. Today, business is booming, especially in Asia.
The company's factory runs round-the-clock six days a week. Its international department, now seven strong, sells products in 35 countries. Foreign sales reached $9.4 million, 16 percent of the company's total revenues in the last fiscal year, and Raubenstine expects even bigger sales this year.
Nor is Hanover Wire Cloth alone in its exporting zeal. Raubenstine ticks off three other small- and mid-size companies exporting within 10 blocks of the factory.
As part of what the US Census Bureau calls the York, Pa., metropolitan area, this region has seen merchandise exports rise 29.5 percent over the last two years. That's respectable, but hardly remarkable. La Crosse, Wis., grabbed the top spot with a whopping 197 percent growth in exports in 1995 alone, according to a report last month by the US Commerce Department.
Other small metropolitan areas easily beat out much larger cities in export growth. In fact, of the top 25 export-growth areas in the Commerce Department's study, only the Buffalo and Memphis metro areas had populations over 1 million people.
Reasons for the trend
In some ways, small metropolitan areas have a built-in advantage over their larger siblings. If they haven't sold much abroad in the past, then even a relatively small increase in exports can mean dramatic growth rates. For example, if you combined the total sales last year of all five export-growth leaders, it would still represent less than 4 percent of what Detroit, the top-dollar exporter, sold abroad last year.
The numbers can also be skewed if a large multinational corporation locates a big branch in a small town. In addition, the statistics show where the export sales were finalized, not necessarily where the exported goods were made, economists warn.
Nevertheless, a closer look at some of the stand-out communities suggests that statistical anomalies can't explain away the small-town export phenomenon.
"Everybody has export potential," says Georg Mehl, a senior international economist at the Commerce Department.
La Crosse, for example, not only took the top spot for one-year export growth in 1995, it took second place behind Florence, S.C., when measured over a two-year span. Part of the area's trade success stems from big companies such as Allied Signal, which makes plastic film and sheet products in La Crosse. Other exporters are smaller, including Trane, which makes commercial heating and air-conditioning systems; a plastic molding and trimming manufacturer; a maker of fabricated sheet and plate metal; and a rubber-shoe company.
Then there's Ameen Ayoob, president of 35-employee Indus International, which makes microfilm and microfiche readers. This technology is pass in the US. But overseas demand is strong, especially for a full-screen microfilm reader that Indus launched three years ago, which can handle not only newspapers but also genealogical records. "The economies of the other countries are better and they're buying more," Mr. Ayoob says. Nearly half the firm's sales go abroad.
Another reason La Crosse is doing so well is the help it gets from state and local economic-development agencies. "Part of our success is that the state has been a good tool" for increasing export awareness, says James Hill, executive director of the La Crosse Area Development Corp.
Of course, not all the county's 2,695 companies export. Many are one-person operations and retailers tied to the local area. But of those companies capable of exporting, Mr. Hill estimates that 15 to 20 percent sold abroad in 1990. Today, he says, the figure could be as high as 40 to 50 percent.
It is still true that the bigger a company is, the more likely it is to export, says Rodney Erickson, dean of the graduate school at Pennsylvania State University at University Park, who has studied the issue. Companies with fewer than five or 10 employees hardly export at all, he says, while those with 50 workers are a lot more likely to sell abroad. Companies with 500 to 1,000 employees are more likely still, but after that the trend levels off, he adds.
Building on domestic strength
"Exporting really takes place from a position of strength in the domestic economy," Mr. Erickson says. Once they've succeeded in the US, then they're ready to sell abroad.
And that seems to be exactly what mid-size companies like Hanover Wire Cloth are doing. Thanks to two major equipment upgrades in the past five years, the company now turns out wire screening in metric widths as well as inch widths, and in nontraditional colors that foreigners seem to love (gold for the Philippines, green for Europe, black for Australia and Canada).
And there's plenty more virgin territory for screening companies. "China," Raubenstine says, "we're just barely touching."