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In effort to double exports, U.S. initiative targets big cities

By Kevin G. Hall
McClatchy Washington Bureau

Nestled in the westernmost part of North Carolina, which is best known for its wood furniture, Plasticard-Locktech International is at first blush an unlikely exporter. Its calling card is plastic cards, the kinds that are used to get into a hotel room or stuck inside a birthday card as a gift.

But the 305-employee company commonly known as Plicards, now in its 25th year, is the kind of exporter the Obama administration is after in its ambitious plan to double exports to more than $3 trillion by the end of 2014.

The goal, called the National Export Initiative, seems unlikely to be met. The effort to double 2010’s sum of $1.8 trillion in exports nonetheless has spurred a nationwide push to encourage smaller companies to jump into global trade.

It’s also led to the Metropolitan Export Initiative, which helps big cities – 13 of them so far – take stock of the trade-related assets they have and marshal resources to boost exports.

“The export initiative made a lot of sense. It’s another way of saying a competitiveness initiative,” said Mark Vitner, senior economist for Wells Fargo Securities in Charlotte, one of the cities that the Commerce Department is considering for an export push. “What we’ve seen more in North Carolina is the ‘reshoring’: Some industry is coming back.”

Some of these companies, Vitner said, have found it cheaper to manufacture at home and export rather than produce abroad.

U.S. exports reached a record $2.2 trillion last year. But given a slowdown in China and Europe’s recession, reaching President Barack Obama’s goal next year remains a steep climb. The U.S. Commerce Department is trying to close that gap with efforts to boost exports from large metropolitan areas.

Metro areas are home to 65 percent of the U.S. population and 75 percent of the nation’s economic activity. Exports from metro areas grew by 40 percent, to $1.31 trillion, from 2009 to 2011. More than 150 metro areas, recently including Plicards’ hometown of Asheville, boast merchandise exports valued above $1 billion.

“Part of this is just bringing all the players together,” said Michael Masserman, the Commerce Department’s presidentially appointed executive director for export policy, promotion and strategy.

A major challenge in boosting exports is that the United States is the world’s largest economy, so many companies put their focus here. But 95 percent of the world’s population is abroad, and that presents a huge growth opportunity.

The financial crisis of 2008 helped break the mold as some companies turned to exports to make up for falling U.S. demand.

“Since 2008, we’ve seen a sharp increase in the number of companies that are interested in exporting,” said Greg Sizemore, the director of the Commerce Department’s U.S. Export Assistance Centers in Charlotte, Greensboro and Raleigh. “We’re over capacity in terms of the number of calls from companies interested in exporting.”

The Metropolitan Export Initiative helps participating cities create customized export plans. It also builds market intelligence and helps connect companies to foreign markets by tapping into assistance programs and connecting exporters with transportation providers.

Four cities served as pilot programs: Los Angeles; Portland, Ore.; Syracuse, N.Y.; and Minneapolis. The program expanded to Atlanta; Chicago; Charleston; Tampa, Fla.; San Diego; San Antonio; Des Moines, Iowa; Columbus, Ohio; and Lexington-Louisville, Ky.

Charlotte and Raleigh, among others cities nationwide, are under consideration to be participants. Charlotte’s export push is helped by the Norfolk Southern railroad building a terminal near the city’s airport, where freight can be transferred for shipment by truck or train.

That facility aims to connect with seaports, and the Charlotte expansion is partly tied to the widening of the Panama Canal, which will allow for larger cargo ships calling along East Coast ports.

“It’s going to be a game changer for us,” said Anthony Zeiss, the president of Central Piedmont Community College in Charlotte, who’s been involved in the local coordination to boost exports and attract exporters.

Such cooperation and coordination are exactly what the federal government hopes to foster. And that’s where Plicards fits in.

Plicards has pushed aggressively into overseas markets, at times leaning on the U.S. Commerce Department for help in seeking partners or contacts abroad.

“They’ve always been willing to extend a helping hand when we are traveling to some of these countries,” said Peter Krauss, the chief sales and marketing officer for the privately held company.

Plicards’ international sales have increased 300 percent over the past two years, but the company’s initial jump into exporting was an evolution.

“Our domestic contracts became international contracts,” Krauss said.

Plicards saw its hotel customers expand abroad, and it needed someone to make the personalized magnetic keycards used to unlock hotel doors. Similarly, some of its retail customers opened stores abroad and needed the plastic gift cards that store value.

Many companies are afraid to export, given the different languages, currencies and customs requirements.

“International shipping is not as logical as you might think it is,” conceded Krauss, who said his company had worked closely with UPS and FedEx, which provide help to new exporters and third-party services.

The effort to double exports isn’t without skeptics.

“Over time, our export volumes are driven more by demand from the rest of the world than they are about our anxiety about exporting more,” said Gregory Miller, the chief economist for Atlanta-based SunTrust Banks. “The initiatives … are good economic development issues for local areas. Whether or not they are going to drive significant additional growth in the U.S. economy is problematic at best.”

Some economic development officials, while expressing support, warn that it takes time and money for smaller companies to make the jump into exporting.

“It takes a long time to become an overnight success,” cautioned Ben Teague, a senior vice president at the Asheville Area Chamber of Commerce.

Email: khall@mcclatchydc.com; Twitter: @KevinGHall
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