By BRADEN LAMMERS
Braden.Lammers@newsandtribune.com
LOUISVILLE —
Just as with real estate, location is the key often mentioned regarding economic development in metropolitan Louisville, which includes Clark and Floyd counties.
With UPS’ Worldport located at Louisville’s International Airport and within a few hours flight from nearly every part of the country, it is easy to understand why. But what was put on display Wednesday was the region’s role in international trade, as U.S. Secretary of Commerce Gary Locke was at UPS’ Global Operations Center to promote the National Export Initiative.
The NEI is an executive order from President Barack Obama,which was signed in March and is designed to double U.S. exports during the next five years and create 2 million jobs. The initiative’s main objectives are to improve advocacy efforts on behalf of U.S. exporters, increase access to export financing, reinforce efforts to remove barriers to trade, enforce trade rules and international promotion of policies leading to strong, sustainable and balanced economic growth.
But the primary goal for the initiative was clearly stated.
“The [NEI] is an unprecedented effort in that it was designed with only one overriding goal — to put Americans back to work in jobs that provide security, dignity and a sense of hope for the future,” Locke said.
International exports came into play as officials in a roundtable discussion said that U.S. companies are missing out on an untapped resource.
“Ninety-five percent of the world’s consumers live outside the borders of the United States,” Locke said. “So, if American companies want to grow, they’ve got to start thinking about that incredible market of consumers for their products and services outside the borders of the U.S.”
Indiana and Kentucky rely on exports to generate between 10 percent and 15 percent of their gross domestic product, according to Indiana’s Global Exports report for 2009. In 2008, more than $26.5 billion and $17.6 billion were generated in exports from Indiana and Kentucky, respectively.
The bulk of the export products are derived from manufacturing and agricultural industries. About one in three manufacturing jobs and one in five agricultural jobs are tied directly to exports, Locke said.
In order to have potential growth in those sectors, the number of U.S. companies that export a product needs to increase, he said.
“Less than 1 percent of U.S. companies are engaged in export,” Locke said. “That’s significantly below other advanced countries, especially in Europe.”
Of that 1 percent, 58 percent export to only one country, he said. Part of the goal for Locke and the NEI is to increase and diversify those companies shipping out of the country.
“If we can help them export to one or two more countries we will significantly increase our exports,” Locke said. “And the more that American companies export, the more they produce. The more they produce the more people they need to create those products or those services.”
If the initiative does move toward meeting its goals, it could be a boom to the local economy.
“There is no question that a lot of these growing exports will be flying on airplanes and controlled by operations centers like UPS,” Locke said. “The rationale behind this program is very simple because companies that are already exporting can quickly scale-up their exports compared to a company that has never sold to a foreign destination before.”
To aid in the initiative, UPS offered a list of 7,000 of its clients that could readily expand export operations to the commerce department. Those customers may not be the large multinational corporations that first come to mind.
“We know that 90 percent of the companies that are involved in export initiatives really are small and medium businesses,” said Larry Hayes, secretary of the Kentucky Cabinet for Economic Development. “In fact, 90 percent of them have 20 or fewer people working for them.”
Even if it is only local companies that grow, positioning is key.
“Obviously, in this local area we do a lot of exporting,” said Janet Sharon, director of customs trade for UPS. “Louisville is our largest hub in the world.”
Originally, Louisville was chosen to be the world hub location — in 1982, with Worldport opening in 2002 — because of its proximity to the rest of the country, commonly mild weather and a large employment pool that existed in Louisville. The more international commerce has grown, the more the employment pool has expanded into Southern Indiana and Kentucky counties around Louisville.
“Southern Indiana plays an important role for us because, obviously, a lot of our employees that work at UPS come from Southern Indiana,” Sharon said.
