For Immediate Release

March 24, 2009

 

ECONOMIC CRISIS PROMPTS MORE CONNECTICUT BUSINESSES TO GO GLOBAL
International trade helping companies survive the recession, but barriers remain

It’s been a year of crisis in Connecticut and across the country, with the collapse of the subprime mortgage market, the meltdown on Wall Street, and record-high oil prices. In order to survive, businesses have had to rethink the way they do business. For many Connecticut companies, change has meant diversification and incorporating international trade into their business plans. Exporting has become critical for Connecticut businesses wanting to remain competitive in today’s global marketplace, but numerous barriers still remain.

Connecticut exports have steadily grown, nearly doubling from $8 billion in 2003 to $15 billion in 2008. Over the past year, Connecticut exports increased almost 11 percent over 2007.

The latest figures show that 4,636 Connecticut companies are exporting goods and services to foreign markets. Of those, 89 percent are small and midsized companies with fewer than 500 employees.

According to the 2009 Connecticut Business & Industry Association (CBIA) International TradeSurvey released today, more than one in ten Connecticut exporters joined the international trade market in the last six months alone.

"Today’s very difficult economy has compelled more Connecticut companies to diversify, strengthening their exporting efforts and their connections to global markets,” said John R. Rathgeber, CBIA president and CEO. “Investments in the international markets are already benefiting many companies and will continue to pay significant dividends and create new opportunities when our economic recovery begins.”

The survey, sponsored by CBIA, the Connecticut Department of Economic and Community Development (DECD) and J.H. Cohn LLC, explores Connecticut companies’ involvement in international trade, including the benefits and challenges associated with doing business abroad.

More than half (53 percent) of the survey respondents export goods or services to foreign markets. That’s up 18 percentage points from 2007, when only about one-third of Connecticut companies surveyed were engaged in international trade. While the majority of exporters, 55 percent, have been engaged in exporting for at least a decade, 11 percent entered the global marketplace in just the last six months.

"This sudden interest points to businesses’ need to supplement their domestic operations and increase their market share in the wake of the 2008 economic crash,” said Peter M. Gioia, CBIA vice president and economist. “Businesses that broaden their base through exporting position themselves better in the marketplace. Given economic uncertainties, these efforts are of utmost importance for continued success.”

Nearly three-quarters of respondents (64 percent) said they entered the global marketplace to increase their sales and profits, and 37 percent did so to follow their clients.

"Connecticut companies are exporting more goods, in more categories, to more places, than ever before,” said Frank P. Longobardi, partner, J.H. Cohn LLC. “They have the tools and the confidence to enter new geographic markets and overcome the challenges they face. It’s inspiring for others looking to grow their business in new ways.”

Over the past three years, Connecticut businesses have sold their goods and services to 222 countries, 189 of those in 2008 alone. Industrial machinery comprises the greatest segment of Connecticut exports, at $6 billion. Rounding out the top five export sectors are aircraft and spacecraft parts; electric machinery; optic, photo and medical instruments; and plastics.

"Connecticut’s businesses need not be prisoners of the local economy,” said Anne S. Evans, director, Middletown Export Assistance Center, U.S. Department of Commerce. “This report validates the fact that those companies that have innovative and globally accepted products can and do find business opportunities outside the United States.”

The businesses surveyed conduct the majority of their international trade in Western Europe (32 percent) and North America (31 percent). Over the next three years, Connecticut businesses believe the next big emerging markets will be in Northern Asia and the Pacific Rim—China, Japan, and Taiwan.

While this survey reveals that many Connecticut firms are entrenched in global trade, it also finds that barriers concerning information on markets and export rules are holding them back. Twenty-seven percent of exporters acknowledge a “general lack of knowledge” about foreign markets, and 60 percent don’t consider themselves knowledgeable about federal free trade agreements. Twenty percent of nonexporters said their greatest obstacle to international trade is their lack of knowledge about export regulations and foreign markets.

While the U.S. export sector has been one of the few bright spots in an otherwise faltering domestic economy, it could lose some of its strength and vitality as the recession deepens. “Even so,” says Gioia, "Global business can only grow in importance in the next decade. It’s vital for our state to support its manufacturing and export sectors and capitalize on opportunities to strengthen Connecticut’s position in the global supply chain.”

The survey was e-mailed to businesses throughout Connecticut in February 2009 and 534 companies responded. The survey has a margin of error of +/- 4.73 percent.

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CBIA is the state’s largest business organization, with 10,000 members.

J.H. Cohn LLC is one of the top 20 accounting and business consulting firms in the U.S.

DECD is Connecticut’s lead economic, community and housing development agency.

Editor’s Note:  For a copy of CBIA’s 2009 International Trade Survey, visit cbia.com/newsroom or call Nancy Andrews, CBIA media relations manager, 860-244-1957.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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