Global Markets Represent New Frontier for Oregon

By Scott Goddin, director of Portland U.S. Export Assistance Center

Oregon companies benefit from expanding international markets
Ninety-five percent of the world’s consumers live outside the United States, and more Oregon companies are looking to increase their bottom line by making new sales abroad. In export sales alone, Oregon companies have continued to be successful internationally with state exports increasing almost 11 percent in 2005 over 2004 and 39 percent from 2001-2005, to $12.4 billion. From 2001-2005, Oregon exports increased to many of the state’s top destinations, including Canada (84%), China (78%), Malaysia (169%), Mexico (190%) and South Korea (58%). Many other Oregon export destinations posted solid gains as well. Machinery manufacturers, chemical manufacturers, computers and electronic products, and transportation equipment ranked among Oregon’s leading exports. Oregon firms, both large and small, are poised to benefit from an expanding world market.

The importance of trade to Oregon’s economy is broad and deep. The 2005 figure of $12.5 billion in merchandise shipments represents roughly ten percent of Oregon’s gross state product—the measure of goods and services produced within our borders. Nearly 25% of Oregon’s agricultural products (by value) are exported, reaching an estimated $959 million in 2004. The merchandise figure also understates the value of services exports—Oregon’s creative services including advertising, software and architecture among others, serve clients around the world and generate revenue locally. Earnings from tourism (foreign and domestic) reached an estimated $1.8 billion in 2005 and the contribution from foreign students studying in Oregon’s universities was estimated at $136 million in 2003-2004.

Range of activities position Oregon in global marketplace
Exporting helps companies grow and compete, and those who think beyond our borders have a competitive advantage in today’s global marketplace. According to census estimates, over 4,700 companies in Oregon are involved in exporting, with nearly 4,000 considered small- to medium-sized firms (SMEs - defined as under 500 employees). A more realistic, but anecdotal, assessment of the Oregon business community would qualify these SMEs as under 50-100 employees. In 2001 (latest estimate available), it was estimated that nearly 150,000 Oregonians were employed in export-related activities or roughly ten percent of the workforce; 10,000 of these are related to agricultural exports. Foreign-invested affiliates in Oregon including Freightliner, Adidas, Hynix and Epson—among the over six hundred foreign companies represented—employ over fifty thousand Oregonians and further position Oregon in the global marketplace.

Innovation and adaptation critical to success
Oregon’s role in the growing global economy has not come without disruption and displacement as global competition has resulted in factory closings, relocation and unemployment. The fact that Oregon has a higher percentage of its work force involved in manufacturing means that our firms may be more heavily impacted by globalization. The state’s political, business, community and labor leaders must continue to encourage investment in education, workforce development and training programs that can keep our firms globally competitive. Critics of the impact of NAFTA (North American Free Trade Agreement) on Oregon cite the loss of an estimated 11,000 jobs as a result of the agreement. This number derives, however, from applications to a federal/state program developed to assist workers displaced by the agreement and other international trade impacts. The criticism also does not take into account any job creation that might have resulted from Oregon’s exports to Canada and Mexico doubling over the term of the agreement.

Oregon companies and its work force must continue to innovate and adjust to a changing global economy and our role in it. Our competitiveness in high technology (representing roughly two-thirds of our exports) increasingly relies on producing intermediate goods (semiconductors and high-value integrated circuits) and production and test equipment used in the production of consumer and industrial products overseas. Very simply, as China grows as a manufacturing platform and exporter to the U.S., it will require the high-value inputs and tools that Oregon produces. This will include technology and software and, increasingly, education and training goods and services. These relationships are already evolving as chip designs developed locally are already being fabricated and tested in China for integration into new products.

Looking for new market niches
In other traded sectors, Oregon firms will need to find profitable market niches for products ranging from organic foods and nutritionals to medical technologies to alternative sources of energy. Oregon’s global footprint includes Eastern Oregon wheat sold to Egypt, hazelnuts to Yemen, wine to the United Kingdom and Columbia Sportswear’s branding throughout Europe and Asia. Scanning electron microscopes manufactured by FEI support nanotechnology research around the world and OHSU is recognized for its world-class research in genetics. Hemcon’s shrimp-shell bandages are saving lives in Iraq and Afghanistan, and Adidas’ and Nike’s models of corporate stewardship (while drawing criticism) are changing the way U.S. companies are doing business overseas. Portland State University is training Chinese government officials in land management practices and Portland’s architecture firms are global leaders in energy-saving “green building” practices. A public-private sector initiative sponsored by the state to encourage an industry sector cluster development strategy is broad in its vision but dynamic in scope by encouraging critical mass in a variety of sectors populated by small- to medium-sized companies that will hold the key to Oregon’s future competitiveness.

Pioneer heritage supports global drive
Oregon’s companies have the entrepreneurial drive and ability to meet the challenges of the global marketplace and succeed. Local and state leaders can and should provide the education and training resources needed to enhance our work force at all levels from manufacturing truck engines to writing code for software. Collaborative efforts between industry, government and education exist and need to expand to share best practices in manufacturing techniques, supplier relationships and innovation. Local, state and federal resources are available to assist firms in targeting overseas customers, developing marketing strategies and securing in-country contacts. As we look outwards, it will also be critical to have programs in place to assist workers and communities in transition from the effects of globalization. This represents a necessary step in an exorable process of adjusting to new and constantly changing world. Oregon’s pioneer heritage is one of individuals’ seeking new challenges and opportunity in new land. In many ways, global markets represent that new frontier.

About the author
Scott Goddin is director of the Portland U.S. Export Assistance Center (www.buyusa.gov/oregon) and has been working in international trade with the U.S. Department of Commerce for more than 20 years. He works with Oregon and Southwest Washington high-technology companies to develop international markets, specifically helping them to design market-entry strategies; find and evaluate distributors, VARs or agents; evaluate product or service-delivery methods; and “internationalize” their companies.

Goddin has served as a U.S. trade negotiator working on Asian market access and standards issues for U.S. high-tech and communications companies and intellectual-property rights issues in Korea, Taiwan and China. Goddin also has served in temporary assignments as a commercial attaché at American Embassies in Seoul, Taipei and Nairobi and has managed the office in Portland supporting local Oregon firms since 1997. You can learn more about export assistance by visiting www.export.gov. or by contacting Goddin directly at scott.goddin@mail.doc.gov.