30,000 is the number of U.S. businesses that have become first-time exporters since 2009. With 80 percent of global earning power now residing outside the United States, even smaller and mid-market firms are venturing into international markets.
Global trade also leads foreign companies to make the leap into the world’s biggest economy, the United States. The U.S. continues to be the largest recipient of foreign direct investment, more than $240 billion just last year.
Locally, the ‘Crossroads of America’ has untapped potential as a crossroads of global commerce. The Indy Chamber’s Global Indy initiative aims to grow the metro economy by boosting exports and foreign investment.
LOOKING PAST THE RANKINGS
“Unfortunately, Indianapolis hasn’t taken full advantage of globalization,” said Ashley Elrod, Economic Development Program Director for the Indy Chamber. “Too few local businesses are exporting, and we aren’t top-of-mind for foreign investors.”
Elrod noted that the Indy region is among the nation’s top 25 top regions for exports and foreign direct investment (FDI), but in both areas a handful of large corporations are responsible for most of our lofty statistics. And the FDI pipeline is dotted with rust – more than half the foreign-owned companies that call Indianapolis home entered the market more than 25 years ago.
A GLOBAL FOOTPRINT
In the last edition of Catalyst, we reported on the Global Indy push to promote international business development. To turn this goal into specific actions, the Indy Chamber sought the support of the Brookings Institution and JPMorgan Chase through their Global Cities Initiative (GCI) – a national program that helps a handful of large metro areas capitalize on momentum in exports and FDI.
“The expertise of Brookings and support of JPMorgan Chase have been invaluable,” said Elrod, who manages an Indianapolis-based steering committee of employers, educational, and civic institutions with global interests. “We’ve brought together the best minds in our region and added insights from other state and metropolitan initiatives – it’s a great combination of local knowledge and broader market perspective.”
But why haven’t more Indy businesses joined the global movement? A survey of local employers reveals the most common perceived barriers: The challenge of connecting with international customers; a lack of economic, language and cultural familiarity with foreign markets; navigating export rules here and legal and intellectual property protections abroad; and the overall costs of transportation and distribution.
These concerns discourage would-be exporters, and create a massive missed opportunity for the region.
“The value of Indiana’s exports have more than tripled over the last twenty years, and today global trade supports the jobs of more than 100,000 Hoosiers,” said former Indiana Lieutenant Governor Kathy Davis, who served on the regional export team. “More than half those exports originate here in Central Indiana. But we continue to lose the vast potential of thousands of companies that aren’t selling into international markets.”
In response, the Metro Export Plan aspires to grow the number of exporting companies in the region 20 percent by 2020 by calling for a variety of resources aimed at small and medium enterprises: export training, a single point of contact for export assistance and market analysis, free market data through an online dashboard, and matchmaking services for shared transportation costs.
The Indy strategy also looks to enlist major exporters as mentors and supply chain partners and market guides for smaller exporters, while creating more opportunities to participate in trade missions and other global outreach activities.
“We’re transforming the Indy Chamber into a new kind of service organization, and the Export Plan shows how,” explained Indy Chamber President and CEO Michael Huber. “Every recommendation is about removing hurdles.”
In fact, one of the first initiatives of the Export Plan is the GoGlobal Export Acceleration Program, which provides competitive grants for primarily mid-sized companies with realistic plans to expand internationally. By creating this seed fund for aspiring exporters, sponsor JPMorgan Chase hopes to inspire their peers to pursue similar opportunities.
“International trade and investment provide a pathway for local businesses to create jobs, attract capital and grow our economy,” said Al Smith, chairman of JPMorgan Chase in Indiana. “JPMorgan Chase is proud to support the GoGlobal grant program to help connect local businesses to the export resources available to them and help drive our region’s future economic success.”
INVESTING IN INDY
As the Indy Chamber works to implement the Export Plan, the next phase of GCI planning is underway – a blueprint for foreign direct investment, where Indy also needs to diversify and revitalize its global pipeline. As the FDI strategy takes shape, Elrod noted a shared focus on mid-sized companies and common priorities like infrastructure and talent in both exports and foreign investment.
“These plans will dovetail into an overall trade strategy,” she said. “As more companies become exporters, they’ll also raise their international profile and position themselves as potential strategic allies and even merger partners for foreign-owned businesses. And both exporting firms and international companies tend to pay higher wages and focus on higher-value business operations – so we expect a strong payoff for the regional economy.”