South of the Border
Now is the time to look at exporting to Latin America and the Caribbean.
It's a Thursday afternoon, and Laurence Anderson keeps a caller on hold for the better part of five minutes while he finishes a business call to Haiti. Once back, Anderson apologizes -- but makes no excuses.
"Once you get an open line to Haiti," says the president/COO of Alstom Power Rentals, a Jacksonville-based exporter of power generation systems, "you don't want to give it up."
Such are the nuances of exporting to Latin America and the Caribbean. Open lines can be hard to come by. The language -- whether Spanish, Creole or Portuguese -- can be a cultural challenge. Just getting paid can keep even seasoned exporters up nights. Want to sue for payment? Good luck.
"You're completely at the mercy of the legal system where you're doing business," says Ed Patricoff, international litigation chair with law firm Shutts & Bowen. "It calls for exercising a high degree of caution."
The region is in the midst of a four-year economic boom, making business good for exporters, says Terry McCoy, director of the Latin American Business Environment Program at the University of Florida. Demand is up for consumer goods and infrastructure projects, he says, with no signs of letup at least through the end of 2007.
U.S. exporters are benefiting from a strong U.S. economy, the weak U.S. dollar and the strength of Latin American countries as exporters to China and the rest of Asia, adds Manny Mencia, senior vice president of international business development with Enterprise Florida.
Pending or existing regional free trade agreements with Central and South America have added to exporters' markets. Atop that, Florida's position as a logistical waypoint for outbound products and its cultural affinity make Florida an ideal market. Want proof? Some
40 cents of every dollar exported from the U.S. to Latin America (with the exclusion of Mexico) goes through Florida, says Mencia.
"These often-maligned free trade agreements are starting to pay dividends," says Mencia. How much? Exports from Florida are up more than 20% in Brazil, Colombia and Mexico. Venezuela imports from Florida are up around 40%, he says.
Entrepreneurs seem to have sensed the opportunity. Enrollment is up in classes on export markets, documentation and international trade at the University of South Florida Small Business Development Center in Tampa, says Eileen Rodriguez, the center's associate director.
If every silver lining has a touch of gray, shifts to the political left are cause for pause. Students and first-time exporters learn that cash payments should be taboo -- especially from countries tagged as narco-markets like Colombia, Rodriguez says, and that customers who resell to Cuba could land the exporter in hot water.
Moreover, exporting calls for a bit of geopolitical savvy. Where Chile, Peru and Brazil have shifted to the "responsible left," Mencia is more worried about Bolivia, Ecuador, Nicaragua and, of course, Venezuela.
"You need to watch those," McCoy warns -- noting though that they will nonetheless remain strong customers for exporters. "They're still going to be buying a lot of stuff. Even Venezuela. They're awash in petrodollars."
Long-term exporters have learned their lessons. Exporting to the region is not without issues. Post 9/11, insurance costs have doubled, says John Campion, CEO of Alstom Power Rentals in Jacksonville. Fuel is up 50%. Just the hint of problems tests exporters' "risk tolerance," says Campion, whose team went into hiding following the fall of Jean Bertrand Aristide and the chaos in Haiti.
Has that stopped his work there? Hardly. "Patience works its way in there tremendously," he says.
Karolyn Johnson, 36, Owner
Product: Hard-to-find items for the Caribbean basin and Bermuda, including household appliances, furniture and construction materials
Markets: Barbados, the Bahamas, Bermuda and the Caribbean basin
How She Got Started: It was 2004 when a friend in Bermuda lamented to Johnson about the difficulty in finding construction materials for a home she was building. Johnson took off in search of products she could buy in the U.S. and ship to Bermuda -- and make a percentage for her efforts. Johnson took courses in exporting at the University of South Florida Small Business Development Center, and today procures and ships a variety of products throughout the Caribbean.
Working with her marketing partner in Chicago, Johnson sends e-mail solicitations to new business leads given to her by island governments, Enterprise Florida or Export.gov, the U.S. government's exporting site. Bermuda, for example, regularly sends Johnson names of people building or renovating their homes. She follows up on responses with a phone call. She cuts out the middleman, negotiates wholesale prices with suppliers stateside, drop-ships directly from the Port of Jacksonville -- and shaves upward of 15% off the customer's procurement costs, she says.
Sure, issues arise. After $150,000 in sales in 2005 (her first full year in business), sales fell 50% in 2006. She also got stiffed twice last year for a total of $13,000. Not a lot of money, she admits, but enough to "feel it." Now, she gets a signed contract and demands up to half up front by either a wire transfer or direct deposit to her accounts in the islands. "I don't pay for anything out of my own pocket," she explains. Still, Johnson is hardly buttoned-down. "I'm not just about doing business. I'm about building relationships."
Christopher Fulton, 43, President/Owner
Product: Exports and finances irrigation and plumbing products
Markets: The Caribbean and Latin America
How He Got Started: It was the early 1990s and Christopher Fulton was a 27-year-old export trader ("Everyone in Miami was an export trader back then," he jokes.) shipping diapers, batteries and auto parts to anyone overseas. But Fulton's success came when he honed in on a Jamaican supplier of irrigation pipe who constantly was seeking fittings. "I got to be an expert in humble T's and elbows," he says. Today, Fulton supplies pipes and fittings throughout the region, from small resellers to a major aqueduct in Punta Cana, Dominican Republic. With three full-time employees, revenues topped
$5.5 million in 2006.
Fulton has a few hard rules. The first: Figure out how to get paid. That could mean demanding up-front payment, or taking partial payment and trusting your customer for the back end ("I always get nicked for a few grand a year," he admits). Second, take out export or trade finance insurance from the Export-Import Bank of the U.S. ("Exim," for short). This allows exporters to extend their customers credit -- without the exporter going on the hook personally. Third, be transparent. If customers want to know your source, tell them. "They'll be surprised that you helped them." Finally, embrace their culture and language. Fulton knows that "mariposa" is a butterfly valve and "junta rapida" is a gasket joint. And he knows that "Christopher" is easier on the Latino tongue than "Chris," as he's called in the U.S. "You cannot build trust until you demonstrate an appreciation for their culture, and nothing does that better than speaking their language."
Enterprise Florida Inc.
Florida Small Business Development Center Network
This office publishes a comprehensive "Trade Primer," available free online. Local SBDCs offer Exporting Florida, an export certification program, and the Business of Exporting, a three-hour seminar.
Sources: Small Business Development Center at the University of South Florida, Enterprise Florida Inc.
Dept. of Agriculture
Department of State
Federal Trade Commission
International Trade Commission
Small Business Administration
Bureau of Industry and Security
Export-Import Bank of the U.S.