Partnership aims to double Twin Cities exports by 2017

Article by: DEE DEPASS , Star Tribune
Updated: March 21, 2012 - 9:21 PM

A Twin Cities partnership aims to double export totals by 2017, focusing on small and midsize firms.

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Delkor Systems CEO Dale Anderson at the company’s plant in Circle Pines. Delkor, a maker of automated packaging systems, is among participants in global market strategies classes offered by Enterprise Minnesota.

Photo: Glen Stubbe, Star Tribune

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Minnesota's state and city leaders have teamed up with the Brookings Institution in Washington, D.C., in an effort to double exports from Twin Cities companies over the next five years.

The effort, called the MSP Export Initiative, took nine months to develop and will be launched Thursday by Gov. Mark Dayton during the Governor's International Trade Award ceremony in Minneapolis.

The goal is to increase Twin Cities area exports from $17.6 billion in 2010 to $35 billion by 2017.

"It's aggressive, but we do think it's attainable," said Katie Clark, executive director of the Minnesota Trade Office.

To get there, city leaders and export advisers will focus on educating small and medium-size firms. The hope is to create thousands of new jobs, adding to the 117,000 export-related jobs that now exist in the region, organizers said.

Organizers include Brookings, state and city leaders from Minneapolis, St. Paul and Edina; Enterprise Minnesota; Greater MSP Inc.; the Minnesota Trade Office; LifeScience Alley; the University of Minnesota; the Midwest Global Trade Association and others. They say Twin Cities businesses aren't doing all they can to tap overseas markets.

Missing a gold mine

A report released this week by Brookings Institution revealed that large companies such as 3M, Cargill and General Mills understand that overseas markets can be gold mines. The message, however, gets lost on many smaller firms.

That finding was a "surprise," said Amy Liu, co-director of the Brookings Metropolitan Policy Program, which worked with locals to survey businesses in the Twin Cities, Syracuse, N.Y., Los Angeles, and Portland, Ore.

"Most companies in the Twin Cities are not aware of the global opportunity or the demand for their goods and service," Liu said. "They think that focusing only on the domestic market will be sufficient. Frankly they are very comfortable staying with the domestic markets. But going forward, the fundamentals are going to change."

Rapid urbanization across the world is shifting the playing field away from the United States, she said. "Rather than a threat, it's creating an opportunity for U.S. firms to serve the appetite of the rapidly urbanizing world."

Minnesota exported $20.3 billion in agricultural and manufactured products last year, an increase from 2010, according to state data.

The Brookings report said the Twin Cities region, which includes parts of Wisconsin, exported $17.6 billion in goods and services in 2010 to rank 14th in the nation. The region's export growth rate, however, only ranked 84th in the country between 2003 and 2008. It's improved, but still only ranks only 67th.

"The pace of growth has been slow in the past decade and post-recession compared to other cities their size," Liu said. "Given the urgency of the economy and the enormous opportunity around the world, we needed to move this quickly."

Looking abroad for sales

Companies are determined not to be left behind.

Enterprise Minnesota, which helps small businesses maximize profits, recently saw a spike in participants for its global market strategies classes. New participants include Phygen Coatings Inc. in Minneapolis, Delkor Systems in Circle Pines; GVL Poly Inc. in Litchfield; Homecrest Outdoor Living in Wadena and Staging Concepts in Minneapolis.

"Each of these companies is planning to export as a part of their strategy to grow their respective businesses," said Enterprise spokesperson Lynn Shelton. "Some have dabbled in exporting," but now there's a surge of interest.

Phygen CEO David Bell said he sells 5 percent of his rugged "nano-particle" coatings to Mexico and Canada. "But I think it's absolutely potentially feasible that half our sales could be international because we have a world-class product," he said. Phygen has less than $5 million in annual revenues.

After taking the exporting class, Bell's decided to grow his business by first trying to double his Canadian sales. There are fewer language barriers there, he said. Later, Bell hopes to sell more in Mexico and then perhaps in Europe, expanding his team of engineers and scientists from 15 to more than 25.

Such incremental steps have helped Minnesota become a stronger exporter, state officials said. Minnesota's largest trading partners are Canada, China, Japan, Mexico and Germany. But other countries such as South Korea, the United Kingdom, Singapore and United Arab Emirates also have become important markets.

Kim Isenberg, spokeswoman for the Minnesota Department of Employment and Economic Development, said the MSP Export Initiative hopes to achieve three key goals: double exports and related jobs by 2017; increase the number of Minnesota companies that export; and increase the number of countries with which Minnesota trades. Minnesota-based companies had 25 key trading partners as of the fouth quarter.

Export assistance is available to small or medium-size firms here through the Minnesota Trade Office and the U.S. Commerce Department. Ryan Kanne, director of the U.S. Commercial Service Minnesota, said in a recent interview that his goal is to help more local businesses understand how to pursue global trade.

Kanne said Commercial Services, which is a division of the U.S. Commerce Department, is a "secret weapon," because it quietly helps Minnesota companies identify markets and international business partners. It also helps firms gear up for staffing, translation, currency and growth challenges.

Minnesota regularly exports grain, pork, medical devices, computer, machinery and machine parts.

Dee DePass • 612-673-7725