Tide Is Shifting On U.S. Exports
Wednesday, December 26, 2007
CINCINNATI -- Challenged by a troubled U.S. economy and the steeply falling dollar, a growing number of U.S. manufacturers are making up for slowing domestic sales by expanding them overseas, often with sophisticated products.
Once fingered as a prime culprit in the loss of U.S. manufacturing jobs, global business is shaping up as a bulwark against what some analysts fear is a looming recession. Some forecasters predict that the export boom will allow the United States to cut its huge trade deficit.
An expanding foreign appetite for capital goods such as tractors, medical equipment and electrical machinery is driving much of the boom. Much of that growth is in China, the fourth-largest export market for U.S. goods, where U.S. sales are growing 17 percent this year, according to federal officials. In the first nine months of this year, sales of U.S. aircraft to China are up 30 percent and plastics are up 37 percent.
There also is increased international demand for complex niche products for which "made in the U.S.A." remains shorthand for reliability. "These are the kinds of things for which the U.S. continues to hold a lead in know-how," said Erin Ennis, vice president of the U.S.-China Business Council.
Tedia Co., a business based in suburban Cincinnati that makes chemicals used in laboratory testing, has transformed itself to meet that demand. Not long ago, its small cadre of chemists, lab technicians and stock employees did all of their work for a huge domestic firm that needed high-purity solvents for laboratory use. The business model was crafted by Tedia's late founder Moon Su Park, a chemical engineer who launched the company in 1975. It worked well for 15 years but left the new generation of company executives worried that the firm's fate was in the hands of one big client.
Back in 1990, "90 percent of our business was under someone else's name. That is not the kind of position you want to be in as a company," said Tedia President Hoon Choi. That's when Tedia decided to look abroad. Now, sales are expanding rapidly in China and Brazil -- places where the firm did not even do business 15 years ago. Overall, exports account for half of the company's business, and the company has doubled its number of employees to 70 since 2003.
The chemicals Tedia makes are critical to things such as DNA- and water-testing that require pure solvents to isolate the contaminants in the substances being tested -- quality that company officials say few firms outside of the United States, Canada and Europe can provide consistently.
"As some of these developing economies have grown, the demand for our products have grown as well," said Chris Dendy, Tedia's sales and marketing manager.
Tedia is in the middle of building a new 40,000-square-foot warehouse across the street from the company's headquarters, and the firm is anticipating 20 to 25 percent growth in each of the next two years.
"For a long time people thought of globalization only as the loss of jobs," said Elliott Howard, who fills and labels the brown bottles of chemicals distilled in Tedia's eight large stainless-steel stills. "Now, I think of it as expanding the company."
A similar transformation is evident at another Ohio company, Richards Industries, which makes precision valves.
When Bruce Boxterman made his first visit to a trade fair in China in the late 1980s, he became convinced that the potential for his company in China was vast. "You'd go in a store and see shirts on the shelf without any packaging . . . the general lack of developed infrastructure," said Boxterman, now president of Richards. The companies that manufacture such commodities are the clients who now buy Richards valves.