Nothing says “Wisconsin” quite like beer, brats and cheese, and those food items – along with thousands of other state-made products – find their way daily to consumers across the globe. In 2014, thousands of Wisconsin businesses exported $23.43 billion in goods worldwide – the highest total yet.
That number is only expected to grow as Wisconsin companies look to tap into growing overseas markets. With 96 percent of the world’s population living outside of the United States and one billion people expected to join the global middle class over the next 10 years, the demand has never been higher for American goods, said Katy Sinnott, vice president of international business development for the Wisconsin Economic Development Corp (WEDC).
“There is a huge demand overseas for products stamped with that ‘Made in the USA’ label; and the Midwest is known worldwide as a place where quality products are made,” she said.
Industrial machinery is the top Wisconsin export, followed by ag products ranging from cheese and sausage to animal feed components, plus ginseng and medical and scientific instruments. State companies export to 206 different countries, with Canada and Mexico being the top trade partners.
Cutting through red tape
While there’s easily a market for Wisconsin products beyond the United States, exporting isn’t simple. Businesses need to be aware of the myriad rules and regulations in different countries, plus currency exchanges, distribution networks and more.
“Exporting is a complicated process,” said Art Klein, director of Johnsonville Sausage’s international supply chain. “The regulations are always changing, depending on the country.”
Johnsonville is no newbie to exporting, and foreign sales continue to grow for the Sheboygan County sausage manufacturer, but when questions arise Klein turns to the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) for answers. That department, along with the WEDC, provide businesses with the vital information they need to make sound decisions.
“Exporting is complex, but not impossible,” said Jen Pino-Gallagher, bureau director for business and market development for DATCP. “That’s why we work so closely with companies that want to export.”
Wisconsin has trade reps in 79 countries who provide vital “boots on the ground” for companies interested in exporting. And, according to Sinnott, if Wisconsin doesn’t have a presence in a particular country, a business can work with the U.S. Department of Commerce.
“The trade reps are a great resource to our Wisconsin companies looking to grow their businesses overseas,” she said. “For many businesses, going overseas is a great way to grow. But it’s not as easy as saying ‘I’m going to start selling in such-and-such country.’”
The first thing to understand is that every country has different rules and regulations, Pino-Gallagher said. For ag products, that means that what needs to be on a label for a country in Europe is not necessarily the same for a product going to Asia.
Sinnott said many companies become “accidental exporters.”
Learning the ropes
“They get in an order overseas from someone who found them on the web and suddenly they’re exporting, but that may not be the best place for that company to be,” she said. “They may not know the best way to price the products to take into account currency changes, extra shipping costs, taxes, added translation costs or other costs incurred along the way.”
When a company expresses interest in exporting, Sinnott steers them to ExporTech, an export accelerator program designed for a company’s top executives and sponsored by the WEDC, the Wisconsin Manufacturing Extension Partnership (WMEP) and the UW-Stout Manufacturing Outreach Center.
Roxanne Baumann, director of global engagement for WMEP, said participants go through an intensive process that identifies the best markets for a company, then develops a plan for reaching customers and delivering products. Participating companies get specialized help and coaching during three one-day sessions.
“It’s much more effective than saying ‘let’s go to a trade show in Germany’ and then come away with nothing, but you’ve spent $10,000,” she said.
According to Baumann, companies who graduate from ExporTech increase their international sales on average between $600,000 and $900,000 within a year of finishing the course.
“I always encourage the top leaders of the company to come – the CEO, the CFO – they need to know about exporting and how it works,” she said. “We work very closely with them to develop a value proposition for their product. We tell them ‘we need to find out why you think someone would want to find you in Wisconsin for this product.’”
Baumann said ExporTech graduates identify the top three or four countries to target for their first exporting initiative and then develop a specific marketing plan.
“It sounds simple, but it really gets down to ‘who are the customers who need your products?’” she said.
While manufacturing companies mainly attend ExporTech, the WMEP has offered specific programs just for those in the ag sector.
“Dairy exporting will continue to grow as more people around the world enter the middle class and start eating dairy,” Pino-Gallagher said.
Once a business goes through ExporTech, Sinnott said the next step may be to go on a trade tour with the WEDC.
“We talk about goals and help set up meetings so companies can start to build those relationships,” Sinnott said. “We also have trade reps from different countries come to Wisconsin and provide opportunities for businesses to meet.”
WEDC and DATCP also offer seminars and workshops to help businesses learn more about exporting. The agencies are a go-to resource when businesses have questions.
“If someone from sales says ‘let’s go into Uruguay,’ the first thing I’m going to do is pick up the phone and call the Department of Ag and find out about what we need to know and do,” Klein said. “Every country is different and we just find it’s important to utilize the government agencies and ask for help. That’s what they’re there for.”
Joe Holz manages outside and international sales for Kasco Marine Inc. He said the WEDC has been invaluable when it comes to identifying distributors in countries where the Prescott-based manufacturer of aeration, fountain, de-icing and water-mixing solutions is interested in doing business. The company has been exporting its products for more than 25 years, but has greatly expanded its overseas operations the past five years with the assistance of the WEDC.
“WEDC will work with their local partners in each country to research and identify potential distributor prospects, conduct interviews to determine interest level and potential partnerability, then review the listings with us, allowing us to take the reins from there,” he said. “These searches have proven effective in some markets and helped us find good distribution in certain areas.”
Pino-Gallagher said one thing that DATCP likes to do is bring buyers to Wisconsin from foreign markets and set up meetings with interested companies. “They can have a meeting right here and start exploring options,” she said.
While most Wisconsin ag exporters are food manufacturers, some individuals – including ginseng farmers and ag professionals involved in breeding – sell their products globally.
“The key to ask yourself is: Are you export-ready? Don’t say you want to export until you’ve gathered all the information,” Pino-Gallagher said. “Don’t be afraid to ask questions.”
The WEDC offers a Collaborative Market Access Grant program that’s designed to help industry organizations, non-profits or regional economic development groups who work with Wisconsin companies to grow their exporting business.
Kasco Marine has used WEDC grants to help grow its foreign markets. The agency offers an International Market Access Grant to help companies attend trade shows overseas, translate their website or some other activity designed to boost their exporting capabilities. There are also grant programs available to help companies pay for the ExporTech course.
“We have used grants to attend industry trade shows and develop several translated, international websites to help grow the exposure and demand for Kasco products,” Holz said.
Learning how the exporting process works is the first step all businesses need to take if they’re interested in selling overseas, Holz said.
“Exporting can be daunting. There are a lot of hoops to jump through, from finding the customers, to making the sale, getting payment and delivering the product,” he said. “Practicing the process and continuing to stay on top of changes is ongoing. We now export to over 30 countries and our exposure seems to grow all the time, so our products are reaching new markets constantly.”