Departments

Canada / Michigan

Canada Viewed as First Step
to Exporting

by Rick Haglund
October 17, 2011

Canada is Michigan’s largest export market, but experts say there’s a lucrative opportunity for Michigan companies to sell far more than the $14.9 billion in goods they sent to their northern neighbor last year.

That’s particularly true for small companies that may not have a clue how to participate in cross-border trade.

“You don’t have to be a General Motors or a Ford or a major tier-one supplier to be an exporter,” said J.D. Snyder, project director at Michigan State University’s Center for Community and Economic Development. “But I would tend to doubt a small company knows about the service ecosystem that’s available to them if they’re not already exporting.”

Armed with a $179,654 grant from the U.S. Economic Development Administration MSU won in July, Snyder is spreading the word in the eastern Upper Peninsula and central northeast Lower Michigan.

His center is working with the Eastern Upper Peninsula Regional Planning and Development Commission and the East Michigan Council of Governments to encourage small businesses to sell goods and services abroad.

Snyder said those regions were selected because of their proximity to neighboring Canada, which has legal and regulatory systems similar to those in the United States.

Starting out by selling to Canada can help small business become comfortable with international trade. “It’s a relatively low bar to exporting,” Snyder said.

The MSU-led project is designed to support President Barack Obama’s goal of doubling U.S. exports by 2014.

As a first step, the MSU center developed a detailed online questionnaire for businesses throughout the two regions that asks them what barriers they face in exporting.

Results of those surveys are scheduled to be revealed November 4 at the group’s first exporting strategy workshop, to be held at Delta College near Saginaw. The workshop will be live streamed to Lake Superior State University in Sault Ste. Marie.

Snyder said five such workshops are planned over the next 18 months, when the project will end. MSU hopes to get at least 25 companies to start exporting by the end of the project and develop a comprehensive exporting strategy for others that want to explore new markets.

Jeff Hagan, executive director of the Eastern Upper Peninsula Planning and Development Commission, said even though his region is just across the St. Mary’s River from Ontario, businesses in the region could export more goods and services to Canada.

An earlier MSU survey of 20 manufacturing companies in the eastern Upper Peninsula found that 10 were exporting and the other 10 wanted to get involved in international trade but needed assistance.

“Exporting is not as prevalent as you think it would be,” Hagan said. “We import more from Canada than we export.”

Canada sold $28.4 billion in goods and services to Michigan last year, but bought just $14.9 billion in merchandise from Michigan companies, according to the Canadian Consulate General’s office in Detroit.

Hagan said there’s also an opportunity to sell accounting and other services to companies in Ontario.

Officials on the Canadian side of the border don’t see that as a threat to jobs and economic activity there, said Randy Tallon, director of international relations and global logistics at the Sault Ste. Marie (Ontario) Economic Development Corporation.

“We would never discourage it. The United States is one of our most important trading partners,” he said. “We have our differences, but we’re family.”

Jane Fitzpatrick, program coordinator for economic and community development at EMCOG, said increased exports could create much-needed jobs in the economically depressed 14-county region.

The EMCOG region includes the Thumb, the Saginaw Valley and several counties in northeast Michigan where unemployment consistently runs higher than the state average.

Fitzpatrick said about 90 percent of businesses in the region have fewer than 10 employees. Many of them are sole proprietorships.

“We want to pull together resources and identify what the roadblocks are to exporting,” Fitzpatrick said. “Small business managers are doing a lot to run their businesses. They don’t have the staff to delegate this to.”

One of those businesses is Dynamic Manufacturing Corp., a small manufacturer of wood chipping machines in Weidman, near Mt. Pleasant.

Tom Gross, who was the company’ president until it was sold to a Minnesota company last year, said he exported his first chipper in 2005 after teaching himself how to sell in other countries.

Today, about 70 percent of Dynamic’s $8 million in annual revenues come from international sales. The company’s major markets are in Australia, Russia and Japan.

Exporting helped keep Dynamic going during the Great Recession, which took down hundreds of Michigan manufacturers.

Gross, who is now the company’s vice president of international sales, said having an attractive website has been critical to Dynamic’s export business.

“We get inquiries from virtually all over the world through our website,” he said. “It opens the door to a worldwide market.”

Vetting potential customers and setting up payment mechanisms are big concerns in exporting, Gross said. He has utilized U.S. Small Business Administration and Export-Import Bank programs in dealing with those issues.

For the Mackinac Straits Fish Co., selling abroad is little different than selling to customers at home in St. Ignace, said owner Jill Bentgen.

She’s exporting caviar made from whitefish eggs to a company in Sweden that can’t get enough of it.

“I could sell everything I make and ship it overseas right now,” said Bentgen, a former process engineer with Procter & Gamble.

Bentgen started exporting several years ago when she was approached by a Swedish company looking to purchase caviar. She said she now exports several tons of it a year.

“It’s just normal business,” she said. “The Swedish companies speak English. We do business through electronic transfers. And we get paid in dollars.”

To get started, Bentgen said, she had to apply for a health certificate through the Department of Commerce and get her products certified for export through the Food and Drug Administration.

“It was quite easy,” she said.

MSU’s Snyder said he’s hoping his project will simplify the exporting process for many other Michigan companies and, in doing so, promote economic growth in the hard-hit eastern Upper Peninsula and Lower Michigan regions.

“We’re hoping in our own modest way to make a difference for these communities,” he said.

Rick Haglund is a freelance writer and former business reporter and columnist for Booth Newspapers.