National Study Shows Global Sales Key to West Michigan Economy

Workers assemble products at the X-Rite plant in Kentwood.

For color measuring device maker X-Rite Inc., global sales are more than a slogan.

The markets of Europe and Asia are indeed essential to the future of the Kentwood firm.

“They represent a growing part of our business,” said Chief Financial Officer Raj Shah. “We expect this to continue.”

This puts X-Rite in tune with much of western Michigan, where the Grand Rapids area ranks 4th out of the 100 largest metropolitan areas in the United States in percentage of jobs related to exports, according to one. new study from the Brookings Institution.

With more than 50,000 export-related jobs, Michigan ranks 10th in exports as a percentage of gross manufactured product, according to the study.

The study was published Monday night by the Washington, DC-based think tank.

Birgit Klohs, CEO of Right Place Inc., said overseas numbers belie the idea that manufacturing in Michigan is a dead end proposition.

“It’s a very good indicator of the growth of the companies that we still have here that are exporting a lot,” Klohs said.

And almost without exception, those who are successful in exporting do so with high “value-added” products, Klohs said.

“You can’t just settle for a few pieces anymore and compete with that,” she said. “This type of manufacturing is always looking for the cheapest country. It has to be of high quality at a good price.”

Indeed, Klohs sees international trade as a key part of West Michigan’s future job portfolio.

A Brookings analyst agrees, saying metropolitan areas are well positioned to drive future export growth.

“True economic recovery and job growth in America will depend on substantial growth in the amount of goods and services we sell to other countries,” Vice President Bruce Katz said. “Metropolitan areas are already leading the nation in export production, and they will be at the forefront of export growth for years to come.”

U.S. exports support nearly 12 million jobs nationwide, including nearly 8 million in the 100 largest metropolitan areas.

The greatest potential for export growth in the coming years will be with Brazil, India and China. It is estimated that middle class consumption in these three countries, which accounted for about 8.4% of global middle class consumption, could reach 26% by 2020.

At ESCO Grand Rapids, President Rick Hungerford Sr. has preached the mantra of global markets for years. True to the value-added formula, the company manufactures polyurethane dispensers and manufacturing machinery, with customers in Canada, Mexico, Europe and Africa.

He estimated that exports represent 30 percent of the company’s business.

“We haven’t had the impact we would like in China, but we are working on it,” he said.

A local US trade official said that successful exporters generally have a few traits in common.

“You have to have an exportable product,” said Tom Maguire, of the US Department of Commerce, US Commercial Service, based in Grand Rapids.

“Not all products are exportable. It takes hard work on the part of the company.

By the numbers

Export excellence
Grand Rapids ranks almost at the top of the 100 largest metropolitan areas in the country for the share of jobs related to exporting.
The top five:
1. San Jose-Sunnyvale-Santa Clara, California – 22.7 percent
2. Wichita, Kan. – 22.3 percent
3. Palm Bay, Florida – 13.8 percent
4. Grand Rapids – 13.8%
5. Oxnard-Thousand Oaks-Ventura, CA – 13 percent

Source: Brooking Institution
The three big blues
The recession and the decline of the auto industry crippled the overall percentage of US exports from Michigan.
2006 3.9 percent
2007 3.9 percent
2008 3.5 percent
2009 3.1 percent

Source: United States Census Bureau

Maguire is working with manufacturers to determine if their product will work overseas, and if so, which market might be the best. He then tries to put the company in touch with the appropriate contacts abroad.

About a dozen years ago, SoundOff Signal Inc. in Hudsonville did not have an overseas market for its line of emergency vehicles and commercial security products. Then the owner of the company, George Boerigter, made it his mission to change all that.

“He accepted this as a personal assignment,” said Tom Roe, the company’s chief financial officer. “You have to have determination and a strong will to do it.”

Today, SoundOff Signal sells its products in nearly 30 countries, with exports accounting for about a quarter of its sales. In 2009, he was named Michigan Small Business Exporter of the Year by the US Small Business Administration.

Roe said he expected “double-digit” export growth for the next three to five years.

For L-3 Avionics, exporting has been part of its business since the construction of its Cascade Township factory in the 1960s. The company produces cockpit instruments for commercial and general aviation aircraft, employing over 300 people at its headquarters here.

Although exports may account for just under 10 percent of its overall sales, that amounts to $ 10 million per year, said Vice President Larry Riddle.

Its instruments are found on planes across Europe, Asia and the world.

“They could be anywhere,” Riddle said.

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