Helping Small- and Mid-Sized Manufacturers Reach Their Export Potential

September 04, 2013

The Great Recession forced a number of U.S. manufacturers and service providers to look outside national borders to not only succeed, but to survive in the face of a weak domestic market. In their latest report, On the Threshold: Refocusing U.S. Export Assistance Strategy for Manufacturers, Stone & Associates argues that the U.S. must focus on bolstering manufacturing exports as a way to lessen U.S. reliance on its domestic market, reduce the trade deficit, and foster job creation. Rather than focus on macro-level strategy, the report centers on firm-level measures that export assistance organizations can take to aid small- and mid-sized manufacturers (SMMs) in increasing their exports.

But, why focus on exports? The answer lies in the tremendous opportunity in foreign markets. Manufacturing represented 65 percent of U.S. goods exports and 46 percent of total exports (including service exports) in 2010. Although large manufacturers dominate the export market, SMMs still hold a significant share. They directly account for 19 percent of manufacturing sector export value and indirectly contribute to value produced by larger companies in the supply chain. The authors point to an opportunity for growth in foreign markets, as 80 percent of global purchasing power is outside the U.S. and this figure continues to rise. Unfortunately, three-quarters of SMMs exporters only sell to four or fewer markets, often unable to identify and capture other prospects in the international market.

Companies best poised for international growth are identified as “threshold companies” by the authors. These are defined as SMMs willing to commit resources toward expanding exports and currently are moderate exporters to new-to-export companies with differentiated products. The authors estimate that there are 25,000 to 80,000 threshold firms that are not sufficiently served by the export assistance community. But what do they need to reach their export potential? Based on interviews with more than 25 companies, export assistance organizations, and other associations, the authors deduced that assistance needs to be focused on helping SMMs’ management and awareness of foreign market opportunities. To do so, they suggest export assistance organizations target services specifically to threshold companies, provide more relevant market data, and offer both foreign and domestic staff. Click here for the full report…

Learn More at SSTI's 17th Annual Conference!

Michael Stone of Stone & Associates will delve deeper into this topic at SSTI’s 17th Annual Conference in Portland, Oregon, on September 15th – 17th, during the session Export Assistance for Technology-Based Startups and Early Stage Companies. He will be joined by two additional panelists who will expand on how the export assistance community can identify companies with export potential and help them succeed. Register today!

manufacturing, policy recommendations