Exporting opportunities continue to grow sales for New North goods manufacturers
Story by J. S. Decker
International exports from Wisconsin dropped 4 percent last year from a record year in 2014, but at $22.4 billon, sales stand strong at nearly double levels in 2001.
Exports from Wisconsin companies steadily increased through the Great Recession, with strong partnerships forged more easily across a globe that seems smaller every day.
Technology is critical, of course. Communication and transportation are more efficient than ever. Agriculture and heavy industry are big parts of Wisconsin’s global reputation, and extensive support from Madison helps build bridges to everywhere.
Proper shipping records are one lesson among many at workshops hosted by Wisconsin Economic Development Corp., the quasi-government state agency with an entire division devoted to international trade.
Dennis Lewandowski, vice president and partner at A.P. Nonweiler Company of Oshkosh, attended such a workshop and said it pays to know “what the new rules are for safety data sheet programs, what type of information you’ve got to have for the government.”
The manufacturer of industrial paints and coatings exports about 6 to 7 percent of its total sales internationally, Lewandowski said, adding that most of those customers seem to find A.P. Nonweiler one way or another.
“It’s mostly all referrals. We’re big in the airplane industry, so all the people who re-coat planes and parts for planes call us,” Lewandowski said. “We make all the coating for oxygen bottles.”
Pipeline inspection gear made in Menomonee Falls was recently shipped to Columbia, and most of its parts were fabricated at Grassroots Machining LLC in Neenah. Owner Chuck Duginski reads over old blueprints written in German, Italian and other languages before he can replace worn out and broken parts for heavy equipment manufactured overseas years ago.
Eventually, Duginski’s six fulltime employees might have new co-workers taking on projects from abroad.
“I would like that,” he said. “It’s a little bit daunting, to be honest, especially with currency exchange rates and things like that. But I’ve been told that American-made goods, especially heavy industry goods, are still looked at as the best in the world.”
Industrial machinery like the kind Duginski repairs and recreates parts for made up 26 percent of Wisconsin exports in 2015, according to the U.S. Census Bureau. Medical and scientific instruments exported by Wisconsin firms also performed well, growing 11 percent to $2.4 billion.
Feeding the world
Food exports from Wisconsin continue to grow. Total agricultural exports last year reached $3.4 billion, while dairy exports were $273 million. Mexico consumed the most Wisconsin dairy, followed by Canada, Japan, China and Korea. If Wisconsin were a nation, it would be the world’s fourth-largest cheese producer. As it stands, 26 percent of U.S. cheese is made in the Dairy State.
The International Agribusiness Center of the state Department of Agriculture, Trade and Consumer Protection has made introductions for Wisconsin agricultural producers and offered education for more than 50 years. As Director Jen Pino-Gallagher said, “If a company is only selling to US markets, it’s as if they’re in a room with 100 people, but they’re only talking to the four closest people!”
She points to growing economies and customer bases around the world.
“There’s a growing middle class in foreign markets,” Pino-Gallagher said. “There’s a greater desire and ability to purchase imported food products.”
The International Agribusiness Center educates business owners on international outreach, helping them to navigate the often complex process of selling products abroad. It also coordinates with WEDC and the governor’s office to organize trade missions abroad. More than 10 agriculture business leaders journeyed with Gov. Scott Walker and DATCP Sec. Ben Brancel to Mexico this past June, as an example.
Trade missions leave impacts lasting for years to come, said Katy Sinnott, vice president of international business development for WEDC.
“After our trip to China in January, a group from the Shanghai Foreign Investment Development Board visited Wisconsin to understand what opportunities exist in our state, and what products their companies can buy to meet their needs,” Sinnott said.
Following a trade mission to China in 2013, the Wisconsin Ginseng Board and a Chinese medicine firm signed an agreement to buy more than $200 million in Wisconsin ginseng. On that same trip, Miller Electric Manufacturing in Appleton sold 50 welding systems to a Shanghai automotive manufacturer and received more orders after that, according to Sinnott.
Catering to growing wealth
Wisconsin Spice in Berlin has grown from fewer than 50 employees a decade ago to 90 employees today. It’s also significantly grown its global market during that time, earning the manufacturer of mustard and mustard-based ingredients a spot as a finalist in the 2015 Governor’s Export Achievement Awards.
Nearly every mustard seed milled near Berlin is shipped there from Canada and on to other factories where it becomes a condiment, said Al Sass, director of operations for Wisconsin Spice. It might also be used as an ingredient in dressings, sauces and processed meats.
Sass indicated much of the company’s export growth has resulted from consolidation within the food industry – an international company buys a U.S.-based food producer that Wisconsin Spice was providing mustard ingredients for, and within a short period of time Wisconsin Spice becomes the worldwide vendor for that parent company. An estimated 30 percent of the company’s mustard seed is now exported outside of the U.S.
Those opportunities are increasing as developing economies generate more disposable income for their citizens to enjoy inessential comforts, such as pre-made and packaged condiments and sauces.
“Having condiments on your food isn’t a necessity to survive,” Sass said. “In many (poorer places around the world), it’s really more of a luxury.”
Only a handful of countries remain beyond the reach of Wisconsin agriculture.
“Even Iran, these days, we can export to. Presumably, there would be no issues with Cuba,” Sass said. Relations with that socialist island neighbor have recently warmed.
Local and federal regulations in other countries remain some of the tallest hurdles Wisconsin Spice must overcome.
“As over-regulated as people may think we are in the U.S., we are significantly less regulated than many other countries,” he said. “Not to be political, but the biggest concern we have is who is going to be our next president. Exporting is always more easy and more viable for U.S. companies when we have solid trade agreements.”
Sweetening international relations
North Korea is on a short embargo list. Russia recently refused to accept certain U.S. imports in retaliation for sanctions over the invasion of the Crimean Peninsula. Even so, the owner of PoppingFun, Inc. in Neenah just hosted executives from a major Russian chocolate factory in his own home. The friendly visit cemented a new deal for his carbonated candy crystals to be part of Russian chocolate truffles.
PoppingFun President Lynn Hesson is glad to have a new, strong presence in a major market. The larger market still eludes his team, however.
“Breaking into Europe is still a challenge. That’s where most of the market is at, and where our two main competitors are.”
Some are made in China and some in South Korea, while the popular candy brand Pop Rocks are made in Spain, and another competitor is in Turkey. To help claim a larger market share, Hesson brought aboard Kuntay Ozkan as his marketing director, hiring him away from the competition in Istanbul.
Ozkan predicts his experience and devotion will generate “exploding sales.” That means working in each time zone at any moment.
“The client has to feel that you are right there next to them,” he said. Ozkan speaks several languages, but noted every client call drifts towards English. “It’s the world language now.”
PoppingFun’s fizzy, popping crystals are made in a quiet, unmarked building in Neenah’s Southpark Industrial Center. The treats are packaged and sold under many private label brands including Angry Birds, Star Wars and TNT Candy, but the main market for its highly pressurized sugar crystals are as an ingredient, whether in Dairy Queen Blizzards or breakfast cereal.
“We sell to more than 40 countries,” Hesson pointed out, and nothing resembles international hostility when candy is involved. “If more of the world only worried about commerce, we’d all be better for it.”
J.S. Decker is a writer and father in Oshkosh.