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VOICES FROM THE INDUSTRY: There is no better time to think about going global

April 21, 2008

A weak dollar. Lost jobs. Liquidity challenges.

These and other perceived barriers tend to unfortunately mute short-term considerations for Indiana businesses thinking about international expansion.

The reality? Globalization of U.S. businesses is alive and well, and proceeding at a breakneck pace. In fact, America and the world remain embroiled in likely the greatest commercial transformation since the Industrial Revolution with the full integration of U.S. markets in an open era of innovation and productivity.

How does this play out in Indiana?

International commerce supports nearly one in every five jobs.

In terms of Foreign Direct Investment, or FDI, the Midwest leads the United States, and Indiana leads the Midwest, particularly in Japanese FDI.

An employee working for a globally engaged company is likely to bring home an income well above the Indiana standard for domestic companies.

Nationwide, the transformation toward globalization has fostered an increase in annual U.S. income that approaches $1 trillion, adding an average addition income gain in excess of $10,000.

The short-term current challenges actually present new opportunities for Hoosier businesses. While durable goods and heavy-machinery sales often decline in a recessionary environment, the weak dollar has fostered a boom in exports to Canada. Small-scale parts companies, which exist all over Indiana, are in demand.

Myths of globalization

A serious myth continues that globalization is a bad thing, sucking jobs out of the American economy. Critics tout statistics that show job losses, particularly in manufacturing. The truth? Low-paying production jobs are vulnerable, particularly when Americans want three to four times (or more) the pay scale over what overseas workers will accept.

However, one must consider that these types of jobs are the ones that most Americans won't apply for. Numerous small Indiana firms have strategically outsourced these low-skill and low-paying jobs offshore, creating new economic development, often in rural areas.

While some of these low-paying jobs may have left the Midwest, hundreds-if not thousands-of much-higher paying jobs have arrived through foreign companies, more than eclipsing the loss of nonstrategic jobs.

According to World Trade magazine, U.S. manufacturing employment peaked in 1979 at 19.8 million jobs. By 2006, manufacturing employment had fallen to 14.1 million.

What happened? Did these jobs flee the country? No, as the facts show, U.S. manufacturing shipments rose from $1.7 trillion to nearly $4.8 trillion over the same period of time, emphasizing the incredible vitality of the U.S. manufacturing sector. The culprit? As more manufacturing technology has come online over the past decade, American productivity gains have outstripped general business productivity by nearly 50 percent.

Today, manufacturing jobs-particularly in advanced manufacturing-increasingly are high-skill positions that require specific training and higher degrees of education. Indiana is universally recognized as the No. 1 manufacturing state in the nation, which means that the Hoosier state can well continue to benefit from increased globalization-if it keeps pace with work force development.

Indiana has positioned itself as a safe harbor for strong FDI, particularly from Japan. Japanese companies presently have invested $9 billion in Indiana companies, employing more than 32,000 Hoosiers.

Getting help

Need help? The Japan-America Society of Indiana serves up a track record in helping companies connect with a nation that is on a major growth trend. The International Center of Indiana offers prospective exporters cultural and business contacts to improve success. Almost any major law firm in Indiana has import/export officials who can provide advice. The U.S. Department of Commerce maintains a very helpful import/export office in Carmel.

For long-term success, Indiana must be a global state with a global focus, continuing to match our considerable assets with world needs.



Snyder is managing principal of The MEK Group in Carmel, a marketing and business consulting firm. Views expressed here are the writer's.
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