Northeast Wisconsin companies get strategic in international markets
Story by Rick Berg
In the best of all global trade worlds, strategy meets opportunity to create sustained success for Wisconsin companies that want to expand their market presence beyond the United States borders.
“We see all kinds of exporters, including what I call accidental exporters, who maybe get occasional one-off requests for products and just send them off,” said Katy Sinnott, vice president of international business development at the Wisconsin Economic Development Corp. “The difference between those companies and those who are successful is that successful exporters are very proactive, and that has a lot to do with planning and the way they implement their global strategy.”
Sinnott described the five P’s of exporting as planning, products, people, process and partners.
“All of those are important, but it starts with planning,” she said. “It’s extremely important for executive leadership to develop and implement an export strategy.”
Even successful exporters may have started out opportunistically. The key factor is that they evolved strategically. Case in point is Appleton-based CMD Corp., which recently won the 2017 Governor’s Export Achievement Award for “businesses that have achieved significant growth or implemented innovative strategies in exporting.”
CMD President Steve Sakai said his company had, prior to 2009, sometimes dabbled in exports, “but I always considered that as an opportunistic endeavor as opposed to a sustained element of an overall strategy.”
Beginning in 2009, he said, the designer and manufacturer of converting machinery to produce plastic bags, pouches, and flexible packaging recognized it would need to become strategic and aggressive in global trade. The company already owned nearly 90 percent of the domestic market share for its packaging equipment, so there was little room for growth, especially as the U.S. market overall continued to slow immediately following the recession.
“For us to achieve our growth aspirations, looking at (foreign) markets became an imperative,” Sakai said.
Combine slow domestic growth with increased international competition in the U.S. market and you have a compelling motivation to expand globally, said Paul Rauscher, CEO of Hobart-based EMT International.
“If you’re just trying to defend your domestic market share, you’re fighting a losing battle,” Rauscher said. “It’s like in sports. If you’re only going to play defense, you’re only playing half the game and you’re going to lose.”
Defining success in global trade
International trade professionals and successful exporters alike note there are common characteristics that tend to define companies who do well in global trade.
Success usually starts with companies connecting with resources available to them and understanding that doing business globally is a far different experience than doing so domestically, said Greg Miller, international trade consultant at the University of Wisconsin Oshkosh’s Small Business Development Center.
Companies that want to succeed globally “have to be willing to take risks,” said Dean Stewart, dean of corporate training and economic development at Northeast Wisconsin Technical College in Green Bay, which hosts the Northeast Wisconsin International Business Network.
“It’s generally important to be more proactive than reactive. However, when a business first enters global trade, there are going to be lessons learned along the way and it’s important to be reactive to those lessons,” Stewart said. “What went right and what went wrong? What would we do differently? Then you can be more proactive the second time around.”
The elements in Sinnott’s “5 Ps” of exporting – planning, products, people, process and partners – often surface in discussions about global trade.
Be strategic and understand the market differences. Successful exporters start out by assessing the best international markets for their products and understanding how those markets may be different from the domestic market, Sinnott said.
“That’s probably what takes the longest, because you have to do a lot of market research,” Sinnott said. “You have to find out what countries are a good fit for your products, and you can do that by leveraging the resources of the WEDC, for example. You need to understand how your products might be used differently in those markets. Sometimes the packaging needs to be different and you wouldn’t know that if you haven’t done your research.”
Sakai noted CMD quickly learned that in some markets the company’s equipment had to be able to function effectively in conditions where power generation was sometimes inconsistent.
“That was somewhat surprising to us at first to discover that the consistent availability of electric power was not something to be taken for granted in some places and so you have to adjust for the fact that the machines might be taken down suddenly due to a loss of power,” Sakai said. “That just doesn’t happen in the U.S., of course, or very rarely. So that’s something our machines were not designed for initially, when we were doing business mostly in the United States.”
Create a global culture. Having been both an occasional and a strategic exporter, Sakai said he sees a difference between companies that do business internationally and companies that are intrinsically international.
“To be a truly international company requires a different philosophical perspective – a global view,” Sakai said.
“You really have to internationalize your operations,” Sinnott said. “Companies that export well are organizations in which everyone understands why global business is important, regardless of whether they’re involved in the export process. It becomes a key element of your growth strategy and everyone buys into it.”
“We have invested a lot of time and effort in terms of engaging our employees in creating a culture that allows us to adapt quickly and respond to the needs of the markets,” Sakai said. “I really give our employees a lot of credit, because the vast majority of them have been with us for a very long time and most grew up in this area. So, it was challenging at first to think about doing business in countries far away, with business practices that we didn’t always understand at first.”
Develop global partners. Creating a support system of experienced transactional partners is one critical key to doing business globally, Sinnott said. That includes legal, financial and logistical support, as well as distribution and service partners in the regions where a company is doing business.
One of the hardest business operations to manage internationally is sales and service, according to Rauscher. When EMT International recently acquired Germany-based RotoControl Gmbh., Rauscher did so primarily to strengthen EMT’s label-finishing equipment production. Much of that company’s manufacturing capacity will locate to Hobart, but Rauscher said an important side benefit to the deal is that EMT now has sales and service capacity in Europe.
“To do business well in Europe, we needed to have a footprint there,” Rauscher said. “You need that in sales and service for sure, to support your products. We didn’t have that before. We had a small service team that we did through another company. RotoControl is very good at that and has a good global presence, so that will help us not only in the EU, but internationally as a whole.”
Similarly, CMD recently acquired Flex4 of Switzerland, which specializes in servicing packaging equipment.
“As our business overseas has grown, the demand for service and support for our products has increased, and I can tell you that providing service and support to Europe efficiently is not the easiest thing to do from Appleton,” said Sakai. “We saw that a necessary component for us to be successful internationally is to be able to service our customers effectively and provide timely technical support.”
Reaching global critical mass
Miller said as more companies in the New North turn their attention globally, a kind of critical mass will gradually be achieved, with organizations discovering best practices from one another.
“We still have a lot of work to do in terms of global trade,” Miller said. “We’ve been too fragmented and not very cohesive or collaborative until recently, but we are beginning to do better at engaging the resources that are available.”
Stewart expects that more companies in the New North will gravitate toward global trade as market imperatives compel them.
“What they’re going to recognize is that there is only so much business they can capture in the United States or even in North America,” Stewart said. “It’s a big world out there and it’s going to be increasingly important to be aggressive in terms of how they view their business footprint and how they define their marketplace.”
Colleges like NWTC can help by developing a workforce better able to work globally, Stewart said.
“We are creating a lot more international awareness here,” Stewart said. “We have intentionally increased the number of international students here and exponentially increased the number of study-abroad opportunities for our students and faculty. We’re trying intentionally to build a global culture here and in the region.”
“If you want to be a global player, you need to think globally,” said Rauscher. “You have to expand your thinking about what you’re going to do and how you’re going to do it.”
For Sakai, thinking and acting globally has benefits that transcend the profits made from global trade.
“We’ve certainly learned a lot through our experience internationally and I think it’s made us a better company overall in a lot of different ways,” Sakai said. “It’s sharpened us as a company and improved our ability to service our domestic customers, as well as our international customers.”
Rick Berg is a freelance writer and editor from Green Bay.