Building Enduring Business-to-Business Ties
By Jock O'Connell
This commentary appeared in the 'Maine Voices' column of the Portland [Maine] Press Herald on August 15, 2002.
Just a few days ago, the Press Herald reported on the release of a new set of foreign trade statistics indicating that exports from Maine had continued to rise in the six months following Sept. 11, even though overall U.S. exports had dipped appreciably.
Before anyone bases any major business or public policy decisions on this latest export data, a couple of important points need to be made.
For starters, state export data are no more reliable than an Arthur Andersen audit, except in this case it's not chicanery to blame. Rather, it's a classic example of garbage-in, garbage-out.
U.S. export figures are compiled from information provided by typically harried shipping clerks filling out the Shippers Export Declaration forms that must accompany all export shipments valued over $2,500.
Unfortunately, the true provenance of any given export shipment cannot always be established from the information provided on these forms.
For example, a consignment of Maine blueberries sold to a Viennese bakery by a food products company in Manhattan could be identified as an export of New York if the shipping clerk does not know or care where the blueberries were actually grown.
The fact is that no one really knows how much merchandise Maine companies ship abroad or where in the world those products go. Indeed, because so much of Maine's export trade is transported via other states, there is every reason to assume that exports are significantly greater than the official data indicate.
Even if that happy possibility could be proven true, statistics on imports and exports tell a far from complete story of international business.
Just as the multinational corporation emerged as the principal icon of world commerce a generation ago, so-called global supply chains are assuming that stature today.
Owing to dramatic advances in transportation and communications - not to mention a host of international trade agreements that have bolstered legal safeguards for international investors - these complex networks of far-flung business enterprises operate virtually irrespective of geographic constraints.
Here in Maine, the role of global supply chains in channeling merchandise trade flows is evidenced by the fact that Malaysia and Singapore number among the state's top three export markets.
That's not because firms Downeast are selling consumers in the Far East huge numbers of lobsters, hunting boots or paper products. It's because companies like National Semiconductor and Fairchild ship hundreds of millions of dollars in integrated circuits and other electronic components from Maine to factories or testing facilities that U.S., European and Asian companies have established in Singapore or the adjacent provinces of Malaysia.
Major players will find their own ways to do business around the world. But how do Maine's smaller companies ensure they are likewise integrated into this new global economy, not relegated to its margins?
Here is where state government could lend a hand, but only if public officials are prepared to move beyond traditional export promotion programs. Although these programs may help generate a few more million dollars in exports, the results often tend to be one-off deals or other short-term transactions.
States like Maine, with their preponderance of small but often highly innovative companies, might usefully consider an aggressive effort to link Maine companies with foreign businesses with whom they share compatible interests and objectives.
Such a program would be concerned less with boosting Maine's exports than with forging enduring international business relationships that would enable the partners to enter each other's home markets more easily, share new technology and insights, and perhaps even serve as conduits for the new capital investment Maine desperately needs.