Exports Hold Potential for Small Businesses and Could Spur Job Growth

by Terry Costlow

Many people today link offshore job outsourcing to engineering unemployment. A U.S. Department of Commerce (DOC) exports program is aiming to turn the open international borders into a positive for U.S. companies. A bonus of the program is that it may, in fact, reduce unemployment here at home.

DOC’s Commercial Services program was designed specifically to boost exports. By achieving its primary objective, it may benefit U.S. workers in the process. “Twenty percent of jobs in the American manufacturing sector are tied to exports,” said Neal Burnham, DOC Deputy Assistant Secretary of U.S. Commercial Services. By increasing exports, we may well have to add related jobs, including engineering positions.

The weak U.S. dollar is making American goods less expensive — and therefore more attractive — to international markets. As a result, U.S. technology companies have more incentive than ever to view overseas markets as an opportunity rather than a threat.

Small Businesses Have Huge Opportunities

The export environment should provide benefits for American companies, particularly small businesses that are adept at competing with larger competitors. “There’s a huge untapped market,” Burnham said. “We estimate that 95 percent of the market for small companies exists outside the United States.”

Much of the agency’s efforts are focusing on helping small companies that don’t have the resources to set up international branches and can’t take risks in what can become expensive dealings. Working with foreign operations can get costly quickly, particularly when companies find themselves at a dead end in their negotiations. While the government can’t prevent those fruitless efforts, agencies generally provide lower-cost services than private enterprises or foreign programs. “A lot of what we do is free,” Burnham noted. “We charge fees for some products under our cost recovery program, but most of those fees are nominal.”

A case in point: Tobias, an Ivyland, Penn. firm that makes optical systems used in the printing industry, used the program to determine whether certain foreign distributors were legitimate, hard-working operations. “After we got company names, (DOC) looked into their backgrounds for us,” said owner Erik Tobias.

Once the company started selling offshore, it took advantage of a related government operation to ensure it would get paid. The Ex-Im Bank guarantees that Tobias will receive payment for goods it ships overseas. “Below $10,000, we do the work, but for sales above that, they check things out for us,” Tobias said. The company now sells mainly to four countries: Russia, China, Japan and England.

Export Growth On the Rise

Export growth for the companies that have worked through the agency grew solidly last year. “Commercial Services facilitated $35 billion in exports last year, a 27 percent increase over the previous year,” Burnham said. The increase was even sharper during the first few months of this year, with exports up 12.6 percent through April. Shipments to Mexico rose 16 percent, while exports to China grew by 35 percent growth, prompting a very strong focus.

“We’re putting a lot of emphasis on China,” Burnham said. “It’s a very dynamic place, where they need a lot of things. There’s a lot of infrastructure development in China and Eastern Europe, and these regions need technical products for their infrastructure.”

Burnham said that high technology companies often do well when they begin exporting. “Technology is big,” he said. “These countries don’t have a lot of products made by U.S. companies.” The DOC Commercial Services program and others are working to change that.

IEEE-USA Efforts

IEEE-USA has long focused on the impacts of globalization, noting that manufacturing supports more than 90 percent of company-financed research. "National R&D policies and expenditures strongly influence the ability of our nation to compete in global markets," according to a 1998 IEEE-USA position statement, Creating an Economic Environment for Technological Competitiveness.

Terry Costlow has written about the electronics industry for more than 20 years, covering a wide range of technologies and topics. He can be reached at todaysengineer@ieee.org.