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COVER
STORY - March
2001 by Lisa Summers Sidebar- Kentucky exported over $9.6 billion of goods in 1999, ranking 22nd among the 50 states in value of exports. Manufactured goods comprised the majority of Kentucky exports, although agricultural products and coal also played a significant role. “There is an awareness of global markets,” said Mary Beth Warner, deputy commissioner for the Kentucky Cabinet for Economic Development’s Department of Community Development. “Exporting pays. It really can replace declining domestic markets.”
Canada is Kentucky’s largest single importer, accounting for nearly 32 percent of the state’s total exports. Following Canada, Kentucky’s major export markets include Western Europe and Pacific Rim countries. The United Kingdom, France, Germany and the Netherlands are Kentucky’s major European importers. Japan and Mexico are also in the mix. Latin America is the fastest growing market for Kentucky goods and services. Kentucky exports to Brazil increased 837 percent during the 1990s, while exports to Argentina climbed 417 percent, and to Chile 172 percent. The state already operates an office in Guadalajara, Mexico and officials are currently reviewing several locations for a second office in the region. A trip by state officials to South America will occur sometime in March, and in July, Governor Patton plans to lead a delegation of government and business leaders on a trade mission to Latin America. Finding
assistance and capital “Kentucky businesses need a wake-up call,” said John Autin, director of the U.S. Department of Commerce Export Assistance Centers. “Forget yesterday’s lessons: tomorrow’s profits are going to come from foreign markets. And so will the competition.” Autin noted that success in the global marketplace cannot be achieved by accident. “Kentucky business leaders will have to learn new strategies and find new tools to compete internationally,” said Autin. “Fortunately, they don’t have to do it alone. The U.S. Department of Commerce has export assistance centers in Louisville, Lexington, and Somerset.” Warner noted that exporting does have its built-in challenges. First, it requires capital and staff time. “It does require, in many markets, serious face time,” said Warner. “That personal relationship and that trust is very, very important.” Companies interested in exporting their goods must have access to working capital. In some communities, business owners may be forced to look outside their home community for banking institutions and law firms that are accustomed to international trading. J.R. Wilhite, commissioner of the Kentucky Cabinet for Economic Development Department of Community Development, said all the challenges are surmountable. Before considering exporting, businesses should first ensure that their domestic house is in order. Market research is also crucial to success in foreign markets. Business owners should look at their product and then pick a market. “Focus on that one market for the time being,” suggested Warner.
Another is Dippin’ Dots Inc., of Paducah. Dippin’ Dots exports ice cream and yogurt to Belgium, Denmark, Canada, France, and Germany, among others. In state capital Frankfort, AWP Industries exports bulk steel and wire mesh containers to Canada and Mexico. In all, more than 800 companies with a Kentucky presence exported their products in 1999, according to the Kentucky International Trade Directory. Numbers for 2000 will be released sometime in May. “It’s amazing how small the world has become,” said Wilhite. Kentucky’s
agricultural exports Tony Moreno, principal assistant with the Kentucky Department of Agriculture (KDA), was hired last year to help the department concentrate on expanding international markets for Kentucky agricultural products. Moreno is currently working on a partnership project between the KDA, the Foreign Agriculture Service of the U.S. Department of Agriculture, and the U.S. Commercial Service of the U.S. Department of Commerce. The partnership’s goal is to bring export assistance to Kentucky farmers. “That’s our main priority for the new year,” said Moreno. “We’re looking at markets all around the world.” The program focuses on three initiatives: wood products, bourbon, and organics. Kentucky farmers produce high-quality wood products, noted Moreno. An example is Baille Lumber Company’s hardwood yard in Leitchfield . That company exports 85 percent of its production to more than 70 foreign markets each year, according to a report by the KDA. The wood is used for flooring, furniture, cabinets, and other finished products. Kentucky is already known worldwide for its bourbon. And organic foods are becoming increasingly popular in the United Kingdom, producing a demand for those types of products. Moreno said Kentucky dairy cattle acclimate well to Mexico, making them a profitable export as well. The KDA uses its field office in Guadalajara, Mexico to help build export opportunities in that country. The office, which is a joint effort between the KDA and the Cabinet for Economic Development, has generated nearly $1 million in sales of Kentucky cattle in the past two years, according to the KDA. In an increasingly global economy, Moreno says Kentucky farmers should consider the potential benefits of exporting. “Now is a good
time to form these relationships,” said Moreno.
“Contact us. We can put you in touch with
professionals.” Claude Hammond is
editorial director of The Lane Report.
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Transportation
equipment ranked first in Kentucky in 1999 in export
shipment value ($3.5 billion), placing Kentucky ninth
overall in total transportation equipment export sales.
The second most lucrative export product in Kentucky was
industrial machinery, including computer equipment ($1.5
billion). Chemicals and allied products rounded out the
top three at $1.2 billion in export sales.
Already, many small
and medium-sized companies are heavily involved in
international trading. One example is D. D. Williamson
and Company, Inc., of Louisville, which exports dough
conditioner and caramel coloring to more than 60 foreign
countries.