More Connecticut Companies Export, As Congress Moves To Approve Trade Deal
As Congress moves toward “fast-tracking” approval of large international trade bills, a growing number of Connecticut companies are exporting products to other countries, according to a recent survey by the Connecticut Business & Industry Association.
Statewide, 79 percent of businesses — nearly 6,000 — are exporting goods, up from 53 percent that were exporting in 2007, CBIA’s 2015 International Trade Survey of Connecticut Businesses found.
On the national front, the U.S. Senate voted Tuesday to advance President Barack Obama’s trade agenda, which would give Obama improved negotiating powers when it comes to completing a major Pacific trade pact.
Proponents say the deal will open new international trade markets, but critics worry. U.S. Sen. Richard Blumenthal, D-Conn., was among those who voted against the proposal.
“Many Connecticut companies depend on their ability to export under free and fair conditions, and I will work to ensure that they can do so,” Blumenthal said in a statement. “But I am against the largest-ever trade deals being negotiated without public participation or enforceable standards from Congress.”
Blumenthal said the trade deals being considered are “too complicated and too consequential for the rushed, secretive process” proposed by Obama.
Here in Connecticut, exporting goods helps bolster companies’ bottom lines, said Pete Gioia, CBIA’s vice president and economist.
“With more than 95 percent of the world’s consumers living outside of the United States, exporting is key to our economic competitiveness,” he said in a statement. “Connecticut ranks 27th for exporting among all states and 18th per capita, so there is room to grow.”
The largest share of exporting companies, 56 percent, are manufacturing businesses, followed by aerospace businesses at 19 percent and professional services companies at 9 percent. The remaining companies specialize in wholesale distribution, electronics, medical or health products, information technology, retail goods, and “other” goods.
The findings are based on a survey that was emailed to 1,300 companies in March and April, to which 140 business leaders responded. It was conducted by CBIA and sponsored by accounting firm CohnReznick and Santander Bank, and supported by the state Department of Economic and Community Development and the U.S. Department of Commerce.
“Not only does this study provide information for policymakers on how best to offer support to potential exporters, it also helps peer companies understand the trends in their industry and options for growth,” DECD Commissioner Catherine Smith said in a report derived from the survey.
“One trend is clear: the number of companies doing business abroad is increasing,” she said. “With the financial and technical assistance offered by the state and our public and private partners, I fully expect those numbers to keep climbing.”
Many of the companies that are exporting, 89 percent, are small or mid-size business with fewer than 500 employees. And most exporters have been in participating in the international market for a long time: 46 percent have been exporting for more than 20 years while 37 percent have been for 10 to 20 years, the survey found.
More than half of exporters, 52 percent, entered the business to boost sales, while 24 percent did it to follow their clients and 16 percent wanted to diversify their business.
“After the recession, most companies cut all the costs they reasonably could to maintain their bottom line. The only way left to improve the bottom line is to find new customers, and in most cases that means non-U.S. customers,” Jim Wall, principal and International Tax Practice leader at New York City-based CohnReznick, said in the report.
“As many have found or will discover, international expansion brings additional complexity that needs to be managed carefully,” he said.
For the first time, Western Europe is the top export destination for Connecticut-made goods instead of North America, according to the survey. About a third, 32 percent, of the state’s companies are exporting to Western Europe, compared with 26 percent sending to North America, and 18 percent sending to Northern Asia.
But as more companies export, some are encountering hurdles in the global marketplace. The most common barrier is lack of knowledge about foreign markets, cited by 18 percent of respondents. Cost competition and payment delays/defaults were both encountered by 17 percent of respondents while 15 said trade and regulatory barriers were problematic.