The international trade markets are indeed in turmoil. The Asian economies are tumultuous. Russia’s economy is struggling to survive.
But despite dramatic global economic problems, Rhode Island manufacturers that export goods to those regions are staying the course, and though caution is in the air, companies with products in demand are finding that the economic turmoil doesn’t necessarily mean an end to big business overseas or across borders.
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In fact, according to statistics provided by the Rhode Island Economic Development Corporation, Rhode Island exports for the first half of 1998 are ahead of the pace set in 1997. Canada is by far the most common destination for Rhode Island exports, followed by Japan, Mexico, the United Kingdom, Hong Kong, Germany and Ireland.
Through the first two quarters of 1997, Rhode Island exports to Canada totaled $178 million. Through the same period in 1998, Rhode Island exports to Canada are $207 million. Through the first two quarters of 1997, Rhode Island exports to Japan were $47 million. Through the same period in 1998, Rhode Island exports to Japan have totaled $64 million.
“We’re not down overall – that’s good news,” said Maureen Mezei, international trade director at the Rhode Island Economic Development Corporation.
Mezei is not surprised that companies continue to find success in exporting their products, even in the most volatile of times.
“Exporting is so driven by the particular product,” she said. “You have to put things in perspective.”
Joel Urban, director of international sales at the West Warwick-based Advanced Interconnections, leaves next week for a trip that will take him to five countries in 10 days, including Hong Kong, Korea, and Germany. The company sells integrated circuit sockets to people who build computers. The orders in advance of the upcoming trip, said Urban, are already rolling in.
“We have a niche market,” Urban said. “And our business is up significantly in Asia.”
Advanced Interconnections has a collection of major clients, including DaeWoo, Samsung, and Hyundai, all in Korea. Urban is confident that in areas of the world where the economy is volatile, it will rebound. In the meantime, he said that his products continue to find a welcome audience because they help companies save money.
“If you look at the markets, the Asians move very slowly,” said Urban. “Their history is 1,000 years old. But if you show up, if you go over there and establish a rapport, they do amazing things for you. And I believe it’s going to recover — it’s going to turn around.”
William Rife, general manager Chip Coolers Inc., in Warwick, acknowledges that the international markets are a cause for concern. But like Urban, Rife continues to find success in exporting his products. Chip Coolers, which was established in 1993, produces heat sinks that cool computer chips. The company, according to Rife, will do between $12 million and $15 million in sales this year.
“I’m trying not to react too quickly,” Rife said. “Europe seems to be hanging in there for us.”
Korea and Japan, Rife said, are a different story. As a result, Rife is working hard to establish more business contacts in China. At the same time, he is being patient.
“Am I pulling the plug on some things and putting the emphasis somewhere else?” he asked. “I’m not pulling the plug, but I am looking to emphasize other places to export. That’s why I’m looking at China.”
Keith S. Cheverallis, managing director of BankBoston’s Global Foreign Exchange Services, said that he is beginning to see encouraging signs from around the world. His sense is that Asia will in fact rebound. American businesses need to be patient, but there is no reason to overreact, Cheverallis said. The facts do not merit a knee-jerk reaction, he said.
“The critical issue is to make sound judgments as a business person — to make sure that you are going to get paid. If your products are still in demand in these countries, that’s a good sign.”
Raymond Fogarty, director of the Rhode Island Export Assistance Center, located on the campus of Bryant College in Smithfield, advises companies to “stay the course.”
“The overall message is to keep the contacts up,” said Fogarty. “Even though some sales may not be there today — they will be tomorrow.”
But Fogarty is quick to remind companies that the economic turmoil now being experienced in so many international markets is not one that will necessarily pass in a period of months. He expects most countries to rebound — though for some it could take two or three years. And that is time enough to seriously hurt companies with products dependent on particular markets.
“I hesitate to say that it’s not really a problem,” Fogarty said. “Certain businesses could be hurt by this. Companies need to be selective in choosing markets that are a good fit for their product.”
Mezei said that overall, Rhode Island exporters should fare well. The bulk of Rhode Island exports continue to go to Canada. And, she said, there seems to be growing consensus that the Asian markets will recover. And always, she said, so much depends on the product.
“You have to look at it over the long haul,” Mezei said. “It might make sense as a strategic position to stay involved with these countries so that when they do turn around, your distribution is in place.
“The long haul, Cheverallis agreed, is the best way to look at the international markets. Some reforms, he said, will take time. But there are signs that those reforms are taking shape. For example, he said, banking reforms are beginning to move forward in Japan.
“They have recognized the problem — we’ve gone past the denial stage in Japan,” Cheverallis said. Cheverallis agreed with Urban in pointing out that Asian markets tend to move slowly. It is an approach, he suggested, that American exporters must accept.
“American business tends to look at things quarter by quarter,” he said. “Asian business tends to look at things year by year, if not decade by decade.”
