Going Global
From hydraulic valves for a giant Ferris wheel in Shanghai to a swimming pool filter in the south of France, products made in Sarasota and Manatee counties are finding their way around the world as local businesses cash in on the globalization of markets.
Export figures from 2004 to 2006 provided by Enterprise Florida, the state’s economic development agency, reflect a 33 percent jump in sales of products that originated in Florida. The total value of Florida-origin exports in 2006 was more than $38.5 billion.
Although comparable figures are not available for the Sarasota-Manatee market, signs point to strong international sales for area manufacturers and service providers with global niches.
“With the weaker American dollar, the upside is that it makes American products much more attractive to foreign purchasers. We’re looking for a very, very big increase in exports,” says A. Bronson Thayer, a Tampa Bay area banker and chair of World Trade Center Tampa Bay, a regional booster organization and resource broker for international trade.
At Port Manatee, where imports typically outpace exports substantially, exports increased 47 percent year-over-year for the period from October through April, according to Steve Tyndal, senior director of trade development and special projects. Citrus products, passenger cars and road-building equipment are key commodities reflected in those export numbers.
Supporting the Florida export growth trend are government agencies and private-sector booster organizations that would like to see Florida exports gain an even greater share worldwide. Enterprise Florida and World Trade Center Tampa Bay are two such organizations that offer trade missions, educational programs, advice and support services (see sidebar, page X). The U.S. Department of Commerce, through its Tampa Bay U.S. Export Assistance Center, does the same and recently received funding to re-establish data tracking for trade in specific Metropolitan Statistical Areas like Sarasota-Manatee. The center also is planning a Sept. 27 seminar in Sarasota on financing for international trade.
At a local level, the Greater Sarasota Chamber of Commerce has welcomed a previously existing group into the Chamber’s fold. The International Business Council (IBC) was formed in 2006 and boasts heavyweight sponsors including the Abel Band law firm, Kerkering Barberio, CPAs, the Sarasota Bradenton International Airport and the Economic Development Corporation of Sarasota County.
“We’re trying to become a resource to help people get into international business or expand their foothold internationally,” says LandMark Bank’s Tom Quale, who chairs the IBC. “We have dozens of company representatives who are active and attending the meetings.” Among them are Stakenborg Fine Art, i tesori Gifts and Home Furnishings from Italy, Mandala Medi Spa and Esprix Technologies.
In addition to the new IBC, local economic development organizations serve as resource brokers for area businesses and provide “certificates of origin,” an official document used in exporting goods.
Simply exploring the opportunities offered by international markets can be eye-opening for traditionally U.S.-focused companies.
“One of the main obstacles to more international trade is unfamiliarity. People aren’t aware that this opportunity exists, and they don’t know how to go about it,” Thayer says. “But some companies get more than 50 percent of their business selling overseas.”
Sun Hydraulics
Manufacturing hydraulic cartridge valves used to control force, speed and motion in machinery and equipment.
Ejection seat? No one would ride the giant Ferris wheel in Shanghai. Towering above the cityscape, the massive wheel had a reputation for tossing passengers from their seats as it lurched to a stop. Enter Sun Hydraulics, a manufacturing company that straddles the Manatee-Sarasota county line with two facilities. “Links [Sun’s representative in China] made a package that bolted on the existing system to control the deceleration,” says Allen Carlson, who is listed in the public company’s annual report as president and CEO, although Sun is famous for eschewing corporate titles. “That’s our approach to going into new markets: We don’t look at what the competition is doing and ask, ‘How can we do that better?’ We look for problems and develop solutions.”
Sun rising: In the first half of 2007, Sun’s international sales overtook domestic totals for the first time. The company’s sales by world region: 52 percent Americas; 30 percent Europe; 18 percent Asia. “The way Sun has grown internationally is that we look at markets that appreciate entrepreneurism, technology, creativity. In those markets we do well,” Carlson says. The United States, Germany, Japan, Scandinavia and Italy are no-brainers. “Some countries are emerging that you wouldn’t have thought of as entrepreneurial, like China. They aren’t capitalist, but they are entrepreneurial. The [Chinese] government has been a drain on moving forward, but that is changing. Our operation in China has 35 employees, and we intend to grow.” Carlson says the company plans to establish a beachhead in India by the end of 2007.
What price politics? “We made the public announcement of starting a company in France during the Iraq war when the French decided not to participate—remember when [U.S. restaurants] renamed French fries?” Carlson says. “We got a fair amount of nasty letters from investors and prospective investors, but we felt there was an opportunity to grow our business, and it has doubled [in France] in the last five years and will probably double in the next five.” One of Sun’s primary markets in France is the wine industry, which relies on hydraulic valves for harvesting equipment.
Catching the wave: Carlson predicts that a major emerging market for Sun’s products will be related to alternative energy, particularly windmills, solar panels and ocean power (producing electricity with wave farms). In the North Sea off of Scotland, scientists envision a network of submarine tubes that snakes and pulses with wave action, compressing fluid to generate power that will be stored and then released in a controlled way to produce electricity. “We play an important role in making that work,” Carlson said. When fully operational, the world’s first wave farm, off the coast of Portugal, will generate enough power for 45,000 homes, he says. “There are some very high-end, sophisticated uses of our products.”
Mind over matter: “The biggest obstacle (to doing business internationally) is the mindset going in that you can’t operate in that space, that it’s too remote, or we are too small of a company,” Carlson says. “Sun went international when it was a $5-million company. You do it to survive, or you don’t survive long term. Most companies can’t operate with just being a U.S. company.”
Flight Source International
Brokering corporate aircraft sales and acquisitions worldwide.
Money no object: The prospective buyer wanted to see the $28-million Gulfstream IV jet with the standup cabin, full galley and leather seats, but the jet was in Houston and the prospect was in Bermuda. No problem. He was willing to foot the $28,000 bill for Sarasota’s Flight Source International to fly the jet in for a look-see. After a 40-minute inspection, there was no deal. Instead, the buyer purchased a $20-million Citation X from owners in Spain.
Sky’s the limit: “Last year we brokered deals totaling $23.6 million,” says Maria Eckardt, who directs international sales at the company she operates with her husband, Eric, who serves as president. (Flight Source International is based at Dolphin Aviation at the Sarasota Bradenton International Airport and is active with the Chamber of Commerce International Business Council.) “We could exceed that in [one quarter] this year.” Maria rattles off a few of the company’s mega-listings: a London-based Boeing 727 possibly headed to Dubai; a $7-million aircraft in Taiwan that would be coming to the U.S.; a U.S.-based jet bound for South Africa. “Just last week we were in Mexico selling a $500,000 corporate jet to a customer in Venezuela,” she says.
The upside of a weak dollar: Sellers in the United States have an edge moving big-ticket items like airplanes. Stronger currencies like the British sterling and euro are encouraging European buyers to shop on the American side of the pond. “It’s an ideal time for them to purchase airplanes coming out of the United States,” Maria says. “It feels like an instant 20 percent discount.” Inexpensive fuel prices in countries like Venezuela make operating a corporate jet a reasonable expense there, plus companies involved in construction and other growth industries need convenient transportation that covers a lot of ground quickly.
Red tape expertise: According to Maria, the toughest aspect of the business is dealing with the paperwork involved in transferring airplanes across international borders. “We now have an edge over our competitors,” she says. “At times we get calls from other brokers or dealers in our industry who are not as familiar with [the process]. We’re becoming known as industry experts because of our ability to facilitate the actual transaction.”
The Oklahoma connection: Eric credits a relatively simple escrow transaction process for smoothing the way in many deals and boosting confidence levels for buyers and sellers. The buyer deposits money in an escrow account in Oklahoma, and once the bill of sale is transferred, cash is wired to the seller’s bank—wherever it is.
Culture shock: Although she enjoys the opportunity to experience diverse cultures around the world, Maria tells the story of a trip to Mexico where a very wealthy client sent her out shopping for the day with armed guards. “It was a little strange, but that’s the way they live,” she says, referring to the frequent kidnappings reported among well-to-do families in Mexico.
A message to Maria: In all of their world travels since opening the business in 1994 (Eric has been involved in aircraft sales since 1986), the most frightening experience happened to Eric a few years ago in Louisiana. “I was showing an airplane to the man who designed the foil packaging for Microsoft products,” Eric said. “It turned out that the pilot was a helicopter pilot and didn’t really know anything about the plane.” The real problem came when the indicator light for one of the landing gears didn’t come on as they approached the airport to land. “We circled, and the pilot dive-bombed a couple of times to see if jerking the plane up would drop the gear. I called Maria, just in case we didn’t make it.” Finally, they flew past the airport’s control tower, and were told it “looked like” both wheels were down. “After we landed, [the client] got off the plane and immediately threw up,” Eric says. The client later bought a different plane.
Aladdin Equipment Co.
Manufacturing replacement parts for swimming pools and spas.
Know your market: The Aladdin Equipment Co. experience in international sales points to the critical nature of knowing your market. Because the company’s business is selling replacement parts for swimming pools and spas, its best markets are those that have wealthier demographics and swimming-pool weather much of the year. “A lot of our export is to South America through Miami,” says Gordon Henderson, executive vice president of the Sarasota-based manufacturer. The company also does business in the Middle East through builders that purchase through a Miami-based customer. Scandinavia is a good market for hot tub and spa parts; a customer there travels to Sarasota to buy. Australia and France are strong, and sales to China are picking up because of a lubricant Aladdin makes that is specified by the original-equipment manufacturer.
Don’t leave home without it: The food in China is certainly unfamiliar and traveling there from Florida is time consuming, but the greatest inconvenience facing Henderson on his visit there last year was currency. “They don’t accept American credit cards in China,” he says. “They want cash [Chinese yen] or a local credit card.” The frustrated traveler resorted to borrowing cash from a supplier. “If you go, get a local credit card that is pre-loaded with cash value,” Henderson warns. Henderson also says the Chinese expect an executive to be accompanied by an entourage. “If you’re by yourself, they assume you aren’t important.”
The French connection: Southern France is a particularly strong international market for Aladdin’s products, and the company expects to double its sales in France by establishing strategic inventory there and offering factory pricing. “There are more pools in France than anywhere else in Europe,” Henderson says. “It’s on a par with the United Kingdom in terms of personal wealth, but obviously, the weather is much more conducive to pools.” The company operates in Europe through an agent based in France and is considering warehousing inventory there to capitalize on demand for smaller orders. “A number of companies will take a full container, but with smaller orders of several hundred dollars, people don’t want to hassle with importing,” he says.
Lost in translation? The language barrier is often an obstacle to companies wanting to sell internationally, but Aladdin’s industry is a little different. Because most of the market leading manufacturers of swimming pool and spa equipment are U.S.-based, their brands and products are recognized worldwide without language translation. That eliminates the need to translate product catalogues, which would be cost-prohibitive, Henderson says.
Risk and reward: Henderson says Aladdin had some trepidation about ensuring payment for goods when starting its overseas ventures. “Customers expected (payment) terms; they didn’t want to pay in advance,” he says. “We had to take a chance and give good customers terms.”
Talking their Language
These agencies offer advice on doing business overseas.
Economic Development Corporation of Sarasota County
www.edcsarasotacounty.com
(941) 309-1200
Economic Development Council,
Manatee Chamber of Commerce
(941) 748-4842
Enterprise Florida
www.eflorida.com
(813) 276-9430
Greater Sarasota Chamber of Commerce International Business Council
(941) 955-2508 ext. 244
Tampa Bay U.S. Export Assistance Center U.S. Department of Commerce
(727) 893-.3738
World Trade Center Tampa Bay
(813) 864-3000
Global Business 101
By Tom Travis
1. Take advantage of trade agreements. If you want a competitive edge in today’s global marketplace, you must understand free trade agreements and preference programs and how they can impact your business. Decisions about where to set up a business venture, how to locate the best sourcing opportunities and how to develop a strategic plan for the future are all dependent on a thorough knowledge of the trade opportunities these programs provide.
2. Protect your brand at all costs. Protecting your brand means protecting your company’s image as well as its intellectual property. Every global company must pay attention to the human rights and environmental practices of offshore facilities with which it does business.
3. Maintain high ethical standards. Your company must establish its own standards of acceptable conduct, communicate those standards both internally and to all trading partners, and enforce those standards through internal monitoring systems. Ethics, social responsibility, and principled corporate governance are an absolute business necessity in the global marketplace.
4. Stay secure in an insecure world. The tragic events of 9/11 ushered in a new era of compliance with global security requirements. As companies tighten up security, they are beginning to see that there are ancillary benefits to greater control over the supply chain in the form of improved efficiencies, inventory management and loss prevention.
5. Expect the unexpected. Whether the issue is a natural disaster that disrupts distribution channels, an outbreak of influenza that can shut down commerce, worker strikes that close down ports, currency crises that turn a region’s economy on its head, or a surprise coup d’etat in the country where you just opened a new factory, the smart global entrepreneur always expects the unexpected and has a flexible enough infrastructure to change course when circumstances dictate.
6. All global business is personal. Forming personal relationships is key in global trade. A great rule of thumb to follow is the farther apart you are geographically and culturally from your offshore counterpart, the more important it is to meet face to face.
Tom Travis is managing partner at Sandler, Travis & Rosenberg, P.A., an international trade and customs law firm headquartered in Miami. He is the author of Doing Business Anywhere: The Essential Guide to Going Global (John Wiley & Sons, May 2007).