In slacking economy, area companies are globalizing

By Bryan Gentry

Published: September 8, 2008

While they face slower consumer markets and greater inflation in the U.S., some local companies are trying to insulate themselves from a recession by thinking outside the box — and outside borders.

Ralph Torning, an international trade manager for the Virginia Economic Development Partnership, said companies are short-changing themselves if they don’t export their products and services to other countries.

“Whenever the U.S. economy is slowing down … if you want to stay in business and if you want to prosper, you’ve got to do something,” Torning said. “And that something has got to be overseas.”

Torning’s role with the partnership is to help companies in the Lynchburg region and Southside Virginia find footholds in foreign markets.

That’s something that a number of Lynchburg companies are working on, and some are having success.

American Hoffman, a Lynchburg company that makes machines used to balance anything from a jet engine to an electric drill’s motor, is using contracted agents who work for the Virginia Economic Development Partnership in China and Australia to find new overseas clients.

“As we’re spreading our wings, more and more companies are coming our way,” said Stephen Norris, president of American Hoffman.

He said the low value of the dollar — for years it has lost value compared to other currencies, like the euro — makes the company’s products cheaper in other countries. “That gives us an advantage,” he said.

When Norris took the reins of American Hoffman six years ago, exports accounted for about 30 percent of the company’s business. Now exports make up nearly 50 percent.

The region as a whole is finding more foreign clients. In 2005, the Lynchburg area exported nearly $319 million in products and services, representing 4.3 percent of goods and services produced locally.

In 2006, total exports grew by about 20 percent to $385 million, according to the economic development partnership.

A number of other businesses in Lynchburg have seen strong export sales as well. C.B. Fleet sells medication and cosmetic products to 42 countries.

Slocum Adhesives ships industrial glues and adhesives to Hong Kong, Saudi Arabia, China, Mexico and other

locations, according to the company’s Web site.

Rex Hammond, president of the Lynchburg Regional Chamber of Commerce, said the region’s manufacturers have done well in building customer bases abroad. But there is room for improvement, he said.

“Export is one of those fuzzy notions that people hear about, but they don’t quite equate it to their business,” he said.

Torning said that is because for years, companies did not have to export. The domestic market supplied all their needs. But with more foreign companies doing business in the U.S., going abroad is necessary, he said.

Hammond said now is a good time for companies to explore exporting. The dollar this summer reached a point where the euro was worth 50 percent more. That makes American products cheaper and attractive overseas.

Now “would be an excellent time to diversify foreign markets,” Hammond said. “For companies that are interested in doing that, the climate is right.”

Nuclear company Babcock & Wilcox has seen the need to do just that. Its research reactor program, which sells nuclear fuel cells used to conduct research and to create medical isotopes, only exports about 10 percent of its products.

“That’s where we would like to expand,” said Chip Shaffer, program manager. “There’s a lot larger market internationally. You’d have to look internationally to grow the business.”

He said other countries are more receptive to nuclear technologies than the U.S., which could help B&W find foreign customers.

Other countries have also been more willing to explore “green” initiatives to reduce energy use, said Eric Hansen. His company, Innovative Wireless Technologies in Forest, is preparing to export its services for the first time.

They have contracts with a couple of European countries to design wireless energy management systems to help reduce energy use.

IWT also designs wireless border control technologies it is trying to ship overseas.

“Fortunately, with the price of the dollar being low, it makes it attractive for us to export,” he said.

B&W and IWT both are using Torning and the Virginia Economic Development Partnership to help them export.

Torning said the group’s services are focused on creating long-term possibilities for the state’s companies to export.

The partnership provides information on key markets for individual products. It also has contract workers in 26 foreign markets that companies can hire for individualized market research.

It organizes trade missions, too, helping companies go overseas and meet distributors and other potential customers.

“You can have the best product in the world, and you can have the sleekest catalog. … But sooner or later, and preferably sooner, you’re going to have to sit face to face with the potential buyer and look him in the eye,” Torning said.

He is working with the chamber and other economic development groups to make sure businesses in the region know about those services.

American Hoffman has used some of those services to increase its hold on foreign markets. Norris said they have proved useful.

He said many of his clients — such as computer disk drive manufacturers who need balancing machines — have moved overseas in recent years. But American Hoffman is content to stay in Lynchburg while competing globally.

“The skills of the people that we have here are tremendous,” he said. “I believe we can take on most of the rest of the world with the people that we have in Lynchburg.”