It’s a Small Business World After All

Area companies band together to tap growing international markets

Corporate heavyweights Tyson Foods Inc., Wal-Mart Stores Inc. and J.B. Hunt Transport Services Inc. made Northwest Arkansas a player in the global market years ago. Now another echelon of area businesses is looking overseas.

A November 1998 study, conducted by the International Trade Council of Northwest Arkansas and the University of Arkansas’ Center for Business and Economic Research, produced some surprising results.

The study included a survey that was designed to find out how many area companies were interested in international commerce and what kinds of assistance would be beneficial to them. More than 230 companies – most of them small- to medium-sized – responded, and 34 percent of them said they were already in foreign markets.

Another 57.2 percent wanted more information about international trade. Tracy Murray, a distinguished professor of economics at the UA, says this is a good sign for Northwest Arkansas.

“It’s not just the big boys anymore,” Murray says.”There were far more of the smaller companies interested in international trade than I suspected. If you look at the national economy, most of the big firms have already covered the market and their only possible growth is overseas.

“What this survey may indicate about Northwest Arkansas is that we may not be as far behind as we thought we were in terms of the next level of businesses looking at the global market.”

According to U.S. Department of Commerce’s latest figures, Arkansas had $2.2 billion of export sales in 1997. That was up 10 percent from 1996 and up 441.7 percent from 1987.

Northwest Arkansas, categorized as Fayetteville-Springdale-Rogers, was listed No. 107 among U.S. metropolitan areas in terms of 1997 export sales with $732.8 million, up 192.7 percent since 1993.

The Little Rock-North Little Rock area was No. 152 with $349.4 million, up 74.6 percent over the same span.

Daryl Raney is the executive director of the ITCofNWA and a Fayetteville lawyer who specializes in international commerce. He says interest in international trade among area companies is even higher in 1999.

Statistics released May 6 by the Heartland International Business Index show April export orders for a nine-state region, including Arkansas, increased to near-growth levels – a 50 rating on the Heartland scale. Imports for the same time and area were already at growth levels and rising at a rate of 5.4 percent monthly.

Another local indicator is the way Raney’s organization has grown – from 12 people when it began in February 1998 to more than 300 members today.

The ITCofNWA provides monthly networking opportunities and an information clearinghouse via its Website, www.arkansasglobaltrade.net.

Raney says it’s also adding educational programs on foreign trade to try to prevent local business people from shooting themselves in the foot.

“The biggest mistake companies make is trying to get into a market too fast where a hot potato deal has fallen into their lap,” Raney says. “Sometimes you make a ton of money, but more often it doesn’t work like that. I encourage people to slow down and be more calculated.

“There are so many business people here looking globally, we’re hoping our classes will make it where they don’t have to shoot from the hip anymore. That’s probably going to save a lot of toes.”

All of the area’s institutions of higher learning have taken notice about the growing interest in international trade.

The UA is offering a bachelor’s degree in international business for the first time this fall. Webster University in Fayetteville is introducing a master’s degree in international business, NorthWest Arkansas Community College in Rogers has an associate’s degree, John Brown University in Siloam Springs has a similar degree program.

The schools are also sending representatives to the ITCofNWA’s luncheons from 11:30 a.m. to 1 p.m. on the fourth Monday of every month at the Springdale Holiday Inn.

Angie Davis is a charter ITCofNWA member and director of Global Marketing Support Services, a federally funded UA outreach program. She says the diversity of people at the council’s meetings is excellent for networking.

“We bring in a new speaker every month,” Davis says. “And there are people there from every area of international business there, from exporters, importers and distributors to people from the large corporations’ international divisions and freight and shipping representatives.

“It’s a place where people share business cards and ideas.”

Roger Essee, international sales manager for Marshalltown Tools Inc. of Fayetteville, says he jumped at the chance to belong to the council because he’d previously been a member of similar groups in other areas. His company exports worldwide but concentrates on Europe, the United Kingdom, Canada and Australia.

Marshalltown, the premier manufacturer of masonry hand tools, is also prospecting Central and South America.

“The organization has a lot of young people and good camaraderie,” Essee says. “We have manufacturers there from various functional areas, sales and marketing people and service industry members who all come together. It’s a great place to talk about similar problems. We’ve found just trading ideas helped us.”

Another mid-sized company that has benefited directly from the council is White River Hardwoods Inc. of Fayetteville, a manufacturer of decorative hardwood moldings for interior applications. Bruce Johnson, company president, says he gleaned information from the council’s meetings he could not get anywhere else.

“We’ve met freight vendors there who have given us other options for getting our products to market,” says Johnson, whose company exports to Japan, Malaysia, Hong Kong, Europe, Central and South America and Canada and Mexico.

“We’ve taken advantage of that information to improve our bottom line. When you’re competing in an area that’s worldwide, you need every advantage you can muster.”

The ITCofNWA, formed as a spinoff of the Fayetteville Chamber of Commerce’s international trade committee, is currently an unincorporated, nonprofit organization. Its mission statement includes providing information, contacts for support people, professional services and resources and facilitating outsourcing.

The council plans to apply for 501(c)3 status soon. So far, the organization has operated on the time and services donated by its members.

“We have so many people who think the council’s worthwhile and who want to get involved,” Raney says. “We’ve had inquiries from Oklahoma and Missouri, with more people hearing about us and seeing our Website. I think the more the word spreads, we’ll become the premier organization of this type for the whole state of Arkansas.”

Raney, who has 22 years of law experience, says the growing interest in global trade comes from the need for companies to diversify. Especially for mid-sized businesses, it’s better not to keep all of their eggs in one basket.

Raney and Murray agreed this will be one of the tenets of the classes the group plans to begin. They will also stress the need for marketing and logistical research in foreign markets, getting to know local government and business people and thinking long-term.

“If nothing else, the trade council is a big encouragement to business people who may not be importing or exporting, but who would like to be,” Murray says. “They can meet with people experienced in the area who are very willing to demonstrate success and identify pitfalls.

“It’s encouraging to business people to see that their neighbors are able to engage in global commerce, and that what you need to know you can learn. It takes hard work, but success is possible.”