Business Without Borders

International trade is beneficial for American consumers and businesses alike. Benefits for consumers include lower costs and a greater variety of goods available in their local markets. Benefits for businesses include additional market opportunities for sales and less exposure to the risk of domestic economic slowdowns. Companies that export are more stable, more likely to grow and hire new employees, and more likely to invest capital in their domestic facilities to fulfill increased demand.

The United States is the world’s largest importer and second-largest exporter of goods and services. International trade accounted for about 26% of the U.S. gross domestic product, or $5.6 trillion, at the end of 2019, according to data compiled by the U.S. Bureau of Economic Analysis. The U.S. Department of Commerce estimates that exports of manufactured goods directly support more than six million manufacturing jobs, or roughly half of all nationwide manufacturing employment. Across all industries, more than 40 million American jobs depend on the exports and imports of goods and services, according to Trade Partnership Worldwide.

In Virginia, international trade accounted for more than 250,000 jobs and $2 billion in state and local tax revenue in 2018, according to data from the Virginia Chamber of Commerce Foundation and the Brookings Institution. The state’s $35 billion in annual exports is split about evenly between goods ($16.4 billion) and services ($18.7 billion).

Analytics Corp. CEO Jeff Spink can attest to how companies benefit from international trade. The Ashland-based environmental health and safety analytical laboratory started exploring international opportunities in 2014, with Spink visiting Colombia through VEDP’s trade mission program after performing a market study to determine potential international markets.

Within a couple of years, the company had 10 employees in Brazil taking samples and shipping them back to the home office for analysis. Analytics has since expanded into Argentina, Chile, and Peru, with international sales now making up as much as 25% of annual revenue.

Todd Haymore, the former Virginia secretary of commerce and trade who now serves as managing director of global economic development for international law firm Hunton Andrews Kurth LLP, framed international trade in terms of sheer population numbers, with only about 5% of the world’s population living in the United States. “There are lots of people all over the world who need the goods manufactured and services provided by Virginia companies,” he said.

Haymore says the Commonwealth has the foundation in place to become “a trade powerhouse,” citing a beneficial Mid-Atlantic location and targeted investments in the infrastructure necessary for international commerce, including improvements to The Port of Virginia that will make the port the deepest on the East Coast. The economic impact of the port has nearly tripled from about $36 billion a year in output sales in the mid-2000s to about $92 billion a year today.

Among the companies benefiting from those investments is World Art Group, a worldwide art publisher located in Richmond, which started aggressively pursuing international trade in 2005 after being accepted into VEDP’s Virginia Leaders in Export Trade (VALET) program. Lonnie Lemco, World Art Group’s executive vice president of sales, says that exports now make up a quarter of the company’s sales. “International trade has been a great channel for revenue growth,” he said. “Plus, it can help cushion the blow when the U.S. economy is soft or in recession.”

The benefits of diversification go beyond sheer sales figures. Businesses engaged in international trade can tap into a wide-ranging network of global partners and suppliers and become stronger, more innovative companies by participating in global competition against a larger pool of competitors while staying abreast of international best practices. Companies that export are more stable and less likely to go out of business, and companies in export-intensive industries pay 18% higher wages, according to U.S. Trade Administration data.

Export programs from VEDP and other government partners have made those benefits available to smaller businesses, with small and medium-sized enterprises making up 84% of exporters in Virginia. Phoenix Group of Virginia Inc. has benefited from that stability since beginning its export program in 2008. The company, headquartered in Chesapeake, provides essential professional support services and products to the U.S. Departments of Defense, Homeland Security, and Transportation, as well as the North Atlantic Treaty Organization (NATO).

Phoenix Group started its export efforts with market research through a VEDP program designed for new-to-export companies before graduating to the VALET program. The company gathered information on competition in prospective markets and potential overseas partners that have connections and can help navigate local requirements in key foreign markets.

“Before meeting with an international customer, we always ask for assistance from VEDP, including a due-diligence report,” Phoenix Group Sales Director Stephen Clock said. “This helps assure us that we will be engaging with a legitimate company that we as a defense contractor can do business with.”

Phoenix Group now does business internationally in Norway, Poland, and Canada, with global sales accounting for 15–20% of annual revenue for the product division. “Expanding our products into new markets, building new relationships with great international businesses, and marketing all our products and services have been the biggest benefits of global trade for us,” Clock said.

Analytics cited similar benefits to working with the right international partners. “We were very fortunate and found the exact people we needed,” Spink said. “You have to stay actively involved throughout the process, monitor and mentor your employees, and reward them for a job well done.”

Haymore says that opportunities for global expansion will increase in the future as the global population continues to grow, citing infrastructure improvements both at The Port of Virginia and further down the supply chain.

“This enables truckers and railroads to get goods from the port to a large number of consumers, and vice versa, in relatively short course,” he said. “For these reasons and more, I believe that Virginia sits at the nexus of global trade."