Ninety-five percent of market opportunity is outside of the United States, but just 3 percent of American companies are exporting their products and services.
“We’ve got a lot of untapped opportunity,” said World Trade Center (WTC) Denver President Karen Gerwitz.
When it comes to growing your business, the biggest boon can be just a flight away. But businesses face a number of challenges—from where to grow to navigating international regulations—that can intimidate some companies from going abroad.
With easy access, bright talent and local resources, business leaders and advocates say that Colorado companies can and should take advantage of doing business in a global market—whether they employ one or 10,000 people.
Colorado Makes an Impact
Today about 5,700 Colorado companies are exporting their goods or services abroad, worth over $8 billion in goods and an estimated $11 billion in services.
“(International business) is critically important to job creation and diversity of growth for companies,” Gerwitz said.
Medical devices, computers and electronics, processed foods (in particular Colorado beef) and machinery are among the most valuable exports currently coming from the state.
Arrow Electronics, headquartered in Centennial, specializes in distributing computer and electronics components, and since 1980 has worked in international markets. Today, working in 56 countries across 460 locations, the company has built a reputation as an international resource for its clients.
“Our customers are trying to go to market all over the world,” said Tim Kolbus, Arrow’s vice president of global logistics solutions. “We’re uniquely positioned to offer those products and services anywhere.”
A growing space for exports and international business is in aviation and aerospace. Jeppesen, based in Englewood, creates flight maps and plans for every country in the world, including those with sanctions against them such as North Korea and Syria.
And for Jeppesen, there are growing opportunities in countries like China, India, Brazil and Turkey that are growing and whose populations are increasingly taking airplanes to travel, said Jeppesen Senior Manager of Global Compliance Deiadra Swartz.
“There are lots of opportunities,” she said, adding, “It’s not for the timid or the risk-averse.”
But it’s not just Colorado’s large companies that are working abroad. Eighty-seven percent of exporters are small and medium-sized businesses with less than 500 employees.
A Smaller World
Access may play a role in whether companies decide to export.
Denver International Airport (DIA) has 20 international nonstop flights to nine countries, including the most recent nonstop additions to Panama City, Panama, and Tokyo.
When those connections are added, there are trends in trade, as well as tourism, said Laura Jackson, DIA’s vice president of air service development. In total, those two flights are estimated to create $170 million in annual economic impact and nearly 2,000 new jobs.
Those additions are creating more options for business, but with the ease of travel, similar time zones and long-held trade agreements, Canada and Mexico continue to be Colorado’s major international trade partners.
Jackson anticipates that in the next one to two years, DIA will have more nonstop service to Mexico and Montreal, as well as deeper service to South America. In a few more years, she anticipates more service to Asia.
And that’s important for businesses, advocates said, because of the opportunities for exporters.
“Ten years ago the majority of our trading partners, other than NAFTA, were European,” said Sandi Moilanen, the international division director for the Colorado Office of Economic Development and International Trade (OEDIT). “Now I would say trade with Asia is stronger than Europe.”
With International Hurdles Locals Lend a Hand
Navigating the regulations outside of the U.S. can be a challenge, and they vary country-to-country and industry-to-industry. Being clear about your goals and where you want to expand is key, business leaders said.
“Just like you do with any sort of business plan, you need to be looking at an international business development plan,” Moilanen said. OEDIT helps with business planning and leads four to six trade missions each year.
WTC Denver offers 40 to 50 trade-focused classes annually, and is moving to add one-on-one consulting for businesses, Gerwitz said. And, with 330 World Trade Centers in 100 countries, the organization has a broad network that can facilitate local introductions around the globe.
For Jeppesen, navigating the geopolitical environment and understanding the ins and outs of a country’s regulatory system are key. Swartz said she reviews six to 11 pages of regulation changes each week.
“It really is constantly changing,” said Swartz, who manages a team of five that monitors those updates and ensures the company is complying with the regulations of each country in which Jeppesen works.
Their success comes down to diligence and never making assumptions, Swartz said.
When Jeppesen started to work with the Burmese government, the license that allowed the company to do so also prevented it from accepting payment because of U.S. sanctions against the country. To ensure it could provide the service, Jeppesen instead traded information, receiving the country’s flight information.
“It was literally a barter exchange,” Swartz said.
For other businesses, creating local partnerships and finding local talent is key.
“Those employees really help us to navigate the various requirements for doing business,” said Kolbus, who has set up warehouses in countries like India and Malaysia.
Besides trade missions and networking, Project C.U.R.E. President and CEO Doug Jackson suggests giving back to a country that you want to do business with.
Since it was founded in 1987, Project C.U.R.E. has sent medical supplies and equipment to 133 countries, and they often partner with companies that work in these affected areas.
It’s a different way to build relationships, Jackson said, and a way to show what sets our region apart.
“It’s a gesture of good faith,” he said, adding that giving back can be as simple as collecting books for a local school. “We’re about doing charity, that’s part of what makes Denver Denver.”
Experts say no matter how you make connections in other countries, nothing can substitute getting on a plane and meeting people.
That’s because as technology creates easier opportunities to connect, fraud is still a major concern.
“When an order is too good to be true you’ve got to trust your gut,” said Moilanen, who added that the U.S. Commercial Service will visit partner locations on behalf of American businesses. “It’s extremely beneficial to have somebody validate that the company actually exists.”
While challenges are present, they’re certainly not insurmountable. “The first exporting experience
might be a little laborious, but once you get through that you can learn the nuances of a new market,” Gerwitz said.
National Politics Play a Role
International business advocates warn that national politics could hamper the ability for business—particularly small and medium-sized companies—to export and do work abroad.
In particular, they’re closely watching discussions surrounding the Export-Import (Ex-Im) Bank, trade agreement discussions with Asia and conversations about ending the crude oil export ban and allowing liquefied natural gas (LNG) exports.
Ex-Im Bank
For the first time since it was chartered in 1930, Congress did not reauthorize the Ex-Im Bank at the end of June. The bank offers financing and insurance opportunities, which largely benefit small businesses.
Since 2007, more than 100 Colorado businesses, the majority of which are small or minority-owned, have used the bank to facilitate the export of their products abroad, generating a total export value of $815 million.
“It just takes the risk out of doing some of these international sales,” Moilanen said.
But, since July 1, the bank has been unable to authorize any new transactions. The Senate recently folded its reauthorization into Congress’s highway funding bill. The Small Business Administration has also noted it could take on that role of providing credit and insurance. But, it’s a service businesses need.
“The world is becoming more competitive and if we don’t have this assistance then we’re less competitive globally,” Moilanen said.
Trade in Asia
With better access through the nonstop flight to Tokyo and more market growth in Asia, Colorado companies are also watching national talks about the trade agreement between the U.S. and Asian countries like Japan, China and South Korea.
Recently Congress approved a bill that allows the president to negotiate free trade agreements with countries in Asia and the European Union. Business leaders have been supportive of these agreements because they facilitate more exporting. In fact, Colorado’s exports with Mexico grew five-fold after the North American Free Trade Agreement was put in place.
Energy Exports
As a major producer of energy—Colorado ranks seventh in the country—the state is in a unique position to keep the lights on not just for the U.S., but also the world. However, it depends on national and global conversations about energy.
Crude oil exports have been banned since the 1970s, and gas companies are urging LNG exporting approval.
“With the expansion of hydraulic fracturing and the ongoing shale renaissance we’re experiencing, the market conditions that originally prompted the ban are not reflective of the type of policy we need today,” said Sam Knaizer, a policy adviser at Brownstein Hyatt Farber Schrek and chair of the Colorado Energy Coalition’s Federal Public Policy Committee.
According to Knaizer, there’s great opportunity in lifting the crude export ban and allowing LNG exports. It makes the U.S. resistant to any supply disruptions, increases production opportunities for Colorado companies and could catalyze conversations around long-term energy policy for the country and the state.
“There’s growing support for lifting the export ban and enhancing LNG exports,” Knaizer said. “Colorado has contributed significantly to the energy renaissance we’ve had in this country.”
Denver, A Global City
Leaders agree that there is growing recognition that Denver and its companies can and do compete globally.
“Colorado offers a small but strong community in export-import,” Swartz said.
In addition to working to build business opportunities for exporting, business and civic leaders want to raise Denver’s profile by encouraging international businesses to invest here and bring in world-class attractions—from the airport to events like the Biennial of the Americas.
Doug Jackson said he’d like to see more nods to that growing international focus, like signage at the airport and major attractions in other languages.
“I think it would be really fun to see what we can do to really internationalize Denver more,” he said.
But, some of the things that the region is known for—from its collaborative culture to its access to top business leaders—may be what continues to set it apart from other places around the U.S. and the world.
“There are great market conditions here,” Moilanen said. “The ease of getting to our CEOs … that’s a huge, impressive thing that this community is able to do for international businesses.”
Sara Crocker is the communications manager for the Denver Metro Chamber of Commerce.
[Photos courtesy of Arrow Electronics, Denver International Airport and Project C.U.R.E.]