by Rich Rovito, WMEP Industry Reporter
Exporting can provide a means of boosting sales and profits for small and mid-size manufacturers in Wisconsin looking to take advantage of explosive growth in other parts of the world.
But competing successfully in foreign markets comes with an array of challenges.
A recent Lunch & Learn session, entitled “Achieving Success in the Global Marketplace,” put the challenges, as well as opportunities, into perspective before a large group of attendees at events in Pewaukee and Appleton.
“U.S. products are wanted overseas,” said Roxanne Baumann, director of global engagement for the Wisconsin Manufacturing Extension Partnership, in explaining the potential benefit exporting can have for manufacturers.
The demand for U.S. products in foreign markets often means that prices can be raised and terms and conditions can be favorably altered.
“If you go international, your whole profitability margin can go way up,” Baumann said.
Wisconsin manufacturers, regardless of their size, are taking advantage of the explosive growth seen in other parts of the world. Today, 95 percent of consumers are outside the United States and successful companies are tapping into new markets with a successful export expansion strategy, she said.
Dorner Manufacturing Corp., a Hartland-based manufacturer of conveyor systems, has been exporting for many years but has been stepping up its efforts.
“The last couple of years, we’ve done considerable planning and it’s starting to pay dividends for us,” said Matt Jones, directors of sales at Dorner, who appeared as a panelist at the Pewaukee session.
Modine Manufacturing Co., a Racine-based publicly traded manufacturer of heat transfer products, has evolved over the years from a company doing “passive” exporting to one with a much more defined strategy, said Paul Byrne, director of business planning and development for the company.
Today, 65 percent of Modine’s business is generated outside the United States, either through exporting or through the establishment of foreign operations, said Byrne, who also appeared as a panelist.
“The natural progression is that you start to export, you starting putting boots on the ground, whether it’s a sales office or a partnership, and you move forward,” Byrne said. “Companies like ours, when we started (exporting), didn’t have the resources available here, so we just sort of made it up as we went along.”
Dorner used to get inquiries from foreign markets but didn’t have a good way of addressing them, Jones said.
“What we would do is we would try to respond by fax, before the Internet, and we would do so in a way that wasn’t very efficient,” he said. “For us, the value proposition we have is extended easily into foreign markets. What we need to do as we look at select markets is not so much get excited because we want to travel there, but figure out how can we support those markets.”
Entering foreign markets is much more streamlined than in years past, Byrne said.
“Today you have a lot more ways to vet those opportunities I think that it’s a lot easier to begin to step into that process,” he said.
Resistance within a company often can be the biggest obstacle to exporting, Byrne added.
He cautioned companies about going into large markets with a vast array of competitors when deciding to take steps to bolster foreign sales.
“If you are a small company, going into a big market can be daunting and you can be betting the farm. Going into some smaller markets is a great way to practice, even if they are non-traditional markets,” Byrne said.
Byrne admitted that being heavily invested in foreign sales at this point, like Modine, is a challenge due to the economic issues, especially in Europe.
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“But over the life cycle it has saved and sustained our company,” he said.
Other challenges, such as language barriers, can hinder efforts, Jones said. Dorner has Spanish-speaking capabilities within its work force, which has made it easier to implement strategies in certain foreign markets.
Establishing a sales structure that will effectively serve new markets also is essential.
“In certain countries, we were able to leverage relationships with domestic suppliers or companies that we sold to,” Jones said.
Dealing with patent infringement issues also is part and parcel of doing business in foreign markets, the panelists agreed.
The WMEP held a similar session in March in Appleton that featured Brian Wagner, president of Gamber-Johnson a Stevens Point manufacturer of computer mounts and docking stations; and Komal Mehta, chief financial officer and vice president of business development at Triangle Manufacturing Co., an Oshkosh manufacturer of bearings, motor mounts, linkages, oil cups, shaft collars, lazy susan bearings and specialty products.