More Firms Seek Growth Opportunities Overseas Saturated American Market Forces Companies To Expand Search To Keep Growing

For B.W. Elliott Co., a manufacturer of mechanical parts, success at home meant venturing abroad.

Close to bankruptcy in the late 1970s, the maker of transmission components used in everything from ships and airplanes to construction equipment turned around and reached the top of a tiny U.S. market. But growth stalled.

Like many small businesses, Elliott turned to export marketing, lured by double-digit economic growth in emerging countries, compared with U.S. economic growth at an annual rate of 2 percent.

“When you’re at the bottom, you grow by stealing market share from your competitors,” said Tom Dunn, the company’s national sales manager. “When you reach the top of the pile, you look at new business.”

Binghamton, New York-based Elliott started cultivating business overseas, in particular Japan.

This year, exports are expected to account for 20 percent of its annual revenue from almost zero three years ago, Dunn said. The company has about $15 million in annual revenue.

The number of U.S. companies that are exporting is growing 4 percent a year, primarily fueled by small companies, according to Lesley Stroh, publisher of The Exporter trade magazine.

“The U.S. market is saturated in many industries,” said Job Dieleman, an Athens, Georgia-based international trade consultant who is part of the University of Georgia’s business outreach services.

Balchem Corp. took its first trade steps in Europe for its specialty chemicals for food ingredients, then Southeast Asia for the company’s fish feed used in shrimp farming.

“We think of ourselves, in food ingredients, as being a worldwide company,” Raymond Reber, chief operating officer of the Slate Hill, New York-based chemical company.

Today, about 30 percent of the company’s $19 million in revenue and about half of its fish food sales come from exported products, Reber said.

Both companies said lots of legwork and planning were critical in making their export businesses successful.

“We targeted specific customers. In some cases we lined up with local distributors,” Balchem’s Reber said.

Elliott got help from existing customers. In one case, a customer in California played matchmaker. The customer would import Japanese parts and install Elliott’s parts to make vibrators used to keep air pockets from forming when cement is poured at construction sites.

Elliott asked to be introduced to the Japanese company, so the presidents of the three companies set up a meeting at a trade show in Las Vegas.

Dunn said the most difficult part of the process was the length of time it took to get the first order. The Japanese spend a lot of time, sometimes years, in selecting suppliers, he said.

Once selected, though, the Japanese company will buy products from a supplier for a long time, Dunn said.

To be sure, selling goods into overseas markets won’t fix problems at home.

“Selling to international markets is not a way to reverse years of domestic mismanagement,” said Richard Meisenbacher, director of international trade development at the New Jersey Small Business Development Center, a part of the Rutgers University Graduate School of Management in Newark.

Export plans must be seen as fitting into a long-term business plan, said Raymond Fogarty, director of the Rhode Island Export Assistance Center, a part of Bryant College in Smithfield.

The plan should include the company’s competitive advantages, who its competitors are, product pricing, service levels, financing and distribution channels, among others.

Linking up with a distributor or sales representative can make the process easier.

Balchem hired an agent, based in Thailand, who helps out with cultural differences, language, and import licenses.

Dunn warned, though, that middlemen can get in the way of a business relationship. “Trading companies can erode profitability for both companies,” he said.

There are plenty of resources available to small companies who are researching the export business, especially through the U.S. Department of Commerce’s Small Business Administration.

The Rhode Island Export Assistance Center, a partnership of Bryant College and the SBA, runs the International Trade Data Network.

Regional trade groups are helpful in learning about exports from other small businesses who have already gone through the learning curve.

State universities, in partnership with the Small Business Administration, often run small business development centers that offer seminars and consulting services.

The U.S. Department of Commerce offers the National Trade Data Bank, Business America magazine, and an 800 service - 1-800-USATRADE that will fax trade information to individuals.