Maine companies look to Canada, China in export market for state economic growth

Posted Aug. 02, 2013, at 4:02 p.m.
Last modified Aug. 02, 2013, at 7:05 p.m.

Gov. Paul LePage last year led his first gubernatorial trade mission abroad, accompanying 14 Maine businesses and organizations on a trip to mainland China and Hong Kong. Participants had 77 face-to-face meetings with potential business partners during the weeklong mission, according to the Maine International Trade Center, which coordinated the trip.

This year, LePage and Maine businesses interested in expanding their global reach have their sights set south. In late October, the governor, Maine business representatives and others will take off for Mexico City and Bogota, Colombia.

They’re making the trip as exports come to represent a greater share of business for more Maine companies, a greater share of the state’s jobs and a greater share of the state’s hopes for economic growth.

“Part of that is, the world has become a much more global market,” said Janine Bisaillon-Cary, president of the Maine International Trade Center, which offers technical assistance to Maine businesses looking to access foreign markets. “A lot of that is also the Internet. It’s just so much easier and cheaper than it used to be, so it’s much more approachable for small- and medium-sized companies.”

It’s also a necessity to look abroad to grow as the U.S. market stagnates. While Hussey Seating Co. has been exporting for decades, said CEO Tim Hussey, the export market holds most of the growth potential today for the North Berwick company, which manufactures gymnasium bleachers and stadium and auditorium seating.

“The American market for school and college construction and even stadiums and arenas, they’re still in recession-like conditions here,” he said. “We want to be less dependent on the U.S. market.”

A number of Maine business have been following that path in recent years.

Selling more abroad

Maine has seen near constant growth in the value of its businesses’ exports since 2000, save for a few years during the global economic downturn, according to data from the Maine International Trade Center.

Maine businesses sold nearly $3.1 billion in goods to overseas clients in 2012, a 72 percent jump over the nearly $1.8 billion in overseas sales from Maine companies in 2000. Exports peaked in 2011 at $3.42 billion.

While forest products — a traditional economic sector for Maine that includes wood, wood pulp and paper products — have dominated Maine exports, the state has seen the fastest export growth in the aircraft and aerospace industry, which includes companies such as C&L Aerospace, a Bangor-based aircraft repair and maintenance company, and Tex Tech Industries in Portland, which manufactures specialized fabric for aircraft interiors.

The state’s forest products industry exported $885 million in goods in 2012, up nearly 80 percent from its 2000 exports, which totaled $492.3 million. While the aircraft and aerospace industry accounted for a smaller portion of exports, it exported 3,800 percent more goods in 2012 than it did in 2000, jumping to $268 million from just $6.9 million in 2000.

Other bright spots for export growth have been within the state’s seafood industry, where exports grew to $342 million in 2012, and industrial machinery, a sector that exported $146 million in 2012.

To some extent, Maine has a geographical advantage when it comes to competing in a globalized marketplace, said Dana Connors, president of the Maine State Chamber of Commerce.

“In the U.S. economy, we’re seen at the end of the line,” he said. “In the international economy, that’s not the case. In some instances, we’re actually quite well served because of the ports we have and the proximity we have to ocean gateways.”

A globalized marketplace also means a more competitive market, said Hussey, so businesses have to adapt. Often that’s by expanding into new markets.

“It really is a flat world today,” said Hussey, whose business has seen growth especially in Mexico and the Middle East in recent years. “The barriers are down. You’ve got competitors coming into your markets. There are opportunities in others.”

Like they did in Maine, exports reached an all-time high nationwide in 2011, hitting $2.1 trillion and accounting for 13.9 percent of the economy, according to a paper published by the federal International Trade Administration.

Manufacturing industries that rely heavily on exports generally offer better-paying jobs. The trade administration estimates workers in export-reliant manufacturing industries earn 18 percent more than their counterparts who manufacture primarily for domestic customers.

Exports are also a path to faster overall growth for businesses.

In Maine, about 178,000 jobs are tied to international trade, according to the Washington, D.C.-based Business Roundtable, an association of business executives. According to the group, the share of Maine jobs dependent on trade tripled between 1992 and 2011, to 22.3 percent of jobs from 7.5 percent.

Despite growth in recent years, Maine still ranks low among states as an exporter of goods (46th nationwide) and services (45th). (Maine’s economy ranks 44th among the 50 states and Washington, D.C., according to the U.S. Bureau of Economic Analysis.) But Maine’s forest products and seafood exports place it among the top 20 states for those sectors, according to the Business Roundtable.

Farther east, south

As Maine companies have grown the export side of their businesses, the destinations for those goods have shifted eastward. Canada continues to be the state’s dominant customer, purchasing $1.1 billion in Maine exports in 2011, up from $838.9 million in 2000, according to the Maine International Trade Center. Malaysia has continued to hang onto the second spot.

China, which was the third largest customer for Maine’s exported goods in 2011, was 18th on the list in 2000.

In 2011, five of the top 10 recipients of Maine exports were in Asia, compared with four of the top 10 in 2000. European customers such as France and Germany, meanwhile, have dropped in rank on the list.

The Maine International Trade Center organizes its trade missions based largely on where its members — about 300 businesses — are most actively pursuing trade opportunities, said Bisaillon-Cary.

This year’s mission to Mexico and Colombia comes as trade center staff field a growing number of requests for assistance from businesses hoping to branch out into those markets.

The trade center made the decision, Bisaillon-Cary said, “particularly with the uncertainty going on with certain European markets, some uncertainty going on with certain Asian markets and a high demand coming through with requests for trade assistance” with Mexico and Colombia.

The economies in those countries have grown steadily as economies in Europe have contracted and growth in parts of Asia has slowed. In addition, while Colombia hasn’t typically been a major customer for Maine goods, the newly signed U.S.-Colombia Free Trade Agreement could make it more practical for Maine companies to export their products to Latin America’s fourth largest economy.

Bisaillon-Cary said the trade center is still signing up participants for the trade mission. So far, she said, it has signed up businesses from the precision manufacturing, oil and gas, construction products and other industries.

Those businesses participate in matchmaking sessions with potential business partners while abroad. Once they’re home, Bisaillon-Cary said, it likely will take some follow-up before those meetings translate into sales.

“It takes a lot for export sales to come together,” she said. “There are very few that come together right at the time of the meetings. It often takes a follow-up trip.”

Matthew Stone is BDN opinion page editor.

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