Heartlab Cardiac Solutions has been very successful at selling its cardiac imaging networks to hospitals across the United States, including major players such as the Mayo Clinic, Duke University Medical Center and the Texas Heart Institute.
Since its founding in 1994, the Westerly firm has grown to employ 160 people, with revenues of $38.4 million last year, and enough promise that Agfa, a Belgian firm, bought it for $132.5 million this spring.
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But if Heartlab wants to keep growing at this rate, it’s got to grow its sales in Europe and Asia, said Lori Kahler, director of quality and regulatory affairs.
“It’s really the export business that’s going to move us into the future,” Kahler said. “Right now we’re already in most of the largest tertiary care centers in the U.S., so if we want to continue to grow, we need to do exports.”
Heartlab is not alone in this view. Across Rhode Island, some of the most successful manufacturers are doing a growing part of their business abroad – not outsourcing their labor, though some do that too, but finding new markets for their goods.
To a great extent, it’s part of the broader trend toward globalization, as evidenced by the record $252 billion invested by U.S. companies abroad in 2004, as the Organization for Economic Cooperation and Development reported last month. Foreign investment in the United States, by contrast, was $107 billion.
Despite a persistent U.S. trade deficit, the nation’s exports are rising, to $818 billion in 2004, up 13.2 percent in 2003, according to data provided by Maureen Mezei, international trade director at the Rhode Island Economic Development Corporation.
Exports from Rhode Island rose by 9.24 percent last year, to $1.3 billion. And despite a continuing decline in Rhode Island’s manufacturing sector overall, manufactured goods exports here grew by 19 percent between 1997 and 2004, to $1.1 billion.
In other words, for some manufacturers, selling abroad is really paying off.
There are, no question, exceptions. Computer and electronic products, the single biggest category of Rhode Island-based exports, peaked in 2000, at $285 million, then dropped sharply, and has only partially rebounded, to about $254 million per year. Paper exports, accounting for $20.4 million in exports in 1997, were down to $17.2 million in 2004. And non-base metal costume jewelry has dropped from $16.3 million in 1997 exports, to $3.8 million in 2004.
But gold compounds exports have gone from negligible amounts in the mid-1990s, to $22.7 million in 2004, and other precious-metal jewelry is up from $13.4 million in 1997, to $40.5 million in 2004. Photographic chemical preparation exports have nearly tripled, to $30.8 million.
Lottery giant GTECH keeps expanding its dominance around the world – just in the last month, it’s made deals in France, Denmark and Finland.
And pen-maker A.T. Cross, whose domestic sales have been lagging despite vigorous efforts to diversify and rejuvenate its brand name, keeps growing sales and making profits abroad.
Joel Urban, international sales director for Asia and the Pacific at Advanced Interconnections, a manufacturer in West Warwick that makes hardware for electronic equipment, said about 40 percent of his company’s sales are due to exports, up from 15 percent or less a decade ago. It’s not that domestic sales have dropped, either; exports have just grown much faster, Urban said.
It’s not for lack of competition. Urban said there are more than 1,800 manufacturers of interconnection products around the world, and “tens” in his company’s niche. The trick for them has been to create a truly unique, high-value product, he said, with technology that’s difficult to copy and known for its reliability.
Advanced Interconnections wouldn’t stand a chance if it tried to make, say, USB connectors, which are ubiquitous and can only be made profitably by global giants, Urban said, but instead it makes highly specialized connectors used to test the chips in electronic components.
The company works with U.S.-based firms as well as clients in Malaysia, China and Singapore. And while it initially focused on the telecommunications industry, it has diversified to serve clients from Intel, to Nokia, to Samsung, to Sony, as well as medical instrument makers.
“Just as our business is broad-based in terms of geography, it’s also diverse in terms of markets, so that makes it more stable,” Urban said. But succeeding abroad, he said, “is not something that’s automatic. It’s a different marketplace overseas, and you need to understand how to do it to be successful.”
At Cranston Print Works’ Bercen Inc. division, export growth has come, ironically, as a result of a weakened U.S. paper industry, said CEO George Shuster. Bercen makes chemicals for paper machines to run more smoothly and to create finer-quality paper, and international clients now account for about 35 percent of sales, Shuster said.
“The paper industry in the U.S. is very stagnant, if not declining,” he said. “After America, the Europe market became strong for us, and now the Asian market.”
U.S. companies could do a lot better with exports, however, Shuster said, but the nation’s trade policies continue to favor importers, with U.S. tariffs averaging only 1.6 percent, while major foreign markets go as high as 40 percent.
“It’s going to be difficult as long as the U.S. government continues down this happy road,” he said.
