Ozarks manufacturers navigate overseas

Missouri exported $13.9 billion in goods internationally in 2012, up 4 percent from nearly $10 billion three years ago, and many of those goods can be traced back to the Ozarks.

Springfield lawyer turned chocolatier Shawn Askinosie started exporting his product to Sweden five years ago. Today, the 6-year-old Askinosie Chocolate LLC ships roughly 10 percent of its annual yield to six countries including Canada, Singapore and Japan.

“It began in Sweden with a small distributor I met while traveling in Ecuador and grew from there,” Askinosie said. “Each country is really different, but the businesses have something in common in that they are all fairly small, highly specialized specialty foods retailers.”

While Askinosie Chocolate sells direct to about 600 stores in the United States, Askinosie said overseas sales are handled through distributors and estimated his products are on the shelves of between 50 to 100 stores outside of the U.S.

The sweet confections are not the only Missouri products crossing the pond. According to the U.S. Department of Commerce Office of International Trade Administration, the U.S. exported $1.35 trillion in manufactured goods in 2012. Leverett, Mass.-based market tracker WiserTrade estimates through third-quarter 2013 Missouri’s exports total $9.74 billion, led by such products as transportation equipment, chemicals and various food items.

“Exports are so very important to Missouri growth and stability not just locally but nationwide,” said Jeannette Fitzpatrick, president of the Springfield-based Greater Ozarks International Trade Association and export account manager with Springfield-based Marisol International, via email. “Were it not for exports, we would have entered a recession earlier than we did.”

Fitzpatrick said the DOC reports U.S. companies that export not only grow faster, but also are nearly 8.5 percent less likely to go out of business than nonexporting companies.

Trading up
Sixty-five-year-old Springfield-based Allen Filters Inc. – a global oil, gas and energy filtration company with exports to more than 60 countries worldwide – created umbrella firm Allen Global Cos. LLC in November to bring all its products under one roof.

Allen Global’s umbrella encompasses Allen Filters, Inc., Allen Refining LLC, Allen Laboratories LLC, Allen Fabrication LLC, Allen Chemicals LLC, Allen Transportation LLC and the Allen Global Foundation.

“Before we were selling just a piece of equipment, now we are selling the whole system,” said Allen Global President Jerry Nichols. “Allen Global operates on six continents, and Allen filters have been worldwide since the 1960s.”

Exporting filters and equipment manufactured in Springfield, the company concentrates sales to governments and Fortune 50 companies in the industry. Nichols said the company currently has contracts with the U.S. Navy and Coast Guard, and its exporting hot spots include Australia and South America. Traditionally, the company has done business with most oil-producing Middle Eastern countries and systems are used in oceanic oil rigs worldwide such as a recent addition off the coast of Congo.

Nichols declined to disclose revenues but said about 80 percent of Allen Global’s annual business is outside the U.S. He said partnerships are important to maintain the company’s status, noting Allen Global recently announced an exclusive deal with Culligan International for water treatment solutions.

Alternative exports
For one Springfield-based company, exporting has taken on a new meaning. Classic Rock Coffee LLC isn’t exporting a retail product, rather, it’s franchising. Owner Kent Morrison and Franchise Director Brett Payne said the company’s original goal was to set up domestic franchise locations, but as interest started rolling in from the Middle East, they couldn’t turn it down.

“Our Classic Rock concept is very distinct, unique and has an appeal in foreign countries,” Morrison said. “It’s an American theme everyone can embrace.”

Payne said a single master franchisee will own the rights to an entire country and Classic Rock already has stores open in Pakistan through franchisee Black Pvt Ltd., with more to come in India and the United Arab Emirates.  The company also has interest for master franchisees in throughout the Middle East.

“I’d say we get about 20 inquires a month with 40 or 50 percent of them coming from overseas,” Payne said. “Our goal in the next three to four years is to have 60 to 100 U.S. locations and be present in about 15 counties.”

Morrison said the original plan was to start with three locations in the Springfield market, branching out to Tulsa, Okla., Kansas City, St. Louis and northwest Arkansas, however, the company currently has no domestic franchise locations.

According to Springfield Business Journal archives, domestic startup costs range from $218,000 to $420,000, including a $25,000 franchise fee and three months of operating expenses on hand. Morrison and Payne declined to disclose international franchise fees.

“The fees are not the same for every location,” Payne said. “Market conditions, growth patterns and other franchises in the market all play into that decision.”

Not so friendly seas
Chocolatier Askinosie said he encourages small businesses not to be intimidated by the idea of exporting.

However, Askinosie and other area manufacturers voiced concern regarding trade with China.

“We tried exporting to China in the past, and we will never make that mistake again,” he said. “It was not a good experience. The government places so many restrictions and there was so much red tape it wasn’t a feasible option.”

Stockton-based black walnut manufacturer Hammons Products Co. faced similar problems in the country, paying exorbitant tariffs while trying to educate the market about its product.

“Our product is so unique, it’s a challenge and a benefit,” said David Hammons, vice president of marketing and the fourth generation to work in the business. “Nuts are huge in the Asian market, but everyone knows English walnuts, not black walnuts.”

Averaging an annual yield of about 25 million pounds – 30 million pounds this year – Hammons said the company has ceased efforts in China following a recent trade mission to Asia he attended as part of a delegation with Gov. Jay Nixon.

“There is a 40 percent tariff for nut imports into China, but there is also a large nut black market,” Hammons said. “Many California companies bribe customs officials and sticker tampering thrives there. When I asked officials about it, the U.S. Embassy told me not to rock the boat.

“Millions of dollars are made in that market, I understand that, but that’s not how we play here at Hammons. We didn’t want to play dirty, and we are a small company that couldn’t afford the tariffs, so we no longer export to China. It left a sour taste in my mouth.”

Hammons said the company currently sends about a truckload of black walnuts a year to an emerging market in Canada, and black walnut shells are used worldwide in areas such as South America and the Middle East for industrial applications including natural oil filtration.

Branching out
GOITA’s Fitzpatrick said more than 70 percent of the world’s purchasing power is located outside the U.S., but only 1 percent of U.S. companies export goods overseas. Of those that do, 58 percent only export to one country.

Springfield-based manufacturing company International Division Inc.’s InDiv Export Management Co. division wants to help improve that number in Missouri.

“InDiv EMC offers services to companies interested in exporting or importing such as logistics,” said President Jose Sala.

According to its website, the company handles all facets of the export process including logistics, shipping, international sales, marketing and distribution strategy, localization and language translation. InDiv EMC has offices in México, Argentina, Venezuela, Malaysia, Central America and Colombia and representatives in Bolivia, Egypt, Russia, Dominican Republic, Puerto Rico, Philippines, Costa Rica and Guatemala.

“Right now, InDiv produces only about 25 percent of what we sell on a global basis,” Sala said. “The rest, we are distributors for a number of U.S., European and other manufacturers.”

InDiv distributes and produces poultry raising, transportation and processing products, exporting complete packages or components for poultry and swine raising, including buildings, feeders and waters and a full range of ventilation equipment to small to midsized processing plants.

The company is currently constructing a 16,000-square-foot logistics warehouse in Buffalo, to be used for consolidation of export orders and inventory for sale in the U.S, as well as export markets.

Sala said businesses shouldn’t be fearful of venturing overseas and use the resources available to help such as local chambers of commerce, GOITA and the Missouri International Trade and Investment Office.

“It’s really not hard to export,” chocolate-maker Askinosie said. “Once you get one, then people start coming to you. We get inquires about every week to 10 days from countries around the world.”