The Euro effect: Europe opens a world of business.
"Historically, we have seen an exponential increase in international trade between Utah and Europe," says Franz Kolb Franz Kolb was a German pharmacien and the inventor of the modelling paste Plastilin. In English-speaking countries this material is also known as "plasticine." Because of different patent rights in Germany and England there are different views about who actually invented , regional director for international trade and diplomacy with the Governor's Office of Economic Development. Last year, the state had a 14 percent increase in exports to Europe, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Lew Cramer, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of World Trade Center Utah. Cramer adds that the state is currently on track for total international exports of $8.2 billion in 2008, which doesn't include indirect exports (products traveling through other states before being shipped internationally) and intangibles such as film production and services.
In short, Europe is Utah's largest potential trading block in the world, says Cramer.
Throw in a weak dollar, a not-so-border-intensive European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the
European Community (EU), a direct Salt Lake City-to-Paris flight and a Utah population of linguists A linguist in the academic sense is a person who studies linguistics. Ambiguously, the word is sometimes also used to refer to a polyglot (one who knows more than 2 languages), or a grammarian, but these two uses of the word are distinct. and, voila voi·là
Used to call attention to or express satisfaction with a thing shown or accomplished: Mix the ingredients, chill, and , European trade is looking good. From nutritional supplements Nutritional Supplements Definition
Nutritional supplements include vitamins, minerals, herbs, meal supplements, sports nutrition products, natural food supplements, and other related products used to boost the nutritional content of the diet. to software, savvy Utah companies are riding that money train from London to Kiev.
THE EUROPEAN APPEAL
"With today's Euro effect, we have an immediate 30 percent price advantage over our European competitors," says Cramer. Conversely, it's more expensive to open American offices abroad, so, as Kolb explains, it's vital that an international strategy looks beyond the exchange rate. Utah businesses that have found success in Europe have done just that.
Glen Jensen, CEO of Agel Enterprises, says his company does about a third of its sales in Europe. He explains that while the Euro has been "big for us lately," several other factors contributed to the three-year-old company's decision to launch a European expansion in 2006.
Agel produces and sells single-serve gel packs of nutritional supplements, which are distributed in 50 countries through a direct sales model. So, sifting through fewer layers of regulatory procedure has its appeal for the young company. On some levels, the unity of the EU allows Agel to deal with more generalized regulations as opposed to each individual country's regulations. Furthermore, with countries like Germany playing a bigger role in the industry, Agel simply saw a need for a European presence. Jensen adds that the direct sales model fits in well with cultural norms that exist in Europe.
"In many of the European countries, people are used to buying products from a friend or a neighbor," he says, estimating that more than 100,000 of the company's 350,000 sales people are from Europe.
For Randy Hales Randy Hales is a former wrestling promoter and on-screen manager. He has managed wrestlers, PG-13 and Macho Warrior Ric Hogan. He played a major part in the United States Wrestling Association. , CEO of Mity Enterprises, "The sheer size of the European market was interesting." The opportunity in Europe, he says, is even larger than domestic markets. Aggregate international shipments are up 74 percent this year at Mity-Lite (a division of Mity Enterprises), says Hales.
Mity-Lite has been shipping its lightweight and durable tables and chairs to Europe for several years and the company opened an office in Saarbrucken, Germany in June.
"Some of the [EU-related] challenges we have to deal with--legal, banking, regulatory agencies, reporting requirements for various countries--that hasn't gone away yet," he says. "But, heck, there's a common currency and the borders are open. It helps significantly."
Franz Kolb agrees that the EU has brought about significant change to business in Europe. For example, he explains that before the EU's formation, a company would have to fill out 73 pieces of paper to transfer a truckload truck·load
The quantity that a truck can hold.
truckload n → camión m lleno of goods from Sweden to Italy; today, that bureaucratic bu·reau·crat
1. An official of a bureaucracy.
2. An official who is rigidly devoted to the details of administrative procedure.
bu paperwork has been reduced to just five. Kolb, who grew up on the Austrian-German border also describes the dramatic shift in European borders. "They would shoot people in my lifetime. Today, there is no border anymore. It's open. It's like going from [Utah] to Idaho," he says.
The freedom of moving goods and workforce across borders, as well as mostly operating in a single, strong European currency also has its appeal for Hanko Kiessner, CEO of Packsize, LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control (a provider of innovative, corrugated cor·ru·gate
v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates
To shape into folds or parallel and alternating ridges and grooves.
v.intr. packaging solutions). With a population of over 400 million, Europe's potential is exciting, says Kiessner, adding that the European market also offers risk diversification. "We can offset slower growth rates Growth Rates
The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures.
Remember, historically high growth rates don't always mean a high rate of growth looking into the future. here in the US. with faster growth rates over in Europe," Kiessner explains. And should the balance tip in the United States' favor, it will help counter slower international growth.
Packsize's European growth is up more than 300 percent over last year, which has outpaced the company's domestic growth, according to Kiessner. While monetary exchange rates and relatively open borders might be part of that growth, he attributes his company's success to the application of Packsize's American model to European operations 18 months ago. "That is where we went from very level sales, to exponential sales development," he says.
European expansion has also resulted in exponential learning, says Kiessner. For example, he's found that within three weeks of developing a solution for a German customer, the same request emerges in the US. marketplace and vice versa VICE VERSA. On the contrary; on opposite sides. .
Omniture, Inc., a Web analytics company, has also benefited from an international learning curve. Aside from tapping into the European market's potential revenue, the infrastructure (in terms of people with extensive executive-level experience in technology) is remarkable, says CEO Josh James. He's found that Europe, particularly Western Europe Western Europe
The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , is brimming with people that have headed-up European units of companies like IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) and Oracle. Plus, he says, Europeans are used to buying technology from American companies, which means these experienced executives understand the nuances and challenges of working with a company headquartered in the U.S.
"When you want to go to Europe, you just lock and load. Boom. You're done. You hire the people. They've done it 10 times before. They tell you how to do it. They tell you what you're doing wrong," says James. "Actually, because they've been at such big companies before, they can give you advice about how to run the global company."
According to James, Europe currently makes up the majority of the approximately $80 million Omniture does in overseas business on an annual basis.
PROS AND CONS pros and cons
the advantages and disadvantages of a situation [Latin pro for + con(tra) against]
Despite all the current perks of doing business in Europe, there are cultural, linguistic and logistical challenges involved. According to these executives and trade experts, the key to overcoming at least cultural and linguistic obstacles is "localization Customizing software and documentation for a particular country. It includes the translation of menus and messages into the native spoken language as well as changes in the user interface to accommodate different alphabets and culture. See internationalization and l10n. ." For logistical and regulatory woes, time, preparation and a good strategy are all vital, according to Kolb.
Agel, Omniture, Packsize and Mity-Lite traverse cultural and language barriers by hiring talent in the nations where they're doing business. According to Hales' experience, most international business executives are comfortable with English. However, it helps to have employees that are hip to the nuances of each nation. Some nations are trickier to immerse one's business in than others.
"You have to be somewhat familiar with local languages," says Kiessner. "Take France. You better know French to do business there."
While all agree that localization is important, James points out that the company's mindset mind·set or mind-set
1. A fixed mental attitude or disposition that predetermines a person's responses to and interpretations of situations.
2. An inclination or a habit. must shift along with hiring international employees. For example, he says that sending out company-wide e-mails with jokes that only Americans will understand most likely will backfire.
"Not only do [international employees] not get it, they're offended because you act like they don't exist," he says. So, being cognizant of international differences within an American-based company is important to employee retention.
To supplement or precede the hiring of local talent, Utah businesses have the distinct advantage of being surrounded by a well-traveled, multilingual pool of fellow Utahns. On top of hiring abroad and at home, Jensen, Hales, James and Kiessner all travel--and they travel a lot. "If you're going to run a global company, you've got to be globally
minded. You have to be there. You have to go and see it, feel it and touch it," explains James.
You also have to do your homework.
As Jensen explains, "Although the EU is supposed to be an organized union, it's not." Yes, there are general regulations that apply to all EU countries, but some nations have their own regulatory processes on top of what the EU demands. And not all European nations have embraced the EU wholeheartedly whole·heart·ed
Marked by unconditional commitment, unstinting devotion, or unreserved enthusiasm: wholehearted approval.
whole . Sweden, for example, sticks to its own currency and its neighbor, Norway, hasn't joined the union at all.
Jensen stresses the importance of understanding each nation's laws and regulations. In France and Italy, for example, there are specific steps a company like Agel must take to ensure that its independent salespeople are not considered employees. If they neglect those steps and independent salespeople are classified as employees, the company may end up paying a year's worth of severance--even to someone who sold the products for a short time, he says.
While expensive pitfalls can be avoided through research, the strong Euro does translate into upfront spending, in most cases. Other than the obvious costs involved with setting up shop abroad, most of these companies have to translate packaging and software into several languages. Packsize, for instance, has developed software in eight languages. In Agel's case, the company has developed a different formula for Europe than what it sells in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. marketplace; the formula for Asia also differs from the other global regions.
"Companies have to have a strategic plan and they have to have a little bit of time to grow the business," Kolb says. How a company goes about global expansion is specific to each business. Some may start in Canada to get their feet wet. Others may be better suited to pursue "tier one" European markets like Great Britain Great Britain, officially United Kingdom of Great Britain and Northern Ireland, constitutional monarchy (2005 est. pop. 60,441,000), 94,226 sq mi (244,044 sq km), on the British Isles, off W Europe. The country is often referred to simply as Britain. , France or Germany.
Both Kolb and Cramer see it as their respective entities' role to help forge relationships, solve logistical issues and open doors for Utah businesses abroad as well as international businesses at home. By establishing customer and employee relations, the idea is that business will remain strong once the economic playing field levels out.
"There are a lot of Utah companies that are doing well in Europe and our job is to see that more do so. The Euro won't always be where it is. Relationships built up over the years will be," says Cramer.
INTO THE EAST
Western Europe tends to be the starting point Noun 1. starting point - earliest limiting point
terminus a quo
commencement, get-go, offset, outset, showtime, starting time, beginning, start, kickoff, first - the time at which something is supposed to begin; "they got an early start"; "she knew from the for most Utah companies that tackle European expansion; however, none of these businesses are discounting Eastern Europe Eastern Europe
The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. .
According to Cramer, the United Kingdom weighs in as the heaviest hitter, boasting 31 percent of Utah's international exports. That figure is most likely skewed skewed
curve of a usually unimodal distribution with one tail drawn out more than the other and the median will lie above or below the mean.
skewed Epidemiology adjective Referring to an asymmetrical distribution of a population or of data by the value of the products, such as gold, being shipped, explains Kolb. Britain's neighbors, such as Germany, Switzerland and Belgium, are becoming more prominent trading partners with, the Beehive Beehive (star cluster): see Praesepe.
heraldic and verbal symbol. [Western Folklore: Jobes, 193]
See : Industriousness State, explain Cramer and Kolb.
Mity-LitechoseSaarbrucken, Germany in part for its centralized location with easy rail access to the rest of Europe. A value added tax value added tax n (BRIT) → impuesto sobre el valor añadido or agregado (LAM)
value added tax n (Brit position relative to other EU countries also made Germany a good spot, according to Hales. Agel, on the other hand, has European offices in the west and the east: the Netherlands, France, Ukraine, Kazakhstan and Russia. Packsize has two main European offices, one in Germany and the other in Sweden, and Omniture has European offices in London, Paris, Munich, Copenhagen and Stockholm.
"Europe is like one country now in terms of organizing and running a business. You don't have to have facilities and offices in each of the countries," explains Kiessner. He says that some of the strongest growth is occurring in the former eastern block countries: Poland, Romania, the former Baltic republics and parts of Russia.
The bottom line: global expansion, wherever it takes a Utah business, has the potential to be profitable. Citing Novell as an example, Kolb says that a few years ago, the Utah company did more than 50 percent of its $1 billion in sales in international exporting.
"This is truly serious business," he says. "There are wonderful business opportunities abroad, but that doesn't mean that there aren't any failures." In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , just because Uncle Joey thought you could sell your widget Pronounced "wih-jit," for decades, the term has been a popular word for a generic "thing" when there is no real name for it. It is often used to describe examples of made-up products along with other fictitious names; for example, "10 widgets, 5 frabbits and 2 dingits. in Paris, doesn't mean you should.
THE UTAH EFFECT
So, what does all this shipping off to distant lands mean for the folks at home? Monies earned through European exports of companies like Agel, Omniture, Packsize and Mity-Lite are repatriated into the Utah economy. Some jobs go abroad, some are created here. And as the expansion continues, so do the profits and the volume of manufacturing (much of which is done in Utah as well as locations around the world). Exposure to European markets also means learning. Increasingly, Utahns from bankers to lawyers to software developers are becoming sophisticated in the ways of international trade.
And with the dollar devalued de·val·ue also de·val·u·ate
v. de·val·ued also de·valu·at·ed, de·val·u·ing also de·val·u·at·ing, de·val·ues also de·val·u·ates
1. To lessen or cancel the value of. and the economy stagnant, the "Euro Effect" also means that Europeans are investing in Uncle Sam's backyard.
"Utah is on sale," explains Cramer. Companies like France's Sephora and Findland's Amer Sports
The Euro Effect isn't a perfect storm of exchange rate roulette roulette (rlĕt`), game of chance popular in gambling casinos, and in a simplified form elsewhere. In gambling houses the roulette wheel is set in an oblong table. . Yes, a weak dollar gives American business a competitive edge--for now. Anyone who's opened a newspaper in the past few months knows that these are volatile times in domestic and world markets and no one is working in a protected vacuum. What this new land of opportunity presents is just that: opportunity. Sure, there's bureaucracy and cultural differences, but Utahns are rising to the challenge, taking their tidy profits and boarding that direct flight back to Salt Lake City with a heartfelt "merci."