Newsletter – May 4, 2018
As you likely know, I have accepted a new role as president and CEO of the Salt Lake Chamber and Downtown Alliance, and thus have opened a new chapter in my life after four wonderful years leading World Trade Center Utah.
While embarking on this new opportunity, I’ve expanded my knowledge of just how integral this statewide institution has been to Utah’s long history of economic success. For example, the Salt Lake Chamber has been passionately involved in matters both economic and civic for more than 130 years. The first Salt Lake Chamber of Commerce was formed in 1887 to revive trade, create industries and attract tourism and relocation to the capital city.
Next came the Commercial Club in 1902. It was formed to build bridges throughout the community and promote economic development. To that end, the Commercial Club was heavily involved in many notable projects, such as the paving of State Street and multiple sanitation improvements.
In 1922 the Commercial Club became the Salt Lake Chamber. During its history, the Chamber has played an important role in achievements like obtaining a first-rate zoo – despite being in the middle of the Great Depression, putting Bonneville Salt Flats on the map, and then later helping attract an NBA team to Salt Lake City.
The Chamber is also known for its mission to serve large and small businesses across the state. In fact, the Salt Lake Chamber has members in all 29 counties and represents the broad interests of the state’s various industries. Members of the Chamber benefit from educational and networking events, access to other business leaders and various opportunities to give back. In addition to these services, members receive something more difficult to come by – a loud and powerful collective voice that speaks on behalf of their best interest.
One of the ways the Chamber manifests its voice is through its annual publication titled the “Top 10 Legislative Priorities,” which is given directly to every legislator prior to the beginning of the legislative session and is distributed to more than 1,100 attendees at the annual Utah Economic Outlook and Public Policy Summit.
The Chamber also has 23 partner organizations and programs you have likely heard of and definitely benefited from. Its main strategic partner is the Downtown Alliance, which is dedicated to building a dynamic and diverse community that is the regional center for culture, commerce and entertainment.
In addition to providing support and public policy advocacy to local businesses, the Downtown Alliance has created and grown community programs and initiatives such as the Farmers Market, Downtown Rising, Last Hurrah SLC and others.
Some of the Chamber’s branded programs include the Women’s Business Center of Utah, which empowers women through resources and support, and the Utah Transportation Coalition, which aims to provide Utah with a 21st-century transportation system.
During its 130th anniversary celebration, the Chamber recovered a 1909 time capsule from the Commercial Club Building. Inside were two speeches that reflected the Commercial Club’s original mission statement. What is remarkable about the mission from that time is how closely it resembles the mission of today: to stand as the voice of business, support members’ success, and champion community prosperity.
I am honored to take the helm of the Chamber and the Downtown Alliance and look forward to working with our board members and Utah business, government, education and civic leaders as we hold true to this mission, yet grow and evolve.
Market Highlight: Canada
The United States and Canada enjoy the world’s largest and most comprehensive trading relationship that supports millions of jobs in each country. In fact, the two countries share a $1.3 trillion bilateral trade and investment relationship: two-way trade in goods and services totaled nearly $635 billion in 2016, and bilateral investment stock reached nearly $698 billion. U.S. exports to Canada were $321 billion in 2016, or 15 percent of total U.S. exports.
More than 30 U.S. states rank Canada as their number one export market. In 2016, U.S. exports to Canada exceeded total U.S. exports to China, Japan, South Korea, and Singapore combined. Whether your company is a first-time or seasoned exporter, Canada should be a key component of your company’s export growth strategy.
Growth in the U.S. economy translates into growth in Canada: 19 percent of Canada’s GDP results from sales of goods exported into the United States. For example, per Business Insider, Canada exports more goods to the State of Michigan than it does to all European Union member countries. Twenty-three U.S. states name Canada as their number one source of imports.
Approximately 380,000 people cross between the countries every day by all modes of transport. American travelers made 12.5 million trips to Canada in 2015, spending nearly $7 billion. Canada is the largest foreign supplier of oil, natural gas, and electricity for the United States. In 2016, more than 40 percent of the United States’ crude oil imports came from Canada. Education remains a top service export sector in the bilateral trade relationship: 27,000 Canadian students attended U.S. schools in the 2015-16 academic year, and more than 12,000 American students studied in Canada in 2015.
Principal U.S. exports to Canada in 2016 were (listing value and percentage of total exports): vehicles ($47.6 billion/18.1%); nuclear reactors, boilers, and machinery ($42.8 billion/15%); electric machinery ($24.8/9%); mineral fuel and oil ($21.3/5.8%); and plastics ($12.6 billion/4.6%).
The United States is Canada’s primary source of foreign direct investment (FDI), with investment stock from the United States totaling over $363 billion in 2016. Canadian FDI in the United States was $453 billion in 2016, making Canada the United States’ second-largest source of FDI. Canadian investments in U.S. sectors are predominantly found in information technology, financial services, professional services, industrial machinery, food/tobacco, and real estate. As of 2016, U.S. affiliates of majority Canadian-owned firms employed than 636,000 U.S. workers, spent more than $864 million in research and development at U.S. organizations and universities, and contributed more than $13.1 billion toward total value of goods exported by the United States.
Canada is a highly receptive, open, and transparent market for U.S. products and services, with Canadians spending more than 60 percent of their disposable income on U.S. goods and services. The nations share a similar lifestyle, engendering a certain level of cultural familiarity; Americans and Canadians “speak” the same language, literally and figuratively. Canada’s two official languages are English and French; however, English is almost universally spoken, facilitating business communication.
In fields ranging from security and law enforcement to environmental protection to free trade, the two countries work closely together on multiple levels, from federal to local. Close geographic proximity and initiatives between our governments such as Beyond the Border, Regulatory Cooperation Council, and Trusted Traveler programs make cross-border business increasingly seamless.
The U.S. Commercial Service’s export reports were prepared by trade experts at U.S. embassies and consulates in more than 140 countries. They provide insights into economic conditions, leading sectors, selling techniques, customs, regulations, standards, business travel, and more.
With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
The economics lesson we missed in ‘Ferris Bueller’s Day Off’
By Derek Miller
World Trade Center Utah CEO
This article was first published by the Deseret News and is republished here with permission.
“In 1930 the Republican controlled House of Representatives, in an effort to alleviate the effects of … anyone? … anyone? … the Great Depression, passed the … anyone? … anyone? … the tariff bill … the Hawley-Smoot Tariff Bill, which … anyone? … raised or lowered? … raised tariffs, in an effort to collect more revenue for the federal government. Did it work? … Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression.”
The important lesson Ferris Bueller missed on his “day off” seems similarly lost on many national leaders today. The lesson is simple: Tariffs are bad, and free markets are good for economic prosperity. For a state that benefits from free enterprise more than most, it is ironic the Senate namesake of the Hawley-Smoot Tariff Bill was from Utah. Reed Smoot served in the U.S. Senate for 30 years, during which time he also served in the Quorum of the Twelve Apostles of The Church of Jesus Christ of Latter-day Saints. In historical hindsight, he was a terrific apostle but terrible economist.
What Smoot should have known and Ferris should have learned is that tariffs hurt worldwide economies, national industries, local businesses and household consumers. Because the U.S. economy is driven by consumption, it is particularly pernicious that tariffs on foreign goods are passed on to U.S. consumers. When the White House announced plans to place tariffs on goods from Mexico as a way of keeping a campaign promise to build a wall and make Mexico pay for it, someone in the administration must have understood that U.S. consumers would pay the higher price of Mexican products, and the plan was quickly abandoned.
Tariffs on foreign goods also hurt U.S. companies that use those raw materials as manufacturing inputs. The natural result of 25 percent tariffs on steel and 10 percent on aluminum is manufacturers either pay the higher cost of imported raw material or a higher cost of domestic raw materials. Either way, companies have a higher cost of production, thus hurting their competitiveness and the bottom line. While the administration has said it will permit companies to request an exemption from the tariffs, the result is increased government regulations that are disproportionately burdensome on small businesses, which leads to owners taking precious time away from running their business and spending limited resources on an army of lawyers.
The third way tariffs hurt the U.S. economy is the risk of retaliation on products exported from the U.S. This is exactly what is happening with the brewing U.S.-China trade war. When the White House announced $60 billion in tariffs on Chinese products, China quickly responded with a list of its own. If implemented, the tariffs on U.S. goods will reduce Utah’s direct and indirect exports; put downward pressure on the price of targeted products, thereby threatening profitability, and restrict expansion opportunities for Utah businesses into emerging Chinese markets.
When Congress imposed tariffs in 1930, lobbyists for special interest groups descended on Capitol Hill seeking protection. By the time the feeding frenzy was over, the Hawley-Smoot bill contained tariffs on over 20,000 products. The theory was the federal government could raise much-needed tax revenue after the stock market crash of 1929 by collecting taxes from foreign companies while at the same time increasing U.S. production through protection from foreign competition. The theory failed.
Over the objection of 1,000 economists who pleaded with President Herbert Hoover for a veto, the bill became law, and the rest is history — history that is now repeating itself. In addition to the economics lesson, members of Congress and the president learned the painful political lesson that there is a steep price to pay when government fools around with the private sector, puts its thumb on the scale of free enterprise and picks winners and losers, instead of allowing the free market to do so. All we can hope is that someone doesn’t take the keys of Utah’s economy and run it off a cliff like a 1961 Ferrari 250 GT California.
Toolbox: Tip #6 – Leverage Existing Platforms
World Trade Center Utah’s “10 Tips to Help you Think, Act and Succeed Globally” provide a deeper dive into topics that will help as you pursue international business opportunities.
With significant advances in technology and increased internet access throughout the world, we are, more than ever, global consumers. At the end of 2014, there were more than 2.9 billion Internet users around the world, according to the Broadband Commission for Digital Development. What’s more, within the next three years, more than half of the global population will have access to Internet.
It should come as no surprise that many businesses are interested in selling their products online. A brick and mortar business has limited access to customers, but online markets provide access to billions of potential consumers. As a business owner, you may have considered the internet as a tool to expand your business. If you have not yet taken advantage of this low-cost expansion opportunity, there is no better time to start. This article will give you useful ideas and resources to help you expand your business through web-based platforms.
Engaging in e-commerce can offer flexibility. You can utilize an existing e-commerce platform or develop your own online store. Developing your own store requires more oversight and management, but allows you to retain a greater share of your profit from sales. However, for businesses new to online sales and international markets, creating your own e-store can be complex and time-consuming. A good option to consider instead is using an existing platform that allows you to begin selling your product immediately.
Existing platforms such as eBay, Amazon and Etsy will likely require a management fee, usually a small percentage of your sales, which will reduce or eliminate the oversight, management and maintenance of the online business. Utilizing an existing, well-known platform offers the benefit of a trusted familiar name, security and customer traffic that accompanies it. Your product will also be available wherever the platform is accessed. Additionally, using such existing platforms can serve as a way of testing new markets. It allows you to understand unique trends that may exist in different markets before investing more time and resources into expanding into that country or region.
If you are interested in selling your product on one or more of the existing platforms, you should visit each online site and thoroughly review their selling policies and procedures. Understanding the process, duties and obligations required of the seller will allow you to make the best decision for your situation. The following list contains some of the most popular and trusted platforms in use today.
- Amazon.com – one of the largest internet retailers in the U.S. and a prime online retail platform, where you can have instant access to millions of customers who shop on Amazon daily. You can sell just a few items or build a business selling higher volumes of products. Amazon makes it easier to build your business abroad with online marketplaces across the globe and tools and services to complement the global marketplace.
- eBay – the online auction giant has more than 100 million buyers, making it one of the largest online marketplaces in the world. There are no upfront costs for selling on eBay and the platform has streamlined the listing process to make it easier for sellers to list their items. eBay is available in many countries across the globe, making it one of the most ideal online platforms to grow your business.
- Alibaba – much like Amazon and eBay, Alibaba is an online retailer with more than 36 million customers in 240 countries. Whether you are doing B2B or B2C business, Alibaba provides services and tools to help you succeed in growing your business across the globe.
- Etsy – this online platform boasts nearly 20 million active buyers, with people buying and/or selling from nearly every country in the world.
- Overstock – Utah-based Overstock is another online retailer that you can partner with to sell your items domestically and internationally. Offering shipping to more than 180 countries and providing financial transaction services, Overstock makes it easier for you to reach untapped markets abroad.
- Bonanza – a highly-rated online platform that was named the “Most Recommended” and “Best Overall” online marketplace in one of the largest online seller surveys conducted by EcommerceBytes. Bonanza provides an online platform in many countries across the world, where you can easily list your products and items.
If you have questions or need assistance as you grow your online business internationally, World Trade Center Utah’s trade services team is available to help. Visit wtcutah.com or call 801-532-8080 for more information.
Going Global: HyPerComp Engineering Inc.
Last month, during the Cache Valley Business Summit, HyPerComp Engineering Inc. and S&S Worldwide received the Vanguard in International Business Award, presented by World Trade Center Utah in partnership with the Department of Workforce Services.
The awards recognized the two Utah businesses for their success in international exporting from within the Box Elder, Rich and Cache county region. Brigham City-based HyPerComp Engineering (HEI) designs and fabricates composite-wrapped high pressure vessels and its breakthrough technologies for lighter, stronger and safer pressure vessels have proven critical in competing in the aerospace and automotive industries.
As a business with global reach, HEI exports to countries such as Germany, the United Kingdom, Thailand and Japan, with as much as 30 percent of its business coming from international sales. HEI was founded in 1996 by its president, James Patterson, who sold the company in March to three brothers: Daryl, Bryce and Mark Thompson.
HEI specializes in the design, analysis, development, testing, manufacture and certification of filament-wound high pressure composite vessels for diverse applications. The company notes that innovation is its core competence and is rooted in its heritage.
That innovative expertise is underscored by HEI’s role in the development of next-generation storage vessel solutions for both the automotive and military aerospace industries. Not only did the company successfully supply the first “proof of concept” extreme high pressure gaseous and cryogenic compressed hydrogen automotive COPVs to the world’s leading automotive OEMs in the early adaption of hydrogen, but also supplied the U.S. military with ultralight fuel storage COPVs for Unmanned Aerial Vehicles, enabling record-setting flight endurance capabilities.
Meanwhile, HEI customers benefit from the company’s close relationships with and ready access to leading COPV industry participants ranging from material and machinery suppliers, independent testing agencies, regulatory agencies, to aerospace and automotive OEM’s and their supply chains.
“The result for the client is a flexible, experienced and innovative source for even the most challenging requirements,” according to HEI.
From characterizing a composite structure’s various component materials, identifying the optimal combinations and manufacturing processes to ensuring repeatable quality for long-lasting and predictable results, HEI’s unique capabilities in composite pressure vessels offer a comprehensive suite of services ranging from simple testing and analysis to full-service turn-key new product design, development and certification.
HEI has significant experience in filament winding both thick and thin walled high pressure composite cylinders and tubular structures for many varied applications. Our cylinder solutions include our specialization in type 2, type 3 and type 4 composite pressure vessels which encompass the vast majority of current market applications and requirements.
As HEI leaders have noted, the company is strategically located within Utah’s dynamic high tech corridor, which stretches from Orbital ATK’s space operations facility in Northern Utah to the south end of Utah County. This corridor is considered the center of the country’s most concentrated “composites” industry, with carbon fiber material suppliers, filament winding equipment builders and related advanced composites companies clustering in symbiotic relationships that produce strength and efficiency within the supply chain.
The state’s advanced composites industry also benefits from the support of highly specialized local academic research institutions with composites engineering focus as well as an abundance of skilled technicians, engineers and labor force intimately familiar with the composites industry. For more information about HEI visit hypercompeng.com or call 435-734-1166.
|May 17||Doing Business in Taiwan and South Korea Seminar|
|May 22||International Law Seminar|
|May 23||WUSATA Informational Session|
|May 23||Envision Utah’s Spring Breakfast|
|June 6||Utah Technology Innovation Summit|
|June 8||Salt Lake County Metro Solutions: Small Business Forum|
|June 17-20||OutDoor Trade Show|
|July 16-22||Farnborough International Airshow|
|Sept. 17-21||Taiwan and South Korea Trade Mission|