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State helps wood firms with exporting.

SEDA-COG helps Pennsylvania wood products firms open doors to overseas markets.

By the turn of the century, U.S. exports of wood products are projected to be at least 50 percent larger than the 1989 level of $6 billion. International environmental concerns about dwindling tropical hardwood forests, coupled with export bans and restrictions on logs and rough lumber in some tropical hardwood exporting countries, will increase the demand for U.S. hardwoods and softwoods.

But in spite of increased opportunities for foreign sales, the U.S. hardwood products industry has not considered the international market to be a major outlet for its products. There was some consideration of exports as a long-term market for wood products in the 1980s, partly in response to the recession in 1981 and 1982. In fact, the export value of U.S. wood products has doubled since 1985. Yet, exports of hardwood products still represent a minor portion of U.S. annual wood production.

The benefits of exporting are obvious. At its most basic, international sales represent new markets which, in turn, mean greater income, new jobs and potential increased profitability for U.S. wood producers. A stronger forest products industry will lead to new investment in forest management, assuring a continuous supply of wood and fiber for the United States and its overseas customers.

While foreign sales can be lucrative, the decision to enter the export market may not be for every company. Producers must have the flexibility and willingness to tailor a product line to meet specifications quite different from those used in the United States. Producers should be prepared to develop a long-term foreign market development strategy because, among other things, commitment to foreign importers includes maintenance of marketing measures even when the market is weak.

Government assistance

In one rural, multi-county region in Pennsylvania, wood and wood-related product firms are being assisted by the SEDA-Council of Governments as they consider the international market. SEDA-COG is a regional economic development agency, funded by the state and federal governments, and offering a number of business-related services including export development.

"We established our program," says Holley Groshek, manager of SEDA-COG's export program, "to help our region's small- and medium-sized firms take advantage of overseas market opportunities because they believe exporting is complicated. While selling overseas can be complicated for the beginning exporter, selling internationally quickly becomes routine. The aim of SEDA-COG's Export Development Program is to provide these firms with direction and comprehensive assistance, helping them become successful exporters."

Through SEDA-COG, more than 500 companies in various industries have received export-related services. Since 1985 these firms have generated a total of $94 million in export sales. With SEDA-COG's help, more than 40 manufacturers with no previous export experience entered the international marketplace. Another 125 experienced export clients made first-time sales in new foreign markets.

The program provides companies with technical assistance on every aspect of exporting. "For instance," Ms. Groshek says, "we answer questions on shipping, documentation and methods of payment. Extensive one-to-one counseling is provided on overseas representation agreements, export controls, licensing, the development of foreign markets and responding to foreign inquiries.

"In addition to this broad overview of exporting, we help the company evaluate its own internal abilities to export, and we assess the marketability of their products on a global scale. If the firm decides to pursue exporting, we help them identify appropriate markets and, working with their personnel, we help develop international marketing strategies for products with overseas sales potential."

As SEDA-COG's program has evolved, the organization has developed a capacity to provide special services for individual industries. In Central Pennsylvania, timber and related businesses are an excellent enterprise on which to focus. Opportunities abound within the industry.

Eleven counties served

Located in the heart of Keystone State, SEDA-COG's 11 counties are strangers to the noise, congestion and pace of Philadelphia and Pittsburgh. The area is primarily small towns, open fields, woodlands and water. Much of Pennsylvania's publicly owned forests are in the region, particularly in Center, Clinton and Lycoming counties. Within each of these three counties there are more than 350,000 acres of commercial forest land. In each of four of SEDA-COG's 11 counties, the forest products industry employs more than 1,300 people. In each of four more counties, the industry employs 500 to 1,300 people. Statewide, more than 2,300 firms are involved in lumber and value-added products such as furniture, paper, cabinets and related products which utilize secondary processing methods.

In addition to the assistance offered by SEDA-COG, firms in Central Pennsylvania benefit from a network of state and national export service providers, which include:

* U.S. Department of Commerce, International Trade Administration;

* Pennsylvania Department of Commerce, Office of International Development;

* Pennsylvania Department of Agriculture;

* Pennsylvania Hardwoods Development Council; and

* Seven regional Hardwoods Utilization Groups, located throughout the state.

Trade show participation

The Commonwealth of Pennsylvania provides export promotion services such as trade shows. Through such events, firms may establish contact with foreign trading partners.

Many wood-related firms in the state have taken advantage of the Pennsylvania Department of Agriculture's participation in the German trade show Interzum. Interzum, held biennially in Cologne, Germany, is the world's largest event for suppliers to the forest products, furniture manufacturing and furnishing industries. The show attracts visitors from throughout the world. A visit to this exhibition to serve export activities by many countries and also to make some business contacts can be a valuable experience for new-to-export firms.

According to Peter Witmer, an international trade marketing specialist with the Pennsylvania Department of Agriculture, "Interzum is the largest component supply event for the world's furniture industry. Because Pennsylvania has the largest supply of hardwoods, it is an excellent trade opportunity for our firms. The department has represented numerous firms at the past five Interzum events.

Two Pennsylvania veterans of Interzum are Bingaman & Son Lumber and Asperline Log Homes. Both firms have worked with SEDA-COG's Export Development Program and have utilized Pennsylvania's export network in their efforts to develop overseas markets.

Bingaman & Son Lumber

Bingaman & Son, located in Kreamer, Pa., began developing overseas markets nine years ago through indirect sales. It took five years for the company to begin realizing direct sales. Dave Whitten, Bingaman's international sales manager, credits much of the success to George Wehner, the company's director of exports. Wehner's German background, hardwoods marketing experience and familiarity with the overseas market led Bingaman & Son to target overseas markets with its products.

Although its overseas markets expanded gradually, by 1991 Bingaman & Son Lumber had achieved such a high degree of success that the firm was awarded the Pennsylvania Governor's Export Award for a medium-sized company. The firm's owners attribute their success to the gradual expansion of their overseas markets. Their long-term commitment to foreign customers and the recognition that overseas markets are equally important to domestic markets. Under the direction of Chris Bingaman, the company's sales director, Bingaman & Son Lumber's export staff is constantly looking for overseas buyers that are a complement to the firm's established domestic customers. "We produce some items that are not so much in demand on the domestic market, but which are quite useful to overseas buyers," Chris Bingaman says.

According to Whitten, "Exhibiting in trade shows like Interzum is a good way for a firm to get its name out and establish direct contacts, but if a firm wants to succeed internationally, a long-term commitment to exporting is critical. Success may come slowly, building on word-of-mouth, individual contact and the personal touch."

Asperline Log Homes

Asperline Log Homes, located in Lock Haven, Pa., exhibited its products at the Department of Agriculture's booth at Interzum '91. While log homes are considered to be on the periphery of the trade show's focus, Asperline was able to make significant new contacts.

Asperline began pursuing export markets six years ago. Its first international sales occurred four years ago. According to Glenn Smoke, the firm's director of international sales, "Asperline saw exporting as a way to increase the firm's sales and volume." Early on, everyone was expected to make a long-term commitment to exporting. This early commitment and the recognition that it would take some time to see results, was one of the key reasons for this firm's success. The first two years were spent researching, targeting and cultivating foreign markets.

Sales of U.S.-manufactured log homes to Japan led Asperline to initially target that market. According to Mr. Smoker, about 200 U.S. log home manufacturers have exported to Japan, however, less than 10 percent have been successful on an on-going basis.

Asperline is one of the few firms that has been successfully exporting log homes to Japan and this is due to the firm's commitment to the export market. Asperline has made great efforts to develop good relationships with its overseas trading partners. Mr. Smoker spends 40 percent of his time traveling overseas. On average, he visits each distributor in Europe and Asia five to six times a year. While in the United States, he is in constant telephone contact with his overseas distributors. Another key to its successful trading partnership is the reliable sales support which Asperline provides. For example, in the early stages of its marketing efforts, the company sent personnel to supervise the construction and sale of log home units.

Both Bingaman & Son Lumber and Asperline Log Homes attribute their success to another important factor. They took the time to research foreign markets and to tailor their products to meet specific foreign market demand. For example, the average log home in Japan is about 1,000 square feet. In the U.S., Asperline marketed standard log home kits ranging from 1,600 to 2,500 square feet. Log home kits had to be specifically designed for each foreign market, taking into account individual codes, import restrictions and specific market tastes.

Tailoring products

Failure to meet the quality requirements of the overseas buyer, a common mistake for many U.S. exporters, is a sure road to failure when attempting to build a long-term relationship. Although it may sound obvious, many overseas buyers claim that this is a common occurrence when dealing with inexperienced U.S. lumber firms.

"While Bingaman & Son Lumber and Asperline Log Homes are examples of two successful exporters, there are many firms that should be exporting but are not," says Groshek. "For many firms, it's simply a fear of not getting paid. That is why it is important to find the right bank -- one that has international offices. It is equally important to shop around for the right freight forwarder -- one that knows your product."
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Title Annotation:Pennsylvania
Publication:Wood & Wood Products
Date:Nov 1, 1992
Previous Article:Governor's Response Team in tune with business needs.
Next Article:Penns woods through the years.

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