Newsletter – August 6
Greetings my friends, and welcome to another edition of the World Trade Center Utah newsletter. I won’t actually join the WTC Utah team until later this month, but I am excited to get involved now and share my thoughts as I formulate a vision for WTC Utah going forward.
I want to highlight how impressed I am with the organization and brand that former World Trade Center Utah CEOs Lew Cramer and Derek Miller have built. It’s humbling to take the baton from Derek, and I’m deeply grateful for the many organizations and companies that support WTC Utah. You empower the strong WTC Utah team to serve the state and Utah companies. I look forward to working hand-in-hand with each of you as we take WTC Utah’s success to even greater heights in support of Utah’s growth on the global stage.
As I start later this month, one of my priorities will be to ensure continuity and continued growth in WTC Utah’s exceptional relationship with Governor Gary Herbert and the Governor’s Office of Economic Development (GOED). Governor Herbert has inspired an impressive economic vision for the state. A key factor in the Governor’s success is the state-wide leadership of GOED Executive Director Val Hale and his stellar team. I am excited to work closely with these leaders as we press forward in driving Utah’s economic development.
I am also anxious to participate fully in the collaborative, cooperative environment that has made Utah stand out in the nation and around the world. I’ve heard this approach referred to as the “Utah Way.” Whatever the nomenclature, this culture of collaboration is at the core of Utah’s success.
Looking at the gridlock and divisiveness here in Washington, we have an incredible need for states like Utah to demonstrate how a diversity of political positions, ideologies and perspectives can come together collaboratively to solve problems for the betterment of our society. By no means is this process without its drama and difficulties, but Utah finds a way to rise above and break through the challenges with innovative solutions. I firmly believe that if we continue to exemplify the proper application of pragmatic principles for the betterment of our state, people will take notice. We can make the “Washington Way” a little more like the “Utah Way.”
WTC Utah will continue serving the Utah business community and our many strategic partners, helping Utah companies understand the global business climate and making the right connections to capitalize on ever-expanding opportunities. Within Utah’s ecosystem, I admire those organizations that are leading out with global engagement and the many Utah companies that are on the cutting edge of their industries.
WTC Utah’s primary focus will be to partner with these key stakeholders and the many Utah companies that are working to expand internationally. To that end, I look forward to meeting with each WTC Utah member and strategic partner to understand their goals and how WTC Utah can plug in to support.
Another priority is leveraging my international experience and relationships by synthesizing them with those of WTC Utah’s members and strategic partners to further elevate Utah’s status on the international stage. We have an incredible agenda of trade missions and visits by international dignitaries from which to build. One particular area where I see immense opportunity is to develop strong commercial, educational, and cultural ties with the Gulf Cooperation Council countries by bringing Gulf leaders to Utah and in turn taking Utah companies and institutions to the Gulf.
These energy-rich countries are working to diversify their economies and to expand their strategic partnerships with the United States, often by increasing their investment and ties outside of Washington and the coasts. Utah’s economic success creates attractive investment opportunities for them and opportunities to transfer lessons learned here in Utah to the Gulf. Moreover, there are surprising cultural similarities and common ground that create a natural foundation of a mutually beneficial relationship.
But first, I need to finish in Washington and come back home to Utah. I can’t wait to join all of you in the exciting work of driving growth through international trade, not just up and down the Wasatch Front, but across the entire state.
– Miles Hansen, World Trade Center Utah
Market Highlight: Germany
This article was prepared from information by the U.S. Commercial Service and from information by the U.S. Embassies abroad. 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.
Germany does not rank among Utah’s top five overall export destinations; however, look closer at Utah exports according to economic cluster and you’ll find Germany is the number one destination for Utah aerospace and defense exports, followed by Japan, Canada, China and Italy. WTC Utah data shows that Utah exports from the aerospace and defense sector totaled $365.90 million for the fourth quarter of 2017.
The German economy is the world’s fourth largest and accounts for more than one-fifth of the European Union’s GDP. Germany is the United States’ largest European trading partner and the sixth largest market for U.S. exports. According to the U.S. International Trade Administration, leading U.S. exports to Germany include tree nuts, fishery products, pet food and travel and tourism. Germany’s “social market” economy largely follows free-market principles, but with a considerable degree of government regulation and wide-ranging social welfare programs.
Germany is the largest consumer market in the European Union with a population of 82.3 million. The significance of the German marketplace goes well beyond its borders. An enormous volume of trade is conducted in Germany at some of the world’s largest trade events, such as MEDICA, the Hannover Fair, Automechanika and the ITB Tourism Show. The volume of trade, number of consumers, and Germany’s geographic location at the center of the European Union make it a cornerstone around which many U.S. firms seek to build their European and worldwide expansion strategies.
As of June 2018, economic forecasters expect about two percent GDP growth for 2018 and a similar rate in 2019, a slight slowdown from 2017, but still above what many analysts consider Germany’s long-term growth potential. Demand has begun to shift from exports to consumption and investment, which are projected to remain the main driving force for growth in the near-term. Despite budget surpluses and strong corporate profitability, investment (other than construction) remains somewhat subdued.
In June, WTC Utah, the Small Business Administration (SBA) and the Governor’s Office of Economic Development led six Utah companies to the Outdoor Fair in Friedrichshafen, Germany. Participating Utah companies included Cotopaxi, Dark Energy, Buzz Graphics, Oxbow Gear, InstaFire, and Emberlit Camp Stove. Each company was a recipient of a STEP Grant, administered by WTC Utah and funded in part through the SBA.
German policy poses relatively few formal barriers to U.S. trade or investment, apart from barriers associated with EU law and regulations. Germany has pressed the EU Commission to reduce regulatory burdens and promote innovation to increase EU member states’ competitiveness. Germany’s acceptance of the EU’s Common Agricultural Policy and German restrictions on biotech agricultural products represent obstacles for key U.S. products. While not overtly discriminatory, government regulation by virtue of its complexity may offer a degree of protection to established local suppliers. Zealous application of safety and environmental standards can complicate access to the market for U.S. products. American companies interested in exporting to Germany should make sure they know which standards apply to their product and obtain timely testing and certification. Compliance with German standards is especially relevant to U.S. exporters, as EU-wide standards are often based on existing German standards.
For U.S. companies, the German market – the largest in the EU – continues to be attractive in numerous sectors and remains an important element of any comprehensive export strategy to Europe. While U.S. investors must reckon with a relatively higher cost of doing business in Germany, they can count on high levels of productivity, a highly skilled labor force, quality engineering, a first-class infrastructure, and a location in the center of Europe.
Market Entry Strategy
The most successful market entrants are those that offer innovative products featuring high quality and modern styling. Germans are responsive to innovative high-tech U.S. products, such as computers, computer software, electronic components, health care and medical devices, synthetic materials, and automotive technology. While Germany possesses one of the highest Internet penetration rates in the EU for private households, high-speed internet access for business is only average (and expanding such access is a priority of the current government). Multi-media, high-tech and service areas offer great potential. Certain agricultural products also represent good export prospects for U.S. producers. In many cases, price is not the overriding factor for German buyers, but quality and reliability are.
The German market is decentralized and diverse, with interests and tastes differing from one German region to another. Successful market strategies take into account regional differences as part of a strong national market presence. Experienced representation is a major asset to any market strategy, given that the primary competitors for most American products are domestic firms with established presences. U.S. firms can overcome such stiff competition by offering high-quality products and services at competitive prices, and locally based after-sales support. For investors, Germany’s relatively high marginal tax rates and complicated tax laws may constitute an obstacle, although deductions, allowances and write-offs help to move effective tax rates to internationally competitive levels.
Going Global: RAM Company
Forty-four years ago, RAM Manufacturing Inc was little more than a fledgling start-up operating out of the garage of founders Ray and Melzie Ganowsky in St. George. Fast-forward to 2018 and RAM Company is a high-tech manufacturer of electro-mechanical devices that is positioned for explosive growth.
An integral part of Southern Utah’s growing tech sector, RAM Company employs more than 250 workers and is laying the foundation to add another 139 people to its team with the help of tax incentives from the City of St. George and the Utah Governor’s Office of Economic Development. The company just completed an $11 million expansion to its state-of-the-art facility in St. George, despite recruitment incentive offers to move to other parts of the country.
The Ganowskys say their company designs and manufactures complex electro mechanical devices for end users such as Boeing, Airbus, NASA and the U.S. Postal Service. Aerospace products make up more than 80 percent of RAM’s current production and include solenoid valves and other precision actuation devices for aircraft ranging from small planes to the Boeing 700 series and the Airbus A300 family.
According to company data, solenoid and solenoid valves are primarily used to control actuation systems that can operate in conditions of extreme temperature and vibration. The aerospace valve market is projected to grow from $3.71 billion in 2018 to $4.84 billion by 2023 and RAM Company is positioning itself to compete well in this dynamic market. Furthermore, given this market outlook, RAM feels that this could equate to what could be an explosive growth opportunity.
RAM Company designs and manufactures solenoids for oxygen mask deployment, door locks, and fuel dump systems. Various types of solenoid valves are commonly used for aileron systems, flap and landing gear control, fuel control, engine and bleed air.
Commercially, RAM Company can design and manufacture solenoids or solenoid valves that are tailored to the specific needs of its clients. The Ganowskys say some of their company’s 1,600 custom designs are used for mail sorting, undersea applications, offshore oil platforms, medical components and many other unique applications.
The space industry is a major growth sector for RAM Company. Despite several new up-starts and traditional incumbent companies vying for market position in what is a burgeoning industry, RAM Company is positioned to capture a significant amount of business and continues to see many additional opportunities.
RAM Company had the opportunity to exhibit at the recent Farnborough International Airshow along with five other Utah aerospace companies. They were afforded this opportunity after receiving the STEP Grant which is administered by WTC Utah and funded through the U.S. Small Business Administration.
In addition to its expanding domestic client base, RAM Company is also expanding internationally and now supports clients in both Europe and Asia. Approximately 30 percent of RAM Company’s sales come from customers that support international clients. RAM Company currently has direct international sales that approximate four percent of total revenue, but expects that percentage to grow significantly over the coming years as the company continues to grow its international sales.
For more information about RAM Company, visit ramcompany.com or call 435-673-4603.
Toolbox: Tip #8 Part 2 – Managing Your Partners
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.
Expectations of your customers
To understand how to motivate your partners, first think about what they need from you to be successful.
- A product that works – It is essential that your foreign representatives only be given market-ready products because they will be the frontline when it comes to support.
- Good communication and service – Your customers expect the same level of communication that you provide your domestic office. Reply to correspondences as quickly as possible.
- Lack of discrimination – If your domestic pricing is lower than your international pricing, be prepared to defend your position.
- Great prices – You may need to offer your international partners lower prices than your domestic partners so that they can be competitive after the price of importing goods is added.
Motivating your Channels of Distribution
Playing the Exclusivity Game
Buyers will feel more secure in investing time and resources into your product if they have an exclusive contract and do not have to compete with other distributors. As a manufacturer, you have more control over distributors with exclusive contracts. Though the contract is exclusive, if distributors do not meet your expectations, you can cancel the contract or not renew the contract after it has ended.
When to Move to Nonexclusive Contracts
Moving to non-exclusive contracts is mainly a matter of market maturity. Once the market has grown to the point that one distributor does not have the experience and infrastructure to support demand for your product, it is time to consider moving to non-exclusive contracts. This decision can backfire, however, and is difficult to reverse. Your previous distributors may no longer trust exclusive contracts with you and you may be forced to find new distributors if things do not go as planned.
Meeting with your Foreign Buyers
International travel can be expensive. To make sure you get the most out of your visits with foreign buyers, consider the following activities.
- Key account visits – Observe how your representatives sell your product. Evaluate if there are ways to better support them through training or marketing materials.
- Blind sales calls – Visit shops carrying your product and see how it is displayed.
- Media visits – Visit with local industry magazines, especially if you are traveling with a key member of your company. Journalists may also be able to provide you with useful competitive intelligence.
- Training events – Offer your distributors opportunities to learn more about your product and how to troubleshoot issues.
Consideration when Terminating an Agent or Distributor
When you decide to cancel or not renew a contract with a foreign representative you will have both legal and non-legal issues to consider. Legally, even if your contract allows for easy dissolution, seek advice on local laws. You may be obligated to continue your relationship with your distributor unless you can provide just cause.
Consider the amount of inventory your distributor has on hand. Accommodations may need to be made if inventory cannot be moved easily. You do not want your old distributor continuing to sell your product once a new distributor has been appointed. Publicly, you will want to be open about this change. Do not say anything negative about former partnerships, but explain the change as part of your company’s growth.
For more information, or for any other help with your international expansion efforts, please contact WTC Utah Trade Services Manager Jim Porter at email@example.com.
Six Utah Small Businesses Find Success at Global Health Trade Show in January 2018
Each year, healthcare and trade professionals from all over the world meet in Dubai for the Arab Health Trade Show – the largest gathering of its kind globally. The 2018 show in January boasted more than 4,200 exhibiting companies and 103,00 attendees from 150+ countries.
Representing Utah at the trade show were six local businesses who, for the first time, had the chance to showcase their products and services in Dubai. Just a year ago, an opportunity of this magnitude might have seemed unreachable for the following companies: CommGap International Language Services, KORR Medical Technologies Inc., Maxtec, Millennial Medical LLC, TruClinic Inc., and Vitalpax. However, after being awarded a grant from the State Trade Expansion Program (STEP), which is funded through the U.S. Small Business Administration, these companies were able to positively alter the course of their business.
While this is the sixth year that the STEP Grant has been offered in Utah, it is the first year that it is being administered by World Trade Center Utah (WTC Utah). WTC Utah’s mission is to expand prosperity across the state by attracting investment and increasing exports. One of the ways WTC Utah accomplishes this mission is by helping Utah companies add customers, increase revenue and create jobs by selling internationally.
Last October Dalyon Ruesch from Vitalpax saw a post regarding STEP Grant applications on the WTC Utah Facebook page. After a competitive review process, Vitalpax was awarded the grant and selected to travel to Dubai with WTC Utah and the five other Utah businesses. “It was a fantastic opportunity! Since returning home from the show, we have experienced growth and are in the process of acquiring more employees and equipment.”
Another company in attendance was CommGap International Language Services. Lelani Craig, President of CommGap, stated that “attending Arab Health opened our eyes to the possibilities available internationally. We made contact with several international companies with whom we are currently discussing potential work. It was a unique and ideal conference for us to attend since we do a lot of work in the medical field with localization, transcreation and general translation. We are excited for the upcoming possibilities!”
In addition to making connections, the trade show offered valuable training opportunities. While in Dubai, Maxtec was able to train hospital staff and sales reps on why it is important to monitor oxygen and how their devices work. Carl Luft, Director of Business Development for Maxtec, informed us that “this training is mandatory for dealers when applying for a government-issued tender.”
To support the Utah companies and further enhance international relationships for our state, WTC Utah team members also attended the trade show. Suzette Alles, WTC Utah Chief Operating Officer, gave a presentation on Utah’s business climate to investors from around the world. This presentation highlighted the strengths and opportunities of doing business in Utah. Alles represented Utah as one of only nine states selected to present at the seminar.
We look forward to seeing how these six businesses continue to grow and how other Utah companies will benefit from the STEP Grant. In 2018, Utah companies have already received STEP grants to attend trade missions and trade shows in Mexico, Paris, London, Germany, Taiwan and South Korea. The STEP Grant helps small businesses enter and expand into export markets. To learn more about the STEP grant opportunities and how WTC Utah can help your business grow please visit https://wtcutah.com/grants/step/.
Operational Excellence Conference Announces Steve Starks as a 2018 Keynote Speaker
The conference is the largest Theory of Constraints gathering in the world
Steve Starks, president of Larry H. Miller Sports & Entertainment and president of the Utah Jazz, will be a keynote speaker at the State of Utah and Goldratt Consulting Operational Excellence Conference on Sept. 27-28 at the Grand America Hotel.
Steve will talk about what it takes to lead a company that encompasses everything from sports teams to theaters to radio stations. He will also share insights about the inner workings of the Jazz organization and his unconventional path to professional success.
The theme for the 2018 conference is Building on Success 2018: Intense Focus, Extreme Results. The annual conference is centered around how to apply Theory of Constraints (TOC) principles to the public or private sector. Theory of Constraints, often referred to as Constraints Management, helps organizations get breakthrough results by focusing on the one or two constraints limiting performance.
More than 1,100 people attended the conference last year, making it the largest TOC gathering in the world. In addition to Steve Starks, other notable 2018 speakers include the following:
- Governor Spencer J. Cox
- Noelle Cockett, President of Utah State University
- Gil West, Executive Senior VP and COO of Delta Air Lines
- Kristen Cox, Executive Director of the Utah Governor’s Office of Management and Budget
- Ajai Kapoor, Partner of Goldratt Consulting
- Keith Squires, Commissioner of the Utah Department of Public Safety
Utah state government improved performance by more than 27 percent in four years utilizing the principles that will be taught at the conference. These operational improvements have saved taxpayers millions of dollars and produced better outcomes for customers.
The conference is produced by the Utah Governor’s Office of Management and Budget and Goldratt Consulting. It will include two tracks, one for government and the other for the private sector. To register or learn more about the conference visit www.utahexcellence.com.
|Aug. 10||Thought Leader Symposium – The Trade War Has Begun|
|Aug. 27||Applying for Grants Seminar|
|Sept. 17-21||Taiwan & South Korea Trade Mission|
|Sept. 27-28||Building on Success 2018 Operational Excellence Conference|
|Nov. 8||Utah Global Forum|