Over the past several years, Maureen Mezei has had no trouble coaxing some Rhode Island-based companies to go on trade missions and participate in trade shows around the world.
After all, the idea of expanding business on a global scale has been almost irresistible, particularly after the weak U.S. dollar prompted a buying spree by overseas firms a year ago.
But as with so many things in the business world, it’s different this year. And, of course, the economy is largely to blame.
Mezei, the R.I. Economic Development Corporation’s international trade director, is struggling to get Rhode Island businesses to sign on for group trips to foreign lands to develop or solidify business connections.
As the recession has sunk in, travel and marketing budgets have been slashed. And layoffs have some people performing more duties, with shrinking amounts of time to deal with other matters, never mind jetting to another country where the payoff could be years away.
Already, no one from Rhode Island registered for a trade mission to Saudi Arabia at the end of May, a trip organized by the Eastern Trade Council, a nonprofit trade group of which Rhode Island and nine other states are members.
And the EDC’s two-person international trade office also pushed back the registration deadline for a trade expo in November in Dusseldorf, Germany. Interest in attending the world’s largest medical trade fair – where a Rhode Island delegation has appeared for the last two years – has sagged.
“This year, it has been a little more challenging,” Mezei said of the EDC’s efforts to convince businesses to attend. “They’re all weighing how to best spend their marketing and travel budgets.”
The result, some trade experts fear, is that the lack of effort in building business connections now will come back to haunt them when conditions improve.
“When times are tough, you have to show you’re serious about doing business, and that you are committed for the long haul,” Mezei said.
To be sure, global trade has only grown more important to the Rhode Island economy in recent years. According to figures from the World Institute for Strategic Economic Research, the value of products and commodities leaving Rhode Island through the port of Providence in 2008 was $1.98 billion, a 22.8 percent jump from 2006. And that doesn’t count Rhode Island products that are shipped to other states before being exported.
Trade officials don’t expect those type of numbers this year.
In fact, the World Trade Organization is forecasting that the volume of exports worldwide will fall 9 percent in 2009 – the biggest contraction since World War II – because of the global downturn.
In such uncertain times, businesses in Rhode Island and nationwide have been unwilling to commit the time and money for trade missions and expos where the payoff is often years down the line.
Veronique M. Cavaillier, director of the Eastern Trade Council, said a few years ago all she had to do was mention Saudi Arabia and businesses lined up to make the trade trip. The Saudis were spending money, but it is a complex society that is easier to navigate in the context of a trade mission.
This year, the Eastern Trade Council was prepared to guide 15 businesses to Saudi Arabia – the same trip that the EDC was promoting – but the council only got six commitments, four businesses from Pennsylvania, one from New York and one from New Hampshire.
“There’s just this malaise out there,” Cavaillier said last week. “It’s the fear of making a commitment in the short term.”
Ray Fogarty, director of the John H. Chafee Center for International Business at Bryant University, said it’s not that local businesses aren’t interested in trading overseas. “It’s where the growth opportunity is,” he said. “Domestic is as flat as a board.”
But, Fogarty said, many businesses are focusing on core issues, particularly those companies that have experienced layoffs. “Employees are picking up other tasks to maintain the business,” he said. “They can’t afford to be out of the office for two weeks.”
Travel budgets also have been targeted in cost-cutting moves, Fogarty said.
And that’s why trade expos and trade missions should be even more attractive to business nowadays, Mezei said.
For example, businesses that attend the Medica expo in Germany in November will have a display in the “Best of New England” booth, and will receive assistance in advance marketing and in making business appointments.
Participating companies pay a $4,000 fee, half of which can be reimbursed through an EDC fund. Mezei says it cost the EDC nothing other than the wages of the agency staff member who attends the show.
“The object is to allow businesses to test a toe in the water in a very inexpensive and organized way,” Mezei said.
Todd Blair, sales manager for Warwick-based Biomedical Structures LLC, said his trip to Medica with the EDC in 2007 was worth it. Blair said the trip generated four serious leads for the contract manufacturer of biomedical materials.
Biomedical Structures didn’t attend Medica last year, but may go back this year, if the company can make the budget numbers work.
“We’re definitely looking at it,” he said. •
