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Sunday, 28 October 2012 10:12

MEDC gets bigger slice of STEP program pie

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HOLLAND — Executives at Holland-based furniture manufacturer Trendway Corp. are seeing real returns from a new state export assistance program.

The proof: The company just shipped an $8 million order to the Middle East that it would have had a much more difficult time securing had the program not been in place.

The initial success led the 300-person, employee-owned company to continue to push its Middle East export strategy and look at other markets, said Richard Martinez, Trendway’s CFO.

“Made in the U.S.A. has a lot of meaning in the Middle East,” he said.

Martinez said the order was a direct result of help the company received via the new State Trade and Export Promotion (STEP) program. The federal initiative awards funding to states’ economic development organizations to assist small businesses in increasing their sales in foreign markets. The program reimburses companies for 50 percent of their expenses, up to $12,000, excluding meals, for activity geared toward building their exports.

Experts say companies have many resources available to them for export assistance, but many don’t know the extent of help available locally.

As West Michigan companies seek out new buyers overseas, the U.S. Small Business Administration and Michigan Economic Development Corp. continue to offer financial assistance to help defray the costs associated with breaking into new markets, as well as help companies identify new markets and potential partnerships.

This assistance to Michigan companies in developing international ties is particularly important because less than 1 percent of American companies are engaged in foreign markets and those markets represent around 81 percent of the global buying power, said Deanna Richardson, export office manager at the MEDC.

To help Michigan-based companies expand overseas, the MEDC recently launched the Pure Michigan Export Program, which is aimed at helping non-agricultural businesses.

“In order to thrive, Michigan’s companies have to be more global,” Richardson said.

This program focuses on helping small businesses through partnerships with Export Now, the Council of Great Lakes Governors international trade offices, the Michigan Small Business and Technology Development Center and the STEP program.

Through the STEP program, companies can receive reimbursements for travel expenses and the costs of attending international trade shows, as well as overseas trade mission participation, website and marketing material translation and foreign market research. The program also will reimburse companies for the cost of attending domestic trade shows, so long as the applicant is focusing on exports.

For a company to be eligible, it must fit the SBA’s criteria for small businesses and have been profitable in the past year.

Because of the funding, Trendway was able to attend a trade show in Dubai, where Martinez said there were “serious buyers” in attendance from countries such as Qatar and Kuwait. The manufacturer also quoted a total of $20 million in orders for buyers in Saudi Arabia.

“(STEP) is an outstanding program. We believe that this is going to be a successful venture for us,” said Martinez. “We really believe that there is a growing market in the Middle East.”

In 2012, the state received $2.1 million in STEP funding, $600,000 more than the previous year, which allowed the MEDC to ramp up its export assistance programs. The new round of funding kicked in on Oct. 1.

According to the MEDC, during STEP’s first year, more than 400 Michigan-based companies received funding, more than 100 companies entered 62 global markets and sales increased by $21 million.

Trendway’s Martinez said his company hopes to build off its initial success and continue marketing to the Middle East and other export markets.

“We’re in play for significant business opportunities in the Middle East,” he said. “Currently, we’re bidding for up to $14 million in business, and we consider ourselves a leading candidate for that contract.”

The company’s confidence in the region is evidenced by its plans to partner with other companies for a showroom in the Middle East, Martinez said.

The ultimate goal of the STEP program is to grow more export-related jobs in Michigan, said Maureen Lyon, international trade manager for the MEDC.

“One of the key goals of the program is to create jobs,” Lyon said. “Export-related jobs pay, on average, better than other jobs.”

This focus on overseas exports as a larger part of the Michigan economy is a relatively new phenomenon. While companies in Michigan have always been focused on exporting to Canada — Michigan is Canada’s largest trade partner besides the United States — the MEDC did not have a team specifically geared toward exports for 13 years. However, in 2011, the value of Michigan goods that were exported to China was over $2.5 billion, showing that overseas markets are something Michigan-based companies can no longer ignore.

According to a Brookings Institution study, 10 of Michigan’s 14 metropolitan areas are more export-intense than the national average.

As companies in Michigan branch out and look overseas for business opportunities, the MEDC is continuing to try to educate them about the resources available domestically that can assist them.

“There’s a lot of resources available to companies, but I’m always amazed at how many companies don’t know what’s available,” Lyon said.

One of these additional resources is the Van Andel Global Trade Center in Grand Rapids. Founded in 1999, the center is the grantee-administrator for West Michigan’s Kent-Ottawa-Muskegon Foreign Trade Zone. The center provides programming to educate West Michigan businesses about the various options available to them as well as the challenges associated with breaking into international markets.

Sonja Johnson, executive director at the VAGTC, said that to better serve the whole of Michigan, the center is considering opening a Detroit office.

Read 3815 times Last modified on Sunday, 28 October 2012 22:04

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