IQ Magazine - Winter 2012 by Initiative Foundation

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IQ Magazine

WINTER 2012

Contents 20

ABOUT THE COVER: OVER THERE: Central Minnesota’s Global Economy, cover design by Andrea Baumann.

OUR MISSION:

Unlock the power of central Minnesota people to build and sustain thriving communities. INITIATIVE FOUNDATION STRATEGIC PRIORITIES:

34 20 26 34

D E PA R T M E N T S

F E AT U R E S

Kathy’s Note 4 Translations

Over There

IQ Points 8 Your Two-Minute Digest

Central Minnesota’s Global Economy.

Five Markets Infinite opportunities.

Exportrepreneurs At the vault of international trade, a clever few are picking the lock.

– Resilient Businesses – Thriving Communities – Effective Organizations – Local Philanthropy

Technical Instruction Manual Investments, persistence (and some assembly) required.

4 4 R E S OU RC E S — Get There from Here International aspirations? Here’s your little black book.

Tip Sheet 12 Welcome, Stranger Whether you’re an overseas tourist or a corporate rainmaker, culture counts. Sign of the Times 14 The Foreign Exchange International students guide firms to unfamiliar success. On the Job 48 How to Greet a King Five things to know about life as an International Trade Representative. Brainiac 56 An IQ&A with Minnesota Trade Office Exec Katie Clark

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WINTER 12

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Kathy’s Note

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translations

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I’ll never forget the time when my husband and cousin-in-law set about the task of improving a youth camp septic system. Seriously. One of the tasks our ministry group drew was the enviable mission of redesigning the latrine, and the caretaker was doing his best to answer questions from Neal and Dave. When you’re in Ochaby, Poland and the camp caretaker, Kazik, doesn’t speak a word of English, even ordinary interactions tend to be memorable. Kazik helped matters by using plenty of body language. “Tak, tak (yes, yes),” he would say, jumping, nodding, and waving his arms vigorously. Our guys responded using a combination of charades, dirt drawings, grunts and contortions. (Most wives are used to that.) “No, no” (which sometimes means “yes” in Polish) affirmed that they were on the right track. In the end, motivated by a common need, they succeeded in understanding each other and developing a plan for upgrading the system. When we began traveling to Poland a decade ago, it was to “teach” at the language camps, but it didn’t take long to realize that we were the students. In spite of language and cultural barriers, we found that it is not only possible, but very rewarding, to discover mutual goals and work together to achieve them. The same philosophy applies to central Minnesota’s economic opportunities. Due to its manufacturing power in both urban and rural areas, our region is poised to achieve significant economic development through international business expansion. Every successful global partnership can bring new capital and jobs to both entities as well as the communities around them. This special issue of IQ illustrates the why, how and who’s who of international business in central Minnesota. We showcase the entrepreneurs who have crossed over and the local resources to make it happen. True, their professional trade secrets don’t include charades, dirt drawings, grunts and contortions, but after ten years, I’m pleased to report that our adopted Polish youth camp is renovated and fully operational, even its “critical facilities.” Enjoy the magazine!

320-251-6968 U 800-226-5759 215 Park Avenue South, Suite 100, St. Cloud /WVWCN (WPFU 5VQEMU $QPFU #PPWKVKGU Life, Long-Term Care and Disability Insurance 4GVKTGOGPV 2NCPU CPF 1VJGT )TQWR $GPGHKVU Investments, Insurance and Advisory Services offered through Fintegra Financial Solutions, an independent broker/dealer, and SEC Registered Investment Advisor, Member FINRA/SIPC, Larry DeGraaf is a registered representative of Fintegra. DeGraaf Financial and Fintegra are not affiliated. Office of Supervisory Jurisdiction phone # 763-585-0503

4 Initiative Quarterly Magazine IQmag.org

Kathy Gaalswyk, President Initiative Foundation

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&KDOOHQJH \RXUVHOI &KDOOHQJH \RXU RUJDQL]DWLRQ The Anderson Center provides engaging management and leadership development forums for executives across Greater Minnesota. In Center forums, experienced participantsâ&#x20AC;&#x201D;including owners, directors, executives, managers, DGYLVRUV DQG Ã&#x20AC;QDQFLHUVÂ³GHEDWH DQG DSSO\ WKH OHVVRQV RI UHDO ZRUOG FDVH VWXGLHV JXLGHG E\ D KLJKO\ VNLOOHG 'LVFXVVLRQ /HDGHU WR LPSURYH WKHLU RUJDQL]DWLRQV

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Every donor has a dream.

Initiative Quarterly Magazine www.IQmag.org Volume 10, Winter 2012

We have the privilege of bringing it to life. Your legacy begins here. Help people to help themselves through the Initiative Foundation endowment, or create a fund to nourish the local causes that nourish you.

We make it easy. You make it possible.

Donor-advised funds Corporate giving funds Community funds Agency/association funds Scholarship funds Memorial funds

INITIATIVE FOUNDATION Vice President for External Relations | Matt Kilian Grants & Communications Specialist | Anita Hollenhorst

ART Creative Services Coordinator | Eric Rittmann Art Director | Andrea Baumann Production Manager | Bryan Petersen Lead Photographer | John Linn

877-632-9255 | www.ifound.org

ADVERTISING / SUBSCRIPTIONS Advertising Director | Brian Lehman Advertising Manager | Lois Head Advertiser Services | Mary Savage Subscriber Services | Katie Riitters

405 First Street SE Little Falls, MN 56345 320.632.9255 | www.ifound.org

rangeprinting.com

Published in partnership with Range, IQ Magazine unlocks the power of central Minnesota leaders to understand and take action on regional issues.

Printed with Soy-Based Ink on Recycled Paper at Range, Inc.

6 Initiative Quarterly Magazine

IQmag.org

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Intelligence The way a culture regards a business relationship is linked to its perception of time. Westerners are task-oriented and prefer their business deals and relationships to stick to timetables. But others, including Middle Eastern cultures, often see time as a much larger and more flexible concept. Find out how cultural nuances impact international business on page 12.

Excellence In Construction Pyramid Award

Central Minnesota companies helped boost the state’s exports to a record 5.3 billion in the second quarter of 2011. That’s a 12 percent increase over the previous year. Minnesota companies of all sizes are exporting anything from pacemakers to soybeans to countries as nearby as Canada and as far-flung as China and Saudi Arabia. Get the scoop on the impact of central Minnesota exporting on page 20.

The National Association of Manufacturers reports that every $1 in manufacturing product infuses an additional $1.37 into other sectors of the local economy, it’s clear that exporting abroad supports people at home. Learn more about central Minnesota businesses that are exporting success on page 35.

Manufactured goods make up 50 to 60 percent of Minnesota exports each year. In that category the top exports are machinery, medical instruments and devices, computer electronics and components, electrical machinery and vehicles—which includes snowmobiles and ATVs. Meet Katie Clark, this issue’s Brainiac interviewee and Minnesota Trade Office executive director, on page 56.

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“Quotations” “Our international students are highly motivated and talented. They can and do make a difference for central Minnesota businesses. Their value to companies doing business overseas is strengthened by their work experience in the U.S. They return to their countries of origin with a unique set of skills that are of great value to U.S. companies doing business abroad.”

“If we can move the needle on Minnesota firms exporting and get them all to enter one new market, we’d have a real potential for economic growth for this state’s future.”

— Dr. Earl Potter President, St. Cloud State University & Initiative Foundation Trustee

"There is no doubt that international success requires a business going 'all-in' and taking some calculated risks. But the good news is that they don't have to do it alone. In Minnesota, we have a wealth of resources and expertise to draw upon."

— Margaret Anderson Kelliher President, Minnesota High Tech Association

— Kathy Gaalswyk President, Initiative Foundation

“There’s no cookie cutter-cutter method for exporting. Don’t think that because you’ve been successful in China, you can take that same approach to South America or Africa or Australia.”

“We make sure the rules are being followed on everything from how flags are placed to how you address a particular person… There’s protocol that needs to be followed about who’s seated where, if their back is to the door, who’s on their right and left… Even how a person’s name is put on a place card matters.”

— Richard Hahn Vice President, DeZURIK

— Jeffrey Phillips International Trade Representative, Minnesota Trade Office

Building to a higher standard. Yours.

<< CITY HALL AND PUBLIC LIBRARY / STAPLES, MN

Serving all of central Minnesota with offices in Baxter.

218-824-2040 or toll free 877-824-2040 MN Lic. #20630593

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2011 was a special year for the Initiative Foundation, the confluence of its 25th Anniversary and the final year of a successful campaign that raised more than $13.8 million to build thriving communities and a strong economy in central Minnesota. To celebrate both milestones, we commissioned a Commemorative Wall that depicts a classic downtown and 25 symbols of regional impact. A river of donor names unites the Foundation with the generosity of its donors. With great appreciation, we recognize the following donors for their investments of $1,000 or more, between 2007 and 2011. KEYMASTER ($25,000+) Anderson Brothers Construction Company Benton County Blandin Foundation Bremer Bank Bush Foundation Cass County Center for Rural Policy & Development Gloria MacMillan Cessna City of Little Falls Communications Alternatives, Inc. Community Foundation of Greater Dubuque Connexus Energy Corporation for National and Community Service Crow Wing County Department of Health & Human Services East Central Energy Eich Motor Company Emma B. Howe Memorial Foundation Isanti County The Jay & Rose Phillips Foundation Arnold & JoAnn Johnson Little Falls Scholarship Fund Manufacturing Fund of Central Minnesota The McKnight Foundation Medica Foundation The Minneapolis Foundation Minnesota Community Foundation Minnesota Power Minnesota Public Radio Morgan Family Foundation Morrison County Otto Bremer Foundation Pine County John & Bonnie Schlagel Schlagel, Inc. Sherburne County State of Minnesota, Department of Commerce Stearns County Stearns Electric Association

Jack & Betty Thomas U.S. Bancorp Foundation USDA Rural Development U.S. Department of the Treasury Fran & Mil Voelker West Central Telephone Association Wright County Xcel Energy Foundation PORTAL ($10,000 TO $24,999) AgStar Financial Services Arvig Benton Telecommunications Foundation Blue Cross Blue Shield of Minnesota Foundation City of Milaca City of St. Cloud City of St. Michael City of Sartell City of Sauk Rapids City of Wadena Consolidated Telecommunications Company Chisago County First National Bank of Milaca Funders’ Network for Smart Growth and Livable Communities Kathy & Neal Gaalswyk Granite Equity Partners Kuepers, Inc. Architects & Builders Loren & Kathryn Morey The Laura Jane Musser Fund MidMinnesota Federal Credit Union Northwest Area Foundation Robins, Kaplan, Miller & Ciresi Foundation SPEDCO Economic Development Foundation Stearns-Benton Employment & Training Council Eugene & Bernadine Waldorf GATEWAY ($5,000 TO $9,999) American Heritage National Bank Bank of the West BlackRidgeBANK

Cambridge Medical Center CentraCare Health Foundation Central MN Jobs & Training Services Chuck & Barb Christian Citizens State Bank of Waverly City of Baxter City of Big Lake City of Cambridge City of Lindstrom City of Long Prairie City of Melrose City of Mora City of Pierz City of Pine City City of Staples Clow Stamping Company Kanabec County Mille Lacs County Todd County Wadena County Donald & Deanna Engen Essentia Health – St. Joseph’s Medical Center GNP Company (Gold’n Plump) Gray Plant Mooty Lee & Jan Hanson Lakeland Mold Company, Inc. Larson Boats, LLC LarsonAllen, St. Cloud Little Falls Area Chamber of Commerce Little Falls Machine Marco, Inc. Mardag Foundation Minnesota National Bank & Agency NOR-SON, Inc. Peoples Bank of Commerce Pequot Tool & Mfg, Inc. Pine Country Bank Schlenner Wenner & Co. Stephen & Gwyn Shelley Everett & Rita Sobania Sundance Pay It Forward Foundation The Sheltering Arms Foundation Todd-Wadena Electric Cooperative Viking Label & Packaging, Inc.

Widseth Smith Nolting and Assoc., Inc. Sharla & Warren Williams Woodland Bank CORRIDOR ($3,000 to $4,999) City of Annandale City of Clarissa City of Cokato City of Crosslake City of Lake Shore City of Maple Lake City of Monticello City of Nisswa City of Paynesville City of Princeton City of Sandstone City of St. Joseph DeZURIK, Inc. Donlar Construction Curt & Mary Beth Hanson HBH Consultants Don Hickman & Sandra Kaplan Matt & Jeanne Kilian Jo & Larry Korf LINDAR Corporation Bill & Diane Scarince Shelley Funeral Chapels, Inc. Thelen Heating & Roofing, Inc. Venture Allies PASSAGE ($1,000 to $2,999) Advance Design & Systems Anakkala, Berns & Company Duane & Barb Anderson Keith H. Anderson Atomic Learning, Inc. Mayuli & James Bales BankVista Joe & Mary Bauer Steven & Ann Benda Brainerd Lakes Area Economic Development Corporation Dan & Marie Bullert Bob & Marsha Bunger Lynn & Darren Bushinger

Central Minnesota Community Foundation City of Albany City of Albertville City of Avon City of Backus City of Becker City of Belgrade City of Bertha City of Braham City of Brainerd City of Breezy Point City of Cass Lake City of Chickamaw Beach City of Cold Spring City of Eagle Bend City of East Gull Lake City of Eden Valley City of Emily City of Fifty Lakes City of Foley City of Garrison City of Hinckley City of Holdingford City of Isanti City of Isle City of Menahga City of Montrose City of Motley City of Onamia City of Pequot Lakes City of Randall City of Rice City of Rock Creek City of Rockford City of Rockville City of Royalton City of Rush City City of Sebeka City of Swanville City of Taylors Falls City of Verndale City of Waite Park City of Walker City of Waverly City of Wyoming

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See your name on the

25th Anniversary Commemorative Wall Visit us from 8 a.m. to 4:30 p.m Monday through Friday in Little Falls.

Christopher & Amber Close Family Fund Close-Converse, Inc. Gloria L. Contreras-Edin Crow Wing Power D.J.Bitzan Jewelers DeGraaf Financial, Inc. Richard & Kerwin Donat Linda Eich DesJardins & Joseph DesJardins Farmers & Merchants State Bank Chris Fastner & Kathy Hakes-Fastner First National Bank of Walker Bruce & Mary Fogle Dan & Annette Frank Glenn Metalcraft, Inc. Pat & Carmel Gorham

Grand View Lodge & Cote Family Companies Great River Energy David Gruenes Happy Dancing Turtle Cathy Hartle & Doug Larsen Anita & Brad Hollenhorst Linda Holliday Kaufmann Tricia & John Holig Hunt Utilities Group IPEX, Inc. John Kaliszewski Kennedy, Nervig, Carlson & VanBruggen Paul & Shirley Kleinwachter Kristine & Kenneth Kowalzek Lakeland Incorporated

Lakes Printing LarsonAllen, Brainerd Little Falls Machine Little Falls Orthopedics Larry Lundblad Mahowald Insurance Agency McDowall Company Minnesota Business Finance Corporation MINPACK, Inc. MN Elementary School Principalsâ&#x20AC;&#x2122; Association Northern Technology Initiative Northway Group, Inc. Northwest Minnesota Foundation Robert & Marilyn Obermiller Glen Palm & Jane Ellison

Gladys & the late Leonard Paulson Plaza Park Bank Earl & Christine Potter David & Judie Rose Rotochopper, Inc. Julie Schueller & Brian Pederson Dorothy & Mike Simpson State Bank of Cold Spring State Bank of Kimball The Moran Family Fund David Toeben St. Gabrielâ&#x20AC;&#x2122;s Hospital Sandy Voigt Wadena State Bank Dr. George & Raquel Wallin The Whitney Foundation

www.ifound.org 405 1st St. SE Little Falls, MN 56345 877-632-9255

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Tip Sheet

Welcome, Stranger Whether you’re an overseas tourist or a corporate rainmaker, culture counts.

Mary Beth Lamb

By Marni Ginther

hy could a Korean executive be offended if he isn’t seated properly in a meeting with a European business? Why can Americans feel like their Japanese business partners can’t make a decision? Why have workers in South America been uncomfortable receiving awards for good performance? If your company is contemplating expanding into an international market, Mary Beth Lamb thinks you need to know the answers to these questions. An international “cultural competency” expert and the co-author of Do’s and Taboos Around the World For Women in Business ( John Wiley & Sons), Lamb says companies can save themselves time and headaches by researching the cultural differences that will affect their international relationships. Here are some of Lamb’s top tips for businesses that are considering work beyond their borders. Embrace that every culture has its own ideas about time. The way a culture regards a relationship—including a business relationship— is linked to its perception of time, according to Lamb. Northern Europeans and North Americans tend to be more task-oriented and typically prefer their business deals and relationships to stick to timetables. Cultures with this view of time tend to form relationships quickly and efficiently when needed, and can disband once the project is done. But others, including Middle Eastern cultures, often see time as a much larger and more flexible concept. Relationships develop over days, months and years, and the connection between people is often more important than any document or contract. When an English colleague of Lamb’s went on a business trip to Saudi Arabia to sign a contract he thought was nearly finished, he was aggravated when the Saudi representative arrived a day late without any excuse. They then spent the next four days attending meetings and dinners and socializing. The Saudi partner didn’t bring up the contract until he was about to get on his return flight. “Those four days were the most important part of the deal,” said Lamb. “The contract was just a piece of paper—the relationship is really where the value is for people with that understanding of time.”

12 Initiative Quarterly Magazine

IQmag.org

Know (and accept) your place in the hierarchy. Whether or not a culture embraces hierarchy can affect cross-cultural business operations. In some cultures, including the United States, an individual’s place within a hierarchy isn’t strictly enforced: each person at the table has the right to be heard. But other cultures feel that clear hierarchies and defined roles are essential to keeping a company organized and productive. Japan and Korea are hierarchical cultures, according to Lamb. “That hierarchy is evident even in seemingly small details, like who enters the meeting room first, or who sits where.” Koreans will seat the most powerful person in the room at the spot facing the door. This custom dates back thousands of years, to a time when leaders needed to face the door in case an enemy attacked and the leader needed to command the situation. Different views of hierarchy can cause miscommunication across cultures, according to Lamb. “Often, North Americans, and Scandinavian cultures in particular, get frustrated with hierarchical cultures when a person in a meeting continually has to seek approval from a higher up in order to move forward.” It helps to set realistic expectations, and understand that it may take longer to strike a deal with such a culture, because decisions have to go up and down so many more layers of authority. Lamb also advises to try, tactfully, to find out who the real decision maker is, and do your best to convey messages directly to him or her. Recognize that you and your business partners might have different attitudes toward risk. The way people deal with change and ambiguity can be very much a reflection of the culture they come from, Lamb said. Some cultures, including Americans, view uncertainty as a good thing—risk-taking is an essential part of growth and progress. Others, such as French and Japanese cultures, see uncertainty as something to be avoided. When Lamb consulted with a team of businesspeople from several different countries on a project, she noticed that the Irish representatives were getting frustrated with the Germans for being too hesitant. The Irish mindset was: if we don’t act now, we’ll miss the window of opportunity. The Germans, on the other hand, saw no room for mistakes. In their minds, it

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was their job to make the right decision, so if that meant more time must be spent on the decision, then so be it. â&#x20AC;&#x153;In some cultures, the consequences for making mistakes are larger than in others,â&#x20AC;? Lamb said. â&#x20AC;&#x153;And if thatâ&#x20AC;&#x2122;s what youâ&#x20AC;&#x2122;ve experienced from a young age, youâ&#x20AC;&#x2122;re not going to be a risk-taker as an adult.â&#x20AC;? Determine if your business partnerâ&#x20AC;&#x2122;s culture values individualism or a collective mindset. According to Lamb, studies repeatedly show that North Americans view a larger group as a collection of loosely connected individuals, each deserving his or her own rights and recognition. But other cultures, including many in Asia and South America, tend to operate from a more collective mindset, in which the community is more important than the individual. Those cultures place more emphasis on consensus and are more reluctant to express conflicting opinions than their American counterparts. When an American company Lamb worked with was doing business in Honduras, they gave out recognition awards to the highest performing Honduran employees. When those same high performers quit their jobs at the highest rates, it became clear that they were uncomfortable being singled out. Understand each otherâ&#x20AC;&#x2122;s communication styles. Communication style is heavily influenced by oneâ&#x20AC;&#x2122;s culture. Western cultures in general are more likely to think of good communication as direct, objective and data-driven. They are more likely to send an email, expect a response and consider the conversation closed. Many Eastern cultures, however, view each individual conversation as a part of the larger relationship between themselves and the person theyâ&#x20AC;&#x2122;re talking to. They donâ&#x20AC;&#x2122;t necessarily view emotion as a bad thing in communication, and are more likely to speak in implications and metaphors. They may feel that a quick email exchange isnâ&#x20AC;&#x2122;t sufficient to resolve an issue or come to a conclusion. They may not reply to such an email at all, or even take offense at what they perceive as brisk treatment. IQ For more resources on cultural nuances visit: www.IQmag.org/pages/nuances

Women & Horses Itâ&#x20AC;&#x2122;s Ladiesâ&#x20AC;&#x2122; Day at the Barn! Ladies, join us for Similar Spirits â&#x20AC;&#x201C; Women & Horses Gatherings. Itâ&#x20AC;&#x2122;s two hours of riding, socializing and sharing the passion we have for horses. Itâ&#x20AC;&#x2122;s a chance to connect in fun and unique ways with the horses and each other. Saturday, April 21 3-5 p.m. Spirit Horse Center All riding abilities are welcome. Bring your own horse or use ours. Contact us today to register.

â&#x20AC;&#x2DC;So your kid wants a horse?â&#x20AC;&#x2122; This Horse Ownership 101 class is a must for any parent who has been faced with that question. Explore the world of horse ownership from A to Z. By the end of workshop, you should have a clear understanding if owning a horse is for you. Sunday, March 25 Sunday, April 22 1-4 p.m. Spirit Horse Center

Contact us for more information or to register. To register for these programs or for more information, contact Spirit Horse Center today: Www.SpiritHorseCenterInc.com 218-825-4944 Info@SpiritHorseCenterInc.com

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WINTER 12

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Signs of the Times

The Foreign Exchange International students guide firms to unfamiliar success. By Marni Ginther

or Sartell-based W3i, what began as a search for qualified computing professionals turned into a lesson in the value that international students can bring to central Minnesota businesses. “We’re a company that connects users and apps,” said Robert Weber, the senior vice president of the mobile and desktop application business. “And those people are all over the world, so it’s definitely an advantage to have employees with a global perspective.” W3i has gone from a small start-up to a global company with 100 employees in just 10 years. To achieve that growth, W3i needed to hire more and more employees with degrees and expertise in computer science. But according to Weber, there aren’t enough computing professionals in central Minnesota to meet the demand for that skill set. “We’ve definitely employed many international students since our inception in 2000, and they’ve been enormous contributors to our extreme growth,” Weber said. Local colleges and universities are welcoming international students who can not only help fill the tech gap, but also offer translating skills and cultural insights to their employers. “Our international students are highly motivated and talented,” said St. Cloud State University (SCSU) President Earl Potter, also an Initiative Foundation trustee. “They can and do make a difference for central Minnesota businesses. Their value to companies doing business overseas is strengthened by their work experience in the U.S. They return to their countries of origin with a unique set of skills that are of great value to U.S. companies doing business abroad.” At W3i, those students include Ting Huang (“Tim”), who came to W3i from China as a graduate assistant through SCSU’s computing program. “As a senior developer at W3i, Tim was instrumental in the launching of our initial platform,” Weber said. He spent more than four years at W3i before moving on to work as a developer at Microsoft. Aleksey Cherfas was another student the company hired from the University of Minnesota, Duluth. Initially brought on as a software developer, his fluency in Russian proved valuable when the company needed help with

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INTERNATIONAL INSIGHTS: W3i executive Robert Weber (right) said that international students, including Shivani Khanna (left) have been “enormous contributors to the company’s extreme growth.”

translation and strengthening relationships with customers in Russia. More recently, Shivani Khanna of India joined the team as an intern, and then became a full-time employee after graduating from St. Cloud State in 2007. Diana Lawson, dean of the Herberger Business School at SCSU, is working to connect international students with Minnesota companies who could benefit from their unique skill sets. “As interns and employees, international students are definitely assets to companies who are thinking of, or recently have expanded operations abroad,” Lawson said. “In addition to having expertise in their field of study, they bring the language and cultural skills that come from being a native of a different country. Sometimes, the students themselves don’t realize what an asset that can be.” SCSU has about 1,100 international students from 80 to 90 countries, Lawson said. They range across all areas of study, and while some spend only a semester at St. Cloud State, most stay to earn a full degree. SCSU isn’t the only central Minnesota school with an active international student program. Diane Hageman, media relations director at the College of Saint Benedict, says there are currently 262 international students from 47 countries studying at both Saint Benedict and Saint John’s University combined, with pronounced growth in the number of Chinese and Vietnamese students in the past several years. Of course, central Minnesota businesses aren’t the only ones reaping the benefits of this exchange. “I feel I have become a lot more independent and have a more realistic perspective on life because of these new experiences,” Khanna said of her experience at W3i. “Back home, I led a protected, comfortable, sheltered life. Coming to a new country, learning new things, living away from family, adjusting to a new culture was challenging a times. At W3i, I loved what I did and liked the people I worked with so I’ve chosen to stay on. I have been given a lot of opportunity to learn and grow.” IQ

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AS THE 20TH CENTURY WOUND DOWN, SO DID THE GLOBAL MOMENTUM OF DeZURIK, INC. The Sartell-based manufacturer of industrial valves had built an impressive international footprint to serve its customers in mining, paper production, oil refining, chemical processing and water treatment. The DeZURIK flag flew over factories in the United Kingdom and Australia, as well as service centers in Singapore, Japan and Mexico. But just as unprecedented opportunities were opening up in the global marketplace, DeZURIK went into a defensive crouch. An East Coast conglomerate took over the company in 1998 and began dismantling its international infrastructure. Soon, lead times that had been measured in hours or days stretched to weeks, then to months. DeZURIK lost business to competitors that could provide faster, better service in international markets. After decades of preparing itself for global opportunities, DeZURIK left the dock just as its ship was coming in. It’s a cautionary tale for other Minnesota companies competing in an economy that now crosses international borders. “For U.S. companies, or central Minnesota companies, to stay local without looking internationally puts them at a competitive disadvantage,” said Diana Lawson, dean of the Herberger Business School at St. Cloud State University. “Instead of competing with the people next door, we have to compete with the people 6,000 miles away.” Fortunately, DeZURIK had a chance to write another chapter to its story. A Minnesota-based investment firm, Granite Equity Partners, bought DeZURIK in 2009 and immediately set out to rebuild its international presence. A 2011 loan from the Initiative Foundation gave them an additional boost, providing the necessary working capital to expand. The company has established an international network of manufacturers’ reps, but hopes to have its own employees on the ground in key markets within the next three years. The re-establishment of company-owned service or manufacturing facilities is also under discussion, said Richard Hahn, DeZURIK’s vice president of international business development. Privately owned DeZURIK doesn’t reveal its annual sales, but international growth has been tremendous, Hahn said. At a time when many Minnesota companies were still struggling to overcome the impact of the recession, international sales were up 48 percent in 2010 and another 24 percent in 2011; they now account for about 22 percent of DeZurik’s revenue, and are projected to hit 35 percent within three to four years. “We have enjoyed good success to date,” said Hahn, who’s entering his 45th year with the company. “It's very exciting to be a part of this.” Minnesota companies like DeZURIK helped boost the state’s exports to a record $5.3 billion in the second quarter of 2011, the most recent period for which data are available. That’s a 12 percent increase over the previous year. Today, 209 Minnesota companies of all sizes are exporting anything from pacemakers to soybeans and baby products to countries as nearby as Canada and as far-flung as China and Saudi Arabia. But while some of their customers may live at the far reaches of the globe, the economic impact of these companies’ success is felt right here at home.

IN 2011, A REINVENTED AND RE-ENERGIZED DEZURIK HELPED TO BOOST MINNESOTA EXPORTS TO A 12% INCREASE OVER THE PREVIOUS YEAR.

CONTINUED ON PAGE 24

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A peak at the stats, trends, and facts give a glimpse of things to come.

THE MAINSTAYS

Top 5 Export Destinations for Minnesotan Products & Services (2010)

Exports

MN Percent Change

U.S. Percent Change

Country

(millions)

2009-2010

Canada China Japan Mexico Germany

$ 4,641 $ 1,826 $ 930 $ 836 $ 727

21% 45% 26% 26% 12%

21% 29% 18% 26% 9%

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THE TRADE The Minnesota Trade Office and the Minnesota Department of Agriculture will lead delegations on the following trade missions in early-mid 2012:

WHEN

WHERE

WHAT

March 2012

India

Medical Devices

Early Summer 2012

China

General Trade (led by Gov. Dayton)

June 2012

Germany

Solar Industry

July 2012

India

Food Ingredients

September 2012

Russia

Multi-Sector

September 2012

Canada

Smart Grid Industry

Sources: Minnesota Department of Employment and Economic Development

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“IN ORDER TO GROW OUR REGIONAL ECONOMY, WE CAN’T JUST PASS DOLLARS BACK AND FORTH TO EACH OTHER. INTERNATIONAL EXPORTING BRINGS NEW REVENUE TO THE REGION, WHICH CREATES QUALITY JOBS AND BUILDS THRIVING COMMUNITIES.” Kathy Gaalswyk, Initiative Foundation President

A WORLD OF OPPORTUNITIES Central Minnesota’s vibrant manufacturing sector could set the stage for a global breakthrough, according to Kathy Gaalswyk, Initiative Foundation president. “In order to grow our regional economy, we can’t just pass dollars back and forth to each other,” she said. “International exporting brings new revenue to the region, which creates quality jobs and builds thriving communities.” Goods aren’t the only products crossing the international date line. Central Minnesota companies are exporting services, too. ATS International Services, Inc., a division of St. Cloud-based Anderson Trucking Service, Inc. has expanded into Europe and Asia over the last three years, opening facilities in Germany and Singapore. Anderson specializes in what’s called “break bulk” cargo: large, manufactured goods that are bigger than a standard container. The company has become a leader in shipping blades, towers and other components for wind energy projects. The various components are manufactured in different locations throughout the world, primarily in Asia, South America, Europe and the United States. Karen Kieffer, the North American Sales Manager, said the overseas expansion was dictated by customer needs. As its customers increased their international sales, Anderson had to keep up. “International is a growth area for any company,” Kieffer said. “In the United States, all the big companies are focusing on international growth. And a lot of those overseas markets are less developed, leaving significant opportunities for growth for many companies.” Likewise, DeZURIK has seen many of its North American customers in the pulp and paper industry expand their business in Indonesia and other offshore locations. DeZURIK needs a presence in those markets in order to capture sales.

BRINGING IT HOME Both companies say that international sales have provided stability and helped preserve jobs in Minnesota. “It keeps the overall flow going,” Hahn said. “When the domestic market drops, the international is strong. It helps to even things out.” Business experts agree that exporting is vital to preserving jobs in Minnesota. “If your goal is to maintain employment here in the United States, then you need to figure out how to export,” Lawson said. In fact, international growth is so important that it should be a key component of a company’s business plan— not a backup tactic. “You need to start thinking of international markets as part of your strategy, rather than just a place to use your excess capacity,” Lawson said. “It becomes part of your normal growth strategy, the same way you might open another factory in the United States.” But Lawson and others cautioned that operating overseas isn’t as easy as stateside expansion. Legal and cultural differences come heavily into play; even some24 Initiative Quarterly Magazine

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thing seemingly as simple as the difference in time zones can cause huge headaches. Both Anderson and DeZURIK have hired natives of the countries where they’re doing business to represent them in those markets. For Anderson, that includes Germany, Singapore and Puerto Rico, with plans for China and India in 2012; for DeZURIK, it includes those and many more markets, such as Chile, Thailand, Australia and South Africa. “The way people think, the work ethic, the way they respond to recommendations or ideas is different overseas,” Kieffer said. “Having local knowledge and partnering with the right people is critical.” Hahn added that each international market requires a specially tailored approach. “There’s no cookie-cutter method,” he said. “Don’t think that because you’ve been successful in China, you can take that same approach to South America or Africa or Australia.”

TRUST AND TIME Enterprise Minnesota offers a program that helps businesses draw up an international plan. More than two dozen Minnesota companies have completed the Global Market Strategy program, an exhaustive 90-day curriculum. “We consider exporting to be a very high priority for companies to grow their businesses,” said Bob Kill, president and CEO of Enterprise Minnesota. “But it’s critical to have a plan.” Part of that plan should involve actual travel abroad, several experts said. Although Americans are accustomed to handling business digitally, personal relationships are still highly valued in much of the world. “Building trust, buildings relationships is very important,” Lawson said. “And it takes time. But when you have so many unknowns and uncertainties in an international transaction, the personal relationship is very important.” Attending trade shows is also a great way to begin making international contacts. That’s how Alicia Overby started the process that now has her infant-care product, Baby Elephant Ears, in nine foreign markets. Baby Elephant Ears is a headrest/bolster that keeps infants’

Richard Hahn, DeZURIK’s Vice President of International Business Development

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heads and necks supported and aligned when they’re in a stroller or carseat. Based in Cambridge, Overby’s company will tally about $1.5 million in sales in 2011, only two years after its launch. “I’m a Type A personality—I go big or go home, always,” Overby said with a laugh. “So when I started this business, my goal was to get to the most widely known national trade show, the ABC Kids Expo in Las Vegas. I prepared and attended. And we were overwhelmed with the amount of interest and excitement.” But don’t feel that you have to have a booth or an exhibit at a trade show, experts say. In fact, the best approach may be to simply attend a show—preferably abroad—where you can network aggressively and pay attention to what other companies in your field are doing. The state and federal governments have a wealth of programs to help businesses learn the ins and outs of operating abroad as well. And local and regional resources, including the Initiative Foundation’s finance and consulting services, are proving that you don’t have to pay for a passport and plane ticket right away. (For a full list of resources turn to pages 44-45). Above all, develop a mindset that realizes you can’t be content forever in whatever niche you’ve carved out for yourself. And that goes for communities as well as businesses. “We in Minnesota tend to think of our communities as competing with each other. But that’s a 1980s thought,” said John Kramer, CEO of the Greater St. Cloud Development Corp. “It’s now regions competing with other regions internationally.” IQ

“INTERNATIONAL IS A GROWTH AREA FOR ANY COMPANY. A LOT OF THOSE OVERSEAS MARKETS ARE LESS DEVELOPED, LEAVING SIGNIFICANT OPPORTUNITIES FOR GROWTH.” Karen Kieffer, Head of International Sales and Global Business Development, Anderson Trucking Service, Inc.

HARD BARGAIN: Sporting goods designer Jeff Zernov says that economics leave him little choice but to buy labor overseas.

HOUTSOURCING LABOR H When production costs threaten the stability of your company, exporting labor and production can protect your bottom line. Imagine heading up Interstate 94 from the Twin Cities to Alexandria—roughly a two-hour drive. Now imagine that, instead of farm fields and occasional towns, the highway was lined with factories on both sides of the road, all producing at capacity. That’s what Jeff Zernov sees every time he visits South China. And he’s been visiting for about 15 years now. Zernov, of Brainerd, designs sporting goods products and manufactures them in Asia— often in China, but increasingly in South Korea and Vietnam. Doing business under the corporate name Dragon Hunter, LLC, Zernov has sold a steady stream of his products to retailers like Gander Mountain and Mills Fleet Farm. Zernov would rather be manufacturing in the United States, but said the economics leave him little choice. “When I can buy labor in China for $1 an hour or in Vietnam for 28 cents an hour, it’s hard to buy labor here for $20 an hour,” he said. Zernov recently priced tooling for a new line of ice fishing rods. In China, the quote was $7,500. In the United States, he got quotes of $38,000 and $42,000. Zernov makes three to five Asia trips a year, spending two to three weeks each time. Over the years, he’s built a network of trusted suppliers and distributors. But his business also provides jobs here in Minnesota. He hires local graphic designers, CAD artists, copywriters and printers. The key to success, he said, is offering a valueadded product. “The one thing you learn in China is, there’s no lowest cost,” Zernov said. “There’s always someone willing to go a dollar, a dime, a half-penny lower. Don’t get stuck into that lowestcost corner. Design a new product. Come up with something value-added. Leverage your existing base with a higher-margin product.” WINTER 12

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By Lawrence Schumacher Photography by John Linn

From underwater fishing cameras to machines that make microwave popcorn bags to laboratory-ready bacterial cultures, central Minnesota companies are exporting more goods to more markets than ever before. 12 of the state’s 20 largest foreign markets showed growth rates of 20 percent or more between 2009 and 2010.

Five countries—Canada, China, Japan, Mexico and Germany—stand out as the top export partner destinations for Minnesota businesses, said Mathew Woodlee, Senior International Trade Specialist for the U.S. Commercial Service in Minneapolis. But many other global markets, notably Brazil, show a great capacity for growth in the coming decade. Successful companies don’t try to use a one-size-fits-all approach to selling their products and services overseas. “These are

very different countries with different cultures and different ways of doing business,” said Woodlee. “You really have to understand the markets if you want to get the best results for your efforts.” Fortunately, several organizations— the U.S. Commercial Service, the Minnesota Trade Office, the Small Business Administration, to name a few— provide services and information that can help any business tailor its approach to each market. The Commercial Service

offers free, detailed country guides that provide information about the laws, trade regulations and investment climate of key foreign markets. (See full list of resources on pages 44–45.) The organizations can also provide assistance to businesses that have done their research and want to take their first steps to connect with international markets. Here’s a look at Minnesota’s top five foreign trading partners, plus one promising up-and-comer. WINTER 12

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The Basics: Canada is the largest global trading

partner for both Minnesota and the United States. Minnesota exported $4.6 billion in goods and services to Canada in 2010, up 21 percent from 2009.

Top Exports: • Transportation equipment ($1.2 billion) • Machinery ($641 million) • Computers and electronics ($496 million) :: OPPORTUNITIES :: Aerospace and transportation manufacturing and parts are top growth areas, as are energy and natural resource construction and manufacturing. Canadian tourism is growing, due to a strong Canadian dollar, and the Canadian government is a strong business partner for the defense, security and IT industries. :: CHALLENGES :: Doing business in Canada is similar to doing business in the U.S. However, customs documentation, bilingual labeling, packaging requirements and Canadian federal and provincial sales tax accounting are different from the U.S. and require specific attention. :: INSIDE SCOOP :: Canada is officially bilingual (English, French). The metric system is used throughout the country, though understanding of imperial (pounds, miles) weights and measures remains high. Packaging, manuals and other documentation for goods exported to Canada must reflect these differences. :: TRADE AGREEMENTS :: The North American Free Trade Agreement was implemented on Jan. 1, 1994. Almost all tariffs between U.S. and Canada were phased out Jan. 1, 1998, allowing 99 percent of all goods and services to cross the border without any restrictions.

EXPORTING IN ACTION: When Crosslake-based Aqua Vu fell victim to the recession and credit crunch of 2008–09, it had already been selling its underwater fishing cameras in Canada for several years, said Ben Gibbs, president of Outdoors Insight, which aquired Aqua Vu. The company expanded its Canadian sales primarily by selling to companies such as Cabella’s, which has a strong presence north of the border. Canadian sales now account for almost 25 percent of the company’s overall sales, according to Gibbs. Aqua Vu maintains a representative group in Canada to handle service and distribution issues. For many companies, Canada provides a comfortable way to get into foreign sales because of the proximity, common language and ease of trade.

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CANADIAN COMMERCE: Outdoor Insights President Ben Gibbs with the Aqua Vu underwater fishing camera.

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SOUTHERN SUCCESS: SarTec Sales Manager, Matt Wendorf: “Exporting to Mexico is not like shipping across state lines.”

The Basics: Mexico is Minnesota’s fourth-largest export market. Minnesota companies exported $836 million in goods and services to Mexico in 2010, up 26 percent from 2009.

Top Exports: • Food ($214 million); • Computers and electronics ($104 million) • Machinery ($101 million) :: OPPORTUNITIES :: Heavy industry, low-end manufacturing and food-related products and services are expected to continue to show strong growth. Other growth areas include: agribusiness and agriculture; auto parts and services; educational services; energy and environmental services; franchising; housing and construction; packaging equipment; plastics and resins; security and safety equipment and services; technology; transportation; travel and tourism.

ferent from U.S. Customs standards, and product regulations and labor laws are also different. Violence related to organized crime has created insecurity, particularly in some border regions. Mexican business values direct communication and personal relationships, with business often conducted in the homes of senior executives over an evening meal. Companies are extremely price-conscious. :: TRADE AGREEMENTS :: Mexico is a North American Free Trade Agreement signatory. All industrial and most agricultural tariffs were eliminated as of 2003. Remaining agricultural tariffs were eliminated in 2008, allowing the free movement of 99 percent of goods and service across the border.

EXPORTING IN ACTION: Anoka-based SarTec Corporation has been exporting SarTemp, an all-natural, yucca-based grain conditioner for beef cattle since 2000. The company’s business in that sector has increased at least ten percent every year. Matt Wendorf, SarTec’s sales manager, suggests that prospective exporters to Mexico partner with somebody in each area your company is trying to enter. “Maybe it is a formal partnership or merely a friendship,” he said. “Their experience and networking can help eliminate roadblocks or expedite solutions. Local friends can help keep you informed of dynamics like who is expanding and who is having trouble paying their bills.” Wendorf also recommends that prospective exporters not underestimate the complications of the import/export process, even though Mexico is a member of NAFTA. “The process is not like shipping across state lines,” he said. “New regulations and requirements are added and removed every year and they vary from day to day and port to port.”

mexico

:: CHALLENGES :: The size and geographic diversity of the country, combined with a relatively weak infrastructure, makes it difficult to find a single distributor to cover the entire market. High interest rates in the Mexican financial system can make it difficult for Mexican partners to acquire needed credit, leading to payment delays or cash-only partnerships. :: INSIDE SCOOP :: Mexico has a Spanish-speaking population, though English is widely spoken among the business crowd. The Mexican legal system is distinctly dif-

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The Basics: Japan is the fourth largest American trading partner and the third largest for Minnesota. Minnesota businesses exported $930 million in goods and services to Japan in 2010, up 26 percent from 2009.

Top Exports: • Computers and electronics ($247 million) • Miscellaneous manufactured goods ($161 million) • Machinery ($121 million) :: OPPORTUNITIES :: Cutting-edge manufacturing and production companies will continue to find a market in this highly developed economy. Aerospace; biotechnology; computer software; healthcare IT; nanotechnology; renewable energy; pharmaceuticals; safety and security are all expected to remain strong. :: CHALLENGES :: Japan’s large government debt and an aging population have led to a stagnant economy for several years. It is still recovering from a severe 2011 tsunami/earthquake and resulting nuclear reactor damage and contamination. :: INSIDE SCOOP :: Japan has strict service and quality expectations and culturally distinct business practices, including significant deference to age and rank among a business group. Language barriers remain, though English is widely spoken among the business crowd. Consider hiring a reputable, well-connected agent or distributor. :: TRADE AGREEMENTS :: Japan is a member of the World Trade Organization. It has among the lowest tariff rates in the world, but unique product standards and regulations on doing business can impede progress.

EXPORTING IN ACTION: Pine City-based MINPACK has been exporting microfilm cards to Japan since the early seventies, when the company was part of 3M. Originally used to record large-format engineering drawings, the cards have found a second life as a way for manufacturers to archive plans and drawings for machines should the digital versions suddenly not be available. They are particularly popular in Japan because the film’s print quality clearly reproduces the fine lines of the Japanese kanji characters. Today, exports to Japan make up approximately ten percent of MINPACK’s card business, which account for ten percent of MINPACK’s total revenues. But owner Robert Thompson, who bought MINPACK from 3M in 2005, insists Japan is important to the company’s continued success. “I’m always pleased to see an order come in from Japan,” he said. “The margins on the cards sold in that part of the world are higher than the margins in the U.S. Also, the U.S. has always been a first adopter when it comes to technology; when domestic companies started moving away from the microfilm card they were years ahead of Europe and Japan. We’ve seen our volume for U.S. market shrink double digits every year since the mid-1980s. Whereas in Europe and Japan, the market has remained stronger. “

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ASIAN AMBITION: MINPACK Owner, Robert Thompson expects that their microfilm cards will continue to succeed in Japan, where the film clearly reproduces the fine lines of Japanese kanji characters.

china

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The Basics: After Canada, China is the second-largest

trading partner for both Minnesota and the United States. $1.8 billion in Minnesota goods and services were exported to China in 2010, up 45 percent from 2009. It is one of the fastestgrowing trade partners for Minnesota and the United States, both in percentage growth and total value growth.

Top Exports: • Machinery ($506 million) • Computers and electronics ($442 million) • Paper products ($162 million) • Miscellaneous manufacturing • Chemicals

:: OPPORTUNITIES :: High-tech and large-scale manufacturing machinery and equipment are needed as China grows into a first-world economy. Energy, chemicals, transportation, medical equipment, construction, machinery, education and tourism are all industries where China has a high demand. :: CHALLENGES :: China is a developing country with divisions between rural and urban markets and a huge geographic size that makes it hard to approach with a one-size-fits-all exporting plan. The business environment can be unpredictable—decisions made yesterday may not be valid tomorrow. China’s inconsistent and arbitrary legal and regulatory system does not always protect the rights of foreign companies. The government engages in severe protectionism of some domestic industries and firms.

:: INSIDE SCOOP :: China has a planned economy where production is still somewhat dictated by political leaders and a lack of protection for intellectual property. Political connections sometimes trump commerce. Language barriers are also a factor. Consider hiring a reputable, well-connected agent or distributor to find customers in your target market. :: TRADE AGREEMENTS :: China entered the World Trade Organization in 2001, revising its laws and regulations accordingly. Significant barriers and tariffs remain, making imported goods more costly in the Chinese market than in other Asian markets.

EXPORTING IN ACTION: For the last five years, St. Cloudbased Microbiologics has been exporting its quality control microorganisms to multinational companies with manufacturing facilities in China, said Brad Goskowicz, the company’s CEO. The Asian economic giant’s growth has already made it the company’s third-largest Asian market. Because of its huge geographic size and multiple population centers, Goskowicz said his company has found it essential to engage several distributors in order to penetrate the market. China is just beginning to develop regulations and service levels that would open the door to more partnerships; Goskowicz predicts significant future growth for Microbiologics’ China market.

PACIFIC PROMISE: Microbiologics CEO Brad Goskowitz predicts significant growth for the company’s China market. WINTER 12

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The Basics: Germany is Minnesota’s fifth-largest trading partner. Minnesota businesses exported $727 million in goods and services to Germany in 2010, up 12 percent from 2009. It is the world’s fourth-largest economy and comprises one-fifth of the GDP of the European Union.

Top Exports: • Computers and electronics ($302 million) • Miscellaneous manufactured goods ($102 million) • Machinery ($101 million) :: OPPORTUNITIES :: As a highly developed economy, German demand for American products tends to come largely in high-tech and high-end goods, such as computer software and equipment; drugs and pharmaceuticals; medical equipment; industrial chemicals; automotive parts and services. :: CHALLENGES :: Germany has a highly regulated labor market and high taxation, though reforms have been implemented to increase economic competitiveness. Germany is a diverse, decentralized market with many regional differences. :: INSIDE SCOOP :: Germany’s business culture values caution and direct, face-to-face meetings. Business is conducted in a more formal setting than is normal in America and deals often take longer to complete. Government regulations and bureaucratic restrictions can be complex. :: TRADE AGREEMENTS :: Germany presents few formal barriers to trade, but membership in the European Union presents unique requirements. The European Union’s common agricultural policy places restrictions on biotech and some agricultural goods manufactured in America.

EXPORTING IN ACTION: Baxter-based Minnesota Thermal Science entered the German market about three years ago by selling specialized scientific thermal packaging used to transport biologics to a U.S. customer who set up operations in Europe. Soon after, the company found a local distributor for their products to navigate the culture and currency, according to Kevin Lawler, vice president of sales. Today, international business now accounts for about 25 percent of Minnesota Thermal Science’s business, and the European Community represents the largest chunk of that. Lawler’s advice: “You’ve got to be there. I’ll be in Western Europe a couple of times in the coming year to support our efforts.”

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A EUROPEAN UNION: Minnesota Thermal Science Vice President of Sales Kevin Lawler says that exports account for 25 percent of their business.

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brazil BRAZILIAN BOOM: Massman Automation President Jeff Bigger says that the company did six months of research and traveling in hopes of entering the promising Latin American market.

The Basics: Brazil is Minnesota’s 18th-largest international trade partner. Minnesota businesses exported $283 million in goods and services to Brazil in 2010, up 21 percent from 2009. Brazil is the United States’ seventh-largest manufactured goods market and the largest economy in South America.

Top Exports: • Computers and electronics ($76 million) • Machinery ($74 million) • Transportation equipment ($40 million) :: OPPORTUNITIES :: As Brazil builds its infrastructure and economic capacity, industries such as aerospace, transportation, oil and gas, mining, building and construction, agribusiness, energy and telecommunications will continue to thrive. :: CHALLENGES :: The Brazilian market consists of a large geographic area and limited infrastructure. The country has uneven income distribution and poor education rates. It also has a significant informal economy or black market, which encourages intellectual property theft. Brazil has high tariff barriers and a protectionist government policy toward some industries, including agriculture and energy.

:: INSIDE SCOOP :: A deep understanding of local Brazilian culture and business climate is required, including the hidden costs of doing business and the importance of personal relationships. These are typically established through face-to-face meetings in both business and social settings. Hiring a reputable, well-connected agent or distributor is recommended to navigate the Brazilian government bureaucracy and differences between different regions of the country. :: TRADE AGREEMENTS :: Brazil is a member of the Southern Common Market trade compact, which levies common tariffs against external countries (including the United States). Efforts to strike new American trade agreements with South America are proceeding, albeit at a slow pace.

EXPORTING IN ACTION: Villard-based Massman Automation expanded into overseas markets in a big way two years ago with the acquisition of a punch-packaging system for microwave popcorn, according to Jeff Bigger, the company’s president and owner. The company is currently trying to enter the booming Brazilian market. Getting a foothold in Brazil has meant traveling down there to meet people, six months of research into the market and attending an industry exposition focused on Brazil. IQ

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Great ships loaded with grain and iron ore leaving the Duluth harbor bound for ports around the world. For generations of Minnesotans, that was the image of our state’s international trade. Today, that romantic vision needs to make room for a broader view of Minnesota exporting. Businesses in towns across Minnesota led the state to a record-breaking $5.3 billion worth of products sold internationally last year. When you consider that the National Association of Manufacturers reports that every $1 in manufacturing product infuses an additional $1.37 into other sectors of a local economy, it’s clear that exporting abroad supports people at home. “There is no doubt that international success requires a business going ‘all-in’ and taking some calculated risks,” said Kathy Gaalswyk, Initiative Foundation president, “but the good news is that they don’t have to do it alone. In Minnesota, we have a wealth of resources and expertise to draw upon.” Over 100 companies in central Minnesota are playing an increasing role in the state’s exporting success. Some fought hard to keep their heads above water during the recent recession. All see international markets as the way to expand their business base and weather the storms of economic uncertainty. Even as they grow, these companies have stayed where they were founded, keeping the money they earn in their communities, contributing taxes, paying utilities and raising their employees’ standard of living. And they have no intention of moving from the towns they call home. Here are four central Minnesota businesses that are exporting success.

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STEADIER DEMAND: The recession proved to Schaefer Ventilation Equipment CEO Neil Crocker that the company needed to develop a more sustainable overseas market.

Schaefer Ventilation Equipment, Sauk Rapids As Ed Schaefer repaired oil furnaces around Sauk Rapids in the 1940s, he began to accumulate old parts, including large motors. At the request of a local dairy farmer needing to keep his cows cool, Schaefer put fan blades on one of those motors. With that move, he started what president and CEO Neil Crocker calls an “accidental” ventilation company, one that is now a very intentional enterprise, with sales of $15 million and 40–50 employees. Schaefer Ventilation Equipment sells big air-moving systems and radiant heat products that it makes in Sauk Rapids. These systems heat, but mostly cool, animals, plants and people. Giant fans push breezes through movie sets and focused heaters warm chilly hotel entrances. Pilgrims entering Mecca, in Saudia Arabia, pass under Schaefer fans blowing a cooling mist. The company’s income grew by 50 percent in 2011, but sales were shaky only a few years earlier when the recession hit manufacturers hard. To stay profitable, Crocker kept the company focused on essentials, but he wisely continued to fund a series of growth initiatives. One was an exploration of international business opportunities. “Lots of international companies come to the U.S. to attend annual trade

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shows,” said Crocker. “We’ve always made connections and sales from these events.” The recession proved to Crocker that the company needed to develop a more sustainable overseas market. By geographically diversifying sales, Schaefer’s products could become less season-dependent and the company could build a steadier demand. In 2010, Crocker and his team participated in a U.S. Commercial Service/Minnesota Trade Office program called ExporTech designed to help companies become successful exporters. Schaefer also used the U.S. Commercial Service to find dealers and distributors and received coaching on international marketing strategies from the Minnesota District Export Council. Aided by Schaefer’ s 60-year history and a stellar reputation for quality, this tactical exporting effort is paying off. In 2011, Schaefer Ventilation sold $1 million worth of products to Egypt, Pakistan, Mexico, United Arab Emirates, Russia and Venezuela, among other countries. It is also putting significant effort into growing its Middle East business to include Saudi Arabia and Kuwait. Next year, Crocker hopes to increase its international sales to $2 million.

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EASTBOUND: Larson Boats CEO Al Kuebelbeck is turning the Little Falls-based company’s attention to China.

Larson Boats, Little Falls The United States has traditionally been the world’ s biggest motorized boat-buying country, accounting for 80–85 percent of global sales. But in 2007, U.S. sales peaked and then fell dramatically. Larson Boats has ridden many financial waves since Paul Larson began building cedar-plank watercraft in 1913. Buyouts and bankruptcies, depressions and recessions have buffeted the company over the years, but it has held on because of its near iconic status among boaters and an impeccable reputation for quality. Even so, 2007 was a difficult year. Along with the downturn in domestic sales, international sales crashed in the global recession. It was also the year the company declared bankruptcy. Despite the grim boat-buying picture, Larson had several strengths in its favor—a solid history of excellence; highly skilled, loyal employees; in-house manufacturing that saves inventory and freight costs; and tremendous support from the Little Falls community. With financial support from the Initiative Foundation and other partners, the company quickly began to build back its business, especially in the world market. “To truly be able to grow a boat company, you have to have a vision for international sales,” says Nino Dreger, head of international market-

ing. “If we establish the company well in every single market worldwide, we can take advantage of positive economic developments in one market if another falters.” CEO Al Kuebelbeck believes Larson’s advantage comes from the company’s 225 employees who build every inch of Larson’ s boats, except for the instrumentation and windshields, in the Little Falls factory. “There isn’t a better workforce than we have here in central Minnesota,” he said. “The average length of service of the people here now is 18-plus years. If you have that kind of dedication and pride in your work, you can win.” Today, Larson is actively selling boats in 23 countries, with Sweden, the Netherlands, Australia and Germany as the fastest-growing sectors. And it is turning its attention to China, a country Kuebelbeck calls “literally untouched” when it comes to boat sales. The company is just beginning to see the positive impact of international sales. Currently, they make up 18 percent of the company’s revenues and Kuebelbeck’s goal is to double that number. The impact on the local economy grows with each percentage point, adding that much more to a vendor’s bottom line and increasing the need to grow the Little Falls workforce.

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MADE IN ST. CLOUD: Microbiologics CEO Brad Goskowicz says the company sells its products in 128 countries.

Microbiologics, St. Cloud Microbiologics began as a water-testing lab in 1971, but about five years later under the new owner, Bob Coborn, grandson of the grocery store chain founder, the company diversified its services. Coborn expanded the testing business into additional markets and started manufacturing prepared culture media for microbiology. Over time Microbiologics developed a freeze-drying process and began creating microorganism quality controls. Using innovative packaging and new formats, it specialized those controls to ensure quality and safety in fields such as cosmetics, food, pharmaceuticals, and clinical testing. “If you’re a hospital, for example, testing for staph and your results keep coming back negative, how do you know your tests are working properly?” said CEO Brad Goskowicz. “You need a control. We have specific strains of Staphylococcus that you can use to monitor your testing equipment to make sure it’s recognizing the bug when it sees it.” Today, Microbiologics is one of only three companies in the world that makes these specific testing products. “We’ve found our niche,” Goskowicz said. “We are very, very good partners with the people we

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serve and we make all our products here in St. Cloud.” The U.S. demand for Microbiologics’ products has always been strong, but the company needed to look for revenue and growth possibilities in markets that were expanding faster than those in the United States. “We wanted to supplement our U.S. revenue and find ways to weather downturns and disruptions that might happen all around the world,” said Goskowicz. With support from the Initiative Foundation, trade organizations, and the Minnesota Department of Employment and Economic Development, Microbiologics began understanding export regulations, finding distributors, and moving into overseas markets. Now 40 percent of its $15–25 million revenue comes from outside the United States. The company sells its products in 128 countries, with those in Asia increasing revenues by a steady 60–70 percent each year and Latin American countries showing a 30 percent growth rate. “As multinational food and cosmetic companies move into these markets, constant monitoring of their products is critical,” said Goskowicz.

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GROUND LEVEL: Rotochopper CEO John Babcock said that international revenues climbed to $6 million in 2010.

Rotochopper, Inc., St. Martin What was once thrown into landfills, is now an opportunity for Rotochopper, Inc. The St. Martin-based company builds the only highhorsepower, horizontal grinding machines in the world where you can throw pallets into one end and shredded wood comes out the other, colored to your specifications and ready to be bagged for landscape use. Rotochopper products can recycle asphalt shingles into a blacktop ingredient and transform wood waste into biomass fuel. The employee-owned company was an inventive business from the start. In 1990, Vince Hundt, who had been importing and selling forestry equipment from Finland, met Fred Peltz, a gifted machinery designer and owner of Peltz Manufacturing in St. Martin. With startup financing from the Initiative Foundation they built a prototype grinder, refined it and continued to adapt it for multiple uses. The company has been so successful in the United States that it didn’t invest in the international market until a few years ago. “One key to being successful in the overseas market is to have a good international bank,” said CEO John Babcock. “It ensures that the customer’s bank is stable, and that there are no U.S. sanctions in place against the country.” Along with the difficult and costly practice of conforming to differing

international manufacturing standards, it’s been a challenge for Rotochopper to find quality local representatives in various countries. But the sales force in St. Martin has been doing a first-rate job, according to Hundt, the vice president of market development and the architect of the company’s international expansion. In 2009, Rotochopper sold $4 million worth of products internationally, about 20 percent of total sales. In 2010, international revenues had climbed to $6 million with sales in Canada, Norway, Sweden, Finland, England, Australia, New Zealand, Russia, Ukraine and Japan. Many of Rotochopper’s product components are supplied by local businesses. Many services are performed locally, too—for example, a local vendor does the metal machining. In addition to these direct economic impacts, customers come from all over the world to visit the factory. They use taxis and rent cars, shop, stay at hotels, and eat at local restaurants. Babcock calls all of this activity “new” money because it is coming from outside the region and infusing local St. Cloud area businesses. Most of the 50 people who work at Rotochopper come from 10–15 miles away. “We’re committed to St. Martin,” said Babcock. “The people who work here share in the success of the company. We’re here to stay.” IQ

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By Lawrence Schumacher

For many Minnesota businesses looking for a way to boost sales and increase their financial stability and revenue diversity, the question isn’t whether to grow their overseas export markets. It’s how to do it. Only one percent of Minnesota firms export their goods and services outside the United States, and 58 percent of those only export to one foreign market, said Margaret Anderson Kelliher, former speaker of the Minnesota House of Representatives and current president of the Minnesota High Tech Association. Yet in the Twin Cities alone, exports are responsible for $19 billion in economic activity and 180,000 jobs. “If we can

move the needle on Minnesota firms exporting and get them all to enter one new market, we’d have a real potential for economic growth for this state’s future,” said Kelliher. In central Minnesota, many businesses would like to find new markets for their products and services, but don’t have the time or knowledge to get started, said Diana Lawson, dean of the Herberger Business School at St. Cloud State University (SCSU). “When a company wants to go into a foreign market, there’s a heck of a lot of learning that has to go into figuring those markets out,” she said. “Time is money for businesses, and they don’t have a lot to spare.” Fortunately, there are many resources at the local, state and federal levels that can help businesses that want to make a commitment to exporting. Here’s how to get started.

Margaret Anderson Kelliher, President of the Minnesota High Tech Association, and Former Minnesota House of Representatives Speaker.

STEP 1 : THE RESEARCH A couple years ago, Tom Grones started thinking about expanding the market for GeoComm, his company’s geographic information services, which includes mapping, data collection and enhanced 911. He decided that exporting was the best path. But the president and CEO of the St. Cloud-based company didn’t know where to begin. The international market came knocking at GeoComm’s door when a California-based partner started directing inquiries to them for their E-911 products. “All of a sudden, we started having people from foreign companies and governments reaching out to us,” Grones said. But before Grones decided which markets to enter, he researched where his product might find a market, trade barriers, distribution chains and more. The St. Cloud-based Anderson

Center and the Herberger Business School at SCSU proved to be invaluable resources. So did the Minnesota Trade Office (MTO) and the U.S. Commercial Service, both based in Minneapolis. The MTO’s Trade Assistance Hotline can be a first stop for Minnesota businesses wanting to figure out how to get started, said Katie Clark, the office’s executive director. Experts in 15 different priority export markets can answer questions about those markets, or staff can help businesses with basic questions about putting together an exporting plan. The MTO also offers training programs for “new-to-export” companies at any stage of the process. “We can help people figure out what institutions there are to deal with, what to expect in terms of the ease of doing business and what markets are best suited for different products and services,” said Clark.

The U.S. Commercial Service, a branch of the U.S. Department of Commerce, offers both detailed country information guides for the prospective exporter and its Gold Key Matching Service, which helps companies connect with potential agents, distributors, sales representatives and business partners in different markets. “We can arrange faceto-face meetings or put you together with people via videoconferencing,” said Mathew Woodlee, senior international trade specialist at the Minneapolis office. Closer to home, the Herberger Business School, working with the Anderson Center and the Small Business Development Center, offers connections to specialists in St. Cloud that understand both the central Minnesota business landscape and overseas markets.

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WIQ2012-3 JOHN LINN

STEP 2 : THE PLAN

An essential step for GeoComm included building an international strategic business plan that defined where the company wants to go with its exporting and established a timeframe for that strategy. Many small companies start exporting because of an individual inquiry and don’t develop an exporting plan, according to Clark. But one is highly recommended for companies that want to get serious about it. “Having a strategic plan in place and pursuing it can help you focus your efforts and it can also help you open doors with overseas markets,” said Clark. Grones worked with Lawson and the Herberger Business School in 2011 to help develop that plan. In addition to faculty expertise, the Herberger School also connects businesses to students that can do research and develop plans for entering specific markets or evaluating a region. The Minnesota Trade Office also provides assistance with building an exporting plan.

STEP 3 : THE RELATIONSHIPS After extensive research, Grones identified Central America and the Caribbean basin as the best regional match for GeoComm’s export efforts, and Belize as the best first country to attempt to enter. The country has a growing infrastructure to support GeoComm’s product and a good relationship with the U.S. government, which offers some aid to countries for establishing public safety services. Next, Grones needed to make the connections that are essential to landing clients in business, regardless of the market. One option for companies that don’t have much foreign exposure is to go to industry expos and trade shows that bring global buyers to them. “Nothing replaces a face-to-face connection,” said Clark.

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“Going to trade shows is an easy way to introduce yourself, though it requires a good deal of follow-up afterward to establish a real business connection.” Another option is to take part in statesponsored trade missions. The state received a $450,000 grant to fund five new trade missions in 2012, including one to India in March of this year. Often, businesses overseas feel more comfortable when a high-level government official is present or helps arrange a meeting, and trade missions arranged through the governor’s office can help open those doors, according to Kelliher. For some businesses—including GeoComm and Villard-based Massman Automation Designs, which produces line packaging solutions—working with U.S.

Diana Lawson, Dean Herberger Business School, SCSU

“ Time is money

for businesses, and they don’t have a lot to spare. ”

companies that already have a presence in export markets can help break the ice. Massman started working with U.S. companies that did business in markets such as Mexico and expanded its exporting from there, said Jeff Bigger, company president and owner. Bigger said he relied on the U.S. Commercial Service’s Gold Key Service, which offers customized briefings on potential markets, appointments with prospective trade partners, help with travel, interpretive service, clerical support and a post-visit debriefing. “I learned that you really have to have a local presence if you want to be competitive,” he said. “Personal relationships are very important in markets like Brazil and Mexico, and you have to know that.”

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Grones found that when it comes to exporting to an overseas market, there is no substitute for traveling to your overseas markets. “It’s exceedingly important to have a relationship with companies over there, and you can’t do that just through email and phone calls,” he said. Trade missions can be a great way to get your feet wet, but building and maintaining a clientele in foreign markets often requires repeated visits to get a better sense of how things work in those markets, according to Clark. For companies that don’t have experience exporting outside the United States, Canada can be a great first market to enter. Cultural similarities, geographic proximity and the North American Free Trade Agreement make it a less-intimidating market for first-timers. “It’s easier to make and keep business relationships in Canada than just about anywhere else,” said Clark.

STEP 5 : THE CORRECTIONS The world’s economy changes every day, and businesses need to keep up with it. “People a decade ago thought that globalization would just mean taking jobs here and moving them overseas,” said Grones. “But today we see that the U.S. has an important role to play in the global economy, and we can take advantage of it, more than letting it take advantage of us.” To succeed in exporting globally, companies need to keep doing the research, update their plans, make new connections and re-establish their presence in their target markets. Companies that invest the time and effort will find significant rewards that will benefit the whole state. “To really have the growth most businesses desire today, we have to look farther afield than just Minnesota, just the Upper Midwest, even than just nationwide,” said Kelliher. “More sales overseas are good for business and good for Minnesota, and it’s one of the things that will drive our job creation in this decade and those to come.” IQ

JOHN LINN

STEP 4 : THE PRESENCE

Tom Grones, President and CEO, GeoComm

“ It’s exceedingly important to have a relationship with companies over there, and you can’t do that just through email and phone calls. ”

Patience, patience, patience

To succeed in foreign markets, businesses need to take the long view. American business plans often concentrate on goals and objectives for the next year, with a reward system focused on making the next quarter’s projections. But to succeed in entering a foreign export market, businesses must take a longer view and be patient when waiting to see the results of their efforts, advises Diana Lawson, dean of the Herberger Business School at St. Cloud State University. “When you negotiate a deal with an American buyer, you’re both working from a common set of assumptions about the way business is done,” she said. “It can take quite a while to understand the different distribution chains, ways of doing contracts and assumptions that are part of the normal way of doing business in another country.” Twenty years ago, it would have taken two years to negotiate a contract to export to even the most open Asian markets, Lawson said. Today, the timeline is shorter, but doing business still requires visiting countries, making connections and doing research to understand how they operate. And while businesses can luck into orders to foreign markets through the Internet, by attending expos and through referrals, any business plan that incorporates exporting into the company’s overall goals must reflect the long-term perspective that is required to successfully establish a presence overseas. “Exporting is not a short-term solution for any business,” said Lawson. “It requires patience if you hope to succeed.”

Brad Goskowicz, Microbiologics CEO

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Chris McAllister

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RESOURCES GENERAL EXPORT ASSISTANCE Anderson Center www.acmbd.org (320) 251-5420 Email: venita@anderson-center.org Located in St. Cloud, the Anderson Center provides management and leadership development forums for executives across greater Minnesota. The center’s three-day International Business Forum introduces business leaders to the challenges and opportunities of operating and competing internationally. Center for International Business Education and Research (CIBER) Carlson School of Management University of Minnesota www.csom.umn.edu/ciber/ (612) 625-0027 Email: csom@umn.edu Supports international business education experiences for students and provides information related to international business for regional business leaders. Enterprise Minnesota www.enterpriseminnesota.org (612) 373-2900 Email: lynn.shelton@enterpriseminnesota.org A nonprofit business consulting organization that helps small and medium-sized Minnesota manufacturing companies, education services and government entities. Offers global strategy and marketing seminars and programs across the state. Export-Import Bank of the United States Midwest Regional Office www.exim.gov (312) 353-8081 Email: info@exim.gov The official export credit agency of the United States. Helps finance exports of U.S. goods and services primarily to emerging markets to help create and sustain U.S. export-related jobs. Herberger Business School, St. Cloud State University www.stcloudstate.edu/hbs/ (320) 308-3213 Email: hbs@stcloudstate.edu Offers several programs to prepare international business executives for careers in global business. Consults with regional businesses to help them create business plans that include exporting.

Initiative Foundation www.ifound.org (877) 632-9255 Email: info@ifound.org

U.S. Commercial Service trade.gov/cs/states/mn.asp (612) 348-1638 Email: office.minneapolis@trade.gov

A regional foundation that promotes economic development through business financing, consulting and workforce development projects, especially to central Minnesota manufacturers seeking to expand into international markets. The Initiative Foundation also provides grants to nonprofits, community development resources, leadership training and donor services.

The trade promotion arm of the U.S. Department of Commerce’s International Trade Administration provides assistance to Minnesota companies who either want to get started in exporting or increase their sales to new global markets.

Midwest Global Trade Association www.mgta.org (651) 290-7482 Email: office@mgta.org An organization of international business professionals, which provides education, current information and support to enhance the international business opportunities of its members and the community. Minnesota International Center www.micglobe.org (612) 625-4421 Email: mic@umn.edu A nonprofit organization that promotes cultural understanding through educational events for students, citizens and businesses. Minnesota Small Business Development Centers www.mnsbdc.com (651) 259-7423 lyle.wright@state.mn.us With offices located throughout the state, including five in central Minnesota, the SBDCs provide a wide variety services to small businesses. Although they do not provide financing they help businesses assess funding options and opportunities, identify financing sources, evaluate eligibility, and prepare documentation that lenders require. Minnesota Trade Office (MTO) www.positivelyminnesota.com (651) 259-7499 (651) 259-7498 (Trade Assistance Helpline) Email: mto.tradeassistance@state.mn.us The international business unit of the Department of Employment and Economic Development, which assists manufacturers and service providers to obtain the information, skills, resources and contacts they need to successfully export goods and services worldwide. The MTO also hosts international trade missions. Their Trade Assistance Hotline helps companies with a wide range of exporting questions, from customs to trade regulations to etiquette.

U.S. Small Business Administration— Office of International Trade www.sba.gov/about-offices-content/2/3122 (612) 370-2324 The mission of SBA’s Office of International Trade is to enhance the ability of small businesses to compete in the global marketplace; facilitate access to capital to support international trade; ensure that the interests of small business are considered and reflected in trade negotiations; and support and contribute to the U.S. Government’s international agenda.

SPECIAL SECTOR SUPPORT LifeScience Alley www.lifesciencealley.org (952) 542-3077 Email: info@lifesciencealley.org A Twin Cities-based nonprofit trade association serving the life sciences in Minnesota and the surrounding region. Hosts conferences and seminars on exporting. Minnesota Department of Agriculture Marketing Services Division www.mda.state.mn.us/food/business (651) 201-6000 The international trade staff provides assistance to farmers and agribusiness in evaluating market entry methods, understanding and obtaining regulatory requirements, finding partners, arranging shipping and financing. Minnesota High Tech Association www.mhta.org/ (952) 230-4555 Email: info@mhta.org Supports the growth, sustainability and global competitiveness of Minnesota’s technology-based economy through advocacy, education and collaboration.

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www.incommons.org or www.regionfive.org The work that provided the basis for this publication was supported by funding under an award with the U.S. Department of Housing & Urban Development. The substance and findings of the work are dedicated to the public. The author and publisher are solely responsible for the accuracy of the statements and interpretations contained in this publication. Such interpretations do not necessarily reflect the views of the Government.

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On the Job

JEFFREY PHILLIPS: “Even though a lot of business can be done over the phone or the Internet, we encourage Minnesota companies to go overseas.”

How to Greet a King Five things to know about life as an International Trade Representative. By Sarah Colburn | Photography by John Linn

hether he’s helping Minnesota companies market their goods in Moscow or briefing the governor about how to properly welcome an international dignitary, Jeffrey Phillips is at the service of businesses and government officials alike. An international trade representative in the Minnesota Trade Office, Phillips is the go-to guy for information and advice about European and Russian markets and business customs. We asked him to tell us about his unique career.

You promote face time. Even though a lot of business can be done over the phone or the Internet, we encourage Minnesota companies to go overseas. Foreign companies want more personal interaction. The German delegation told me that if a Minnesota company had taken the time to visit again, they would have done business with them. A sale can take six months to a year.

You get dirty looks. Most of the people we deal with speak English. I speak a very little bit of Japanese, French and German. When I was working as a trade representative for the food industry, my first major presentation was to 400 organic food buyers in Tokyo. I would throw in a little Japanese and they would clap. Then I would say my part in English and the translators would do theirs. One translator gave me dirty looks because I changed my presentation.

You prevent faux pas. We have a lot of ambassadors come to town and we act as the protocol office. We make sure the rules are being followed on everything from how flags are placed to how you address a particular person. We pay a lot of attention to how people are seated. There’s protocol that needs to be followed about who’s seated where, if their back is to the door, who’s on their right and left—all out of respect for a person’s rank and professional position. Even how a person’s name is put on a place card matters.

You check the bottom of phones. The big thing I cover for Europe is called CE Marking for products like machinery, medical devices, even toys—if you look on the bottom of your phone or laptop, you’ll see a “C” and an “E.” That marking signifies companies have met health and safety requirements. It’s their passport into the European Union.

You roll with the flubs. When the king and queen of Norway attended a reception at the governor’s mansion, the king was supposed to get out of the car first. But the way they had the cars positioned, he had to walk all the way around. Everybody was so nervous and so aware of everything. But the king and queen were very calm and good-natured. IQ

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IQ&A with Elizabeth Foy Larsen

IQ tours the opportunities with Minnesota Trade Office Exec Katie Clark

IQ: I’m a business owner with a global dream. How can you help me? KC: The Minnesota Trade Office assists companies with obtaining the information, skills, resources and contacts they need to successfully export manufactured goods and services in the international marketplace. Our office is staffed with international trade representatives, who have lived and worked overseas and bring expertise from different parts of the world. When a company calls our hotline, our representatives know their markets very well and can help companies be successful in those markets.

ments and devices, computer electronics and components, electrical machinery and vehicles— which include snowmobiles and ATVs. Agriculture exports are also a key market—15 percent of exports annually; one in three soybeans in China is from Minnesota. The other 30 percent of exports are service exports, such as education.

IQ: So, your staff must rack up the frequent flyer miles?

IQ: The Internet and exporting—how are they linked?

KC: The MTO coordinates trade missions to targeted countries, includ-

KC: When we talk to companies around the state and ask if they are exporting, many of them will answer no. But when we dig deeper, we’ll find they’re doing business with an international market as the result of a sale that came in through their website. Today, any company can do business around the world just by having a website, however, nothing replaces doing business face to face.

ing missions led by the Governor, to help companies establish trade contacts and gain firsthand knowledge of new markets. We will lead five trade missions in 2012—Governor Dayton will lead a trade mission to China in June. It’s fascinating to see the impact the Governor has while leading trade missions overseas. As a Governor, he has access to the highest levels of leadership in business and government and can open doors for Minnesota companies in hierarchical cultures. All Minnesotans are invited to join the Governor’s trade missions and can apply on our website.

IQ: But aren’t trade missions mostly for the Cargills and 3Ms of the world? KC: No—both small and large. We were also recently awarded a State Trade and Export Promotion (STEP) grant. So, we now have $454,000 available in subsidies for small businesses to participate in our 2012 trade missions.

IQ: Is Minnesota on the international radar yet?

IQ: Can central Minnesota companies get in on the action? KC: Yes, we have a partnership with St. Cloud State University and the Small Business Development Center. We hold trainings on a range of topics, from how to understand cultural nuances to a full-day practicum on China.

IQ: Final question, your best advice for business leaders . . . KC: Make exporting a part of your strategic business plan and proactively identify opportunities for your product in foreign markets. If you don’t already have these plans in place, our office can help.

KC: Minnesota has more Fortune 500 companies per capita than any other state and those companies are doing business around the world. When I’m overseas and mention I’m from Minnesota, they often don’t know where we are located. But if I say words like Medtronic, Mayo Clinic, 3M, and Cargill, they realize they already know Minnesota.

IQ: What do we make that other countries want? KC: Manufactured goods and services make up 50 to 60 percent of exports each year. In that category the top exports are machinery, medical instru-

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Katie Clark is the executive director of the Minnesota Trade Office (MTO), an office within the Department of Employment and Economic Development that provides export assistance to Minnesota’s manufacturers and service providers.

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