The government has a great program to match American companies to foreign export markets. Too bad the companies have never heard of it
In my dream, I see the federal government attacking the trade crisis the way Patton's Third Army attacked Nazi Germany -- with courage, with confidence, and with enough firepower to do the job. I see an elite agency of well-paid, well-trained, well-equipped trade promoters -- as many as 1,200 T-men -- working from 200 offices around the globe, analyzing markets, identifying trade leads, and breaking down trade barriers by daring and sleuth. And I see American business responding to government's lead as it hasn't since the days of the old National Recovery Administration, doing to the Asians and the Europeans what they have so effectively done to us.
A dream? Well, only partly. In fact, this force of T-men already exists, operating as the U.S. & Foreign Commercial Service (US&FCS). It may not be quite as sexy as Her Majesty's Secret Service, but it's not a bad start for a branch of Washington's sleepiest bureaucracy, the Department of Commerce. And early next year, operations at US&FCS go into high gear with the inauguration of a worldwide computer system, which will give any business owner real-time access to detailed market information for thousands of product categories in some 70 nations.
That's the good news. The bad news is that US&FCS has been around since 1981, with little visible effect on a national trade balance that went from $3 billion in the black in 1975 to $170 billion in the red last year. For whatever its capabilities, it remains a program that almost nobody has heard of. "It's the best-kept secret in Washington," complains the government's top export promoter, Mike Stevens.
It is, of course, in the nature of businesspeople to be skeptical about government programs. So was Stevens. Packing an M.B.A. from Stanford University and sales and marketing experience both at IBM Corp. and a small New Hampshire telecommunications company, he was lured to Washington last year by a Presidential mandate to promote American exports. At first he remembers thinking that what government could do to help companies export was simply to stay out of the way. "But let me tell you," he says now, "I've gotten educated.
"We could be headed for a disaster," Stevens warns in his now-practiced crusading style. "My feeling is that you've got national-security implications here. Our security is based on an economic foundation, and if the American businessman doesn't wake up soon and realize that he is dealing in an international marketplace, our economic strength is going to flounder."
By many accounts, Stevens is an optimist. Despite a sharp decline in the dollar, the trade deficit continues to climb. Imports are at an all-time high, while exports, although rising, have been disappointing in such key areas as agriculture and high-tech electronics. Our trading partners, flush with dollars, have begun snapping up the whole range of American assets, from stocks and bonds to real estate and entire companies. The feeling is taking hold that we have already begun to squander our national patrimony, and that the day may not be too far in the future when our capital, companies, and jobs will largely be controlled from overseas.
If America's importhungry consumers have not exactly responded to this challenge, neither have America's export-shy businesses -- at least not in great numbers. A mere 250 companies still account for more than 80% of U.S. exports, while another 30,000 judged to have export potential sit on the sidelines. Many of these companies are themselves feeling the pinch of shrinking domestic markets and increased foreign competition. But, according to studies, most lack the information and confidence to foray into international markets.
It is precisely this kind of mental trade barrier that Mike Stevens spends his days trying to break down. On paper, he's got some powerful tools. Take the case of the Iowa manufacturer looking to sell his test instruments to customers in Great Britain. He walks into the US&FCS office in Des Moines, ambles up to the computer, and indicates his product and his target country. Out comes a three- to five-page abstract on the test-equipment market in England -- which suppliers dominate, which distributors to go through, what the tariffs are, what kind of certification is required.
But that's only the first part. If the abstract contains anything interesting, a $500 fee can get the manufacturer a market-research report on his specific product, conducted by one of the T-men posted at the American Embassy in London or contracted out to an expert. After six to eight weeks, a 15-page report arrives that indicates who his competition would be, how payments are structured and prices set, and which lines of distribution seem to make the most sense. The embassy will even make appointments with agents and distributors. Should the manufacturer venture further, T-men will be available to assist in choosing a reputable agent and working through the details of currency, tariffs, and export licenses.
Aah, but I see you are still skeptical. Have a talk, then, with Harrell Freeman. Freeman's Louisiana company makes a switching device for radio-based car and rural telephone systems. The technology has been around since the 1950s, but Freeman Engineering Associates Inc. was launched in 1982 on the theory that it would be commercially viable for decades more. Then along came cellular phone systems and put the theory in doubt. Freeman watched -- helplessly, he thought at the time -- as his market began to disappear.
Then an idea struck. If his device represented yesterday's technology in the United States, perhaps it was still useful in developing countries. "We figured it might be a tremendous advantage in a place not already wired for telephones to go by radio instead," he recalls. "What with the cost of copper and the labor costs of wiring, it might prove an efficient alternative."
