The Japanese Yen has increased in value by 20 percent compared to the U.S. dollar since the beginning of February. Thus, goods made in the U.S. are 20 percent cheaper in Japan today than they were at the beginning of this year.
That presents an improved opportunity for U.S. producers to export into Japan.
Over 500 U.S. industries export into Japan. More than 100 of these industries exported greater than $100 million to Japan in 2015. Listed in the chart below are the top 20 specific industries that ship goods to Japan.
There are over 650 manufacturers in Wisconsin who list one of the 15 manufacturing codes in the chart as their primary industry. The other codes in the chart are important non-manufacturing categories:
- Meat Products
- Corn
- Liquid Natural Gas
- Soybeans
- Other Special Classification Provisions
Here is the big surprise: Less than 7 percent of these 650 companies export at all, much less to Japan.
For most companies here in Wisconsin, the biggest barriers to becoming an exporter are psychological. There is fear of the unknown, lack of knowledge, and a natural avoidance of perceived risk even if the real risk turns out to be manageable. Most business leaders won’t say they’re afraid. Instead they’ll frequently say something like, “My business right here in the USA is keeping me completely occupied at the moment.” The trouble is “at the moment” turns out to be “forever” for many of these leaders.
What makes leadership teams great are their abilities to face obstacles and overcome them. In the book “Good to Great” Jim Collins wrote, “It’s impossible to make good decisions without an honest confrontation of the brutal facts.” And our brutal facts include that the big growth opportunity for Wisconsin manufacturers lies in international sales. In fact, international sales have been the primary sources of economic growth across all tradable industries in Wisconsin over the past decade. The international market for our Wisconsin companies is five times larger that the domestic U.S. market.
Leadership teams who take on the challenges of exporting are likely to encounter surprising benefits. For example, the data shows that companies become far more innovative and thus competitive two years after they begin exporting. Additionally, a 2010 federal government study showed exporters as 72 percent more productive than their non-exporting peers. Exporters enjoy higher margins and can pay workers more. In a tight employment market, higher pay gets you the cream of the crop. Exporters enjoy stronger growth, more predictable revenues, and earn substantially higher valuations than similarly sized companies that don’t export. Finally, exporters have a much better chance of withstanding a downturn in the economy.
A company does not need to create an export department to get started. Using a mix of private, state, and federal resources a company can get into exporting with minimal risk and minimal investment. All it takes is a commitment.
Bill Burnett is the director of the export initiative for the Milwaukee 7. He can be reached at (414) 287-4118 or via email at bburnett@mke7.com.
