Kansas City Businesses Expand Exports In Uncertain Climate
The Trump administration’s cancellation and renegotiation of international trade deals has put United States exports in the spotlight. This comes at a time when metro areas like Kansas City are focusing more on increasing exports. Last year, World Trade Center Kansas City, an agency of the Greater Kansas City Chamber of Commerce, started implementing the first ever metro area export plan.
Director Ivry Karamitros says the metro’s diverse economic mix (including healthcare, pharmaceutical, IT and transportation parts companies) has a lot of export potential. However, most local small and medium-sized companies are not trading internationally.
“What we want to see happen is engaging those companies and equipping them to be part of the export ecosystem,” says Karamitros. “Medium-sized companies, if they do it right, become large companies.”
Karamitros says that creates thousands more jobs, and companies that export usually pay employees better. A more diverse customer base also helps a business survive economic downturns.
However, when it comes to exporting, some experts say Kansas City lags behind other metro areas. In a 2015 Brookings Institution report, Kansas City’s exports represent a 10% share of its total GDP, ranking the city in 225th place compared to nearly 400 other US metros.
But more local businesses are starting to trade internationally.
Pulse Aerospace, located in Lawrence, is a four year old company with about 20 employees that makes
autonomous helicopter drones.
“They’re electric right now, they can fly for about an hour, depending on the payload,” says Chief Operations Officer Mark Hrinya.
Hrinya says their helicopter drones can fly greater distances than the competition and carry sophisticated cameras and scanners. Despite the drone’s military reputation, he says most of Pulse’s customers are civilian.
“Power companies are using it to scan their towers and their power lines looking for, you know, are the connectors right? If the line’s sagging?” he says.
Hrinya says his company knew nothing about exporting a few years back. Today, 40 percent of Pulse’s sales are overseas to countries including Colombia and Taiwan. In Australia their, helicopter drones are used by the coast guard to scan the sea for sharks.
He says exporting is all about paperwork, like the export agreements and export licenses. Rather than other countries’ trade regulations, Pulse’s biggest obstacle is getting through the US bureaucracy.
“We haven’t run into a country where it’s been a challenge,” he says.
And Hrinya isn’t too concerned about trade pacts. Now that President Trump has pulled the US out of the Trans Pacific Partnership, or TPP, Hrinya doesn’t think Pulse Aerospace will suffer.
“I don’t think it’s going to impact us a lot. We’re either sold into two of the countries in that area, we’re talking to two more. These customers aren’t bringing that up at all,” says Hrinya.
The Pulse COO says the strength of the US dollar has more effect on their exports than trade pacts or who is in the White House.
But at Bio-Microbics, a water and wastewater treatment company based in Shawnee, Kansas, the election of Trump had an immediate impact.
“The morning after the election we lost two large contracts that we had sewed up in Brazil just because he was elected and that rhetoric,” says Bio-Microbics’ president Bob Rebori.
“Since then we’ve been fighting to try to hold onto some very large contracts in China.”
But Rebori says there’s an adjustment period with any new administration.
When Bio-Microbics was founded in 1996, the company did most of its business domestically. What spurred Rebori to export was the fact that his water treatment business was very seasonal with winter time activity down by nearly 70 percent.
“What I decided to do was to try to diversify the seasons, if you will, by garnishing business overseas,” he says.
That helped a lot during the 2008 financial crash when their domestic sales fell but exports continued to grow, reaching 73 percent of their business by 2009. Outside the fluctuating world economy, like with Pulse Aerospace, Rebori says the biggest challenge to increasing exports is paperwork.
“Our products, because they’re environmental-related for water and waste water, are heavily regulated so you have to have US approvals, Canadian approvals, New Zealand, Australia, you get the idea,” says Rebori.
Rebori chairs the Mid-America District Export Council and is directly involved with trying to get more companies in the metro area actively exporting.
“It doesn’t take a lot to get them to get over the apprehension and then have some success,” he says.
World Trade Center KC is also helping local businesses with those apprehensions about trading overseas. More than sixty companies are using WTC’s "export concierge service," in which Melissa Miller develops tailored export strategies for free.
“I know ones [local businesses] in seasoning, we’ve got one in the liquor industry, animal health, the luxury goods industry, art, shipping art, books on the education sector,” she says, describing both her clients and the diverse local economy.
For many metro area businesses, export prospects could be very promising. The challenge is motivating local companies to acquire the export knowledge they need to make a start.
Danny Wood is a freelance reporter for KCUR 89.3.