ONE-ON-ONE - July 2003
by Ed G. Lane

'We Help Local Companies Become Globally Competitive'
The director of the Kentucky World Trade Center discusses the role exports play in the state's economy

Holley Groshek Holley Groshek is executive director of the Kentucky World Trade Center (KWTC). With offices in Lexington and Louisville, KWTC offers international trade development programs and services to over 300 corporate members throughout the region. Prior to joining the KWTC, Ms. Groshek served as director of export development for a regional economic development organization in Central Pennsylvania. While in Pennsylvania, she also served as president of the Central Pennsylvania World Trade Association; a member of the Pennsylvania Legislature Task Force on Exports; and a member of the Appalachian Regional Commission Export Trade Advisory Council. Groshek received her MBA with a concentration in marketing and international business from Binghamton University and holds a certificate in Polish Studies from the Jagiellonian University in Crakow, Poland.

Ed Lane: What was the catalyst that started the World Trade Center in Kentucky?

Holley Groshek: The Lexington World Trade Center opened in 1988 under Mayor Scotty Baesler’s administration. Mayor Baesler had been on a trade mission to Asia with Governor Martha Layne Collins and had a chance to visit the trade center in Taipai, Taiwan. He had a vision of Central Kentucky’s local economy being globally competitive, just as Governor Collins had a vision of Kentucky being a globally competitive state. Baesler also visited the World Trade Centers in New York and New Orleans. After his visits, he decided to start a similar facility here in Lexington.

EL: When did the World Trade Center open its offices in Louisville?

HG: In 1995, the Lexington World Trade Center entered into a historic agreement with Louisville to open a second center. Our new name became the Kentucky World Trade Center (KWTC) when the second office in Louisville opened.

EL: What is the primary mission of KWTC?

HG: We help local companies become globally competitive. That could be through sourcing components and materials overseas or it could be helping companies expand their sales overseas. For many of the small- to medium-size companies, it’s achieving first-time export sales.

EL: How much have Kentucky exports grown over the past 15 years?

HG: In 1987, Kentucky’s exports were $2.9 billion. In 2002, which is the latest reporting period, exports reached $10.6 billion. That’s a substantial increase. Kentucky exports increased 17 percent over the previous year. That is amazing when you consider what the U.S. economy was depressed during that period. Thirty of the U.S. states had a decline in exports; the United States had a 5.2 percent decrease in exports in that same year.

EL: In what areas did export sales increase in Kentucky during that period?

HG: Kentucky’s strongest export areas are agricultural, high-tech, automotive-related and chemical products.

EL: Nationally, how does Kentucky rank among other states in export sales?

HG: Nationally, Kentucky is 10th among the 50 states based on export sales per capita. Based on total volume, Kentucky is 20th. That’s a strong performance when you consider that Kentucky is “land-locked” and not a big state in terms of population. Kentucky is the only top ten export state that is not located on the U. S. border or coastline. Of the top 20 states in terms of export performance, 19 have active World Trade Centers.

EL: Will the Inter-Modal Regional Commerce Center and Air Park proposed for the Bowling Green area impact export and import sales in Kentucky?

HG: Obviously, transportation is very important. I would certainly think an air park could impact exporting by making logistics easier. Just having UPS in Louisville has made a substantial difference for Kentucky exports. So anything that helps logistically is going to have a direct impact on foreign trade.

EL: Does its central U.S. location have a bearing on making an air park in Bowling Green a viable idea?

HG: I would absolutely think so. UPS decided to have its hub in Louisville, because it’s within a few hours of a large percentage of the U.S. population.

EL: What services does the KWTC provide to assist companies with export trade?

HG: The centers provide a vast array of trade services to companies. Our services are geared to small- to medium-size companies, but that doesn’t mean we exclude the large corporations. KWTC does a significant amount of work for companies such as Lexmark.

In effect, KWTC becomes the export department for small companies that don’t have in-house expertise in “the mechanics of exporting.” We can assist with shipping and logistics; what type of documentation requirements they need for foreign markets; how to get paid for international transactions; help with the legal aspects of doing business with foreign countries; and translation services. And then we go beyond that with market research. A client might have a product and want to know, “is this product competitive? If so, where?” KWTC can help evaluate the worldwide market. We take that market data and help the client develop a viable export marketing plan for their company.

EL: How many corporate and associate members are affiliated with the KWTC?

HG: Within Kentucky, KWTC has over 3,500 members.

EL: Does KWTC work closely with the state’s Economic Development Cabinet?

HG: Very closely; we have a great working relationship. KWTC doesn’t duplicate what the economic cabinet does. KWTC provides more research and hands-on technical assistance.

EL: The Kentucky State Government operates trade offices in Japan, Mexico and South America. How much impact do these offices have on Kentucky exports?

HG: Trade offices have a strong impact. Whenever you can use resources in markets, that certainly helps our companies, especially our small- to medium-size companies. Of course, it would be great if Kentucky had a larger network. That’s where the World Trade Center is important; there are over 300 centers in 100 countries. We use the World Trade Center Network and the three trade missions that Kentucky maintains to benefit Kentucky firms.

EL: As the barriers to international trade are lowered, how will this affect the opportunity for Kentucky businesses to increase export sales?

HG: Obviously, export sales will continue to grow. NAFTA will expand to the free-trade areas of the Americas. President Bush said the U.S. is willing to start negotiating a trade agreement with the Middle East. That’s all very important for us. Market changes put more emphasis on the World Trade Center to get out there and let the companies know that these opportunities exist.

EL: Suppose that I run a small business, want to export a product and contact you. How does KWTC work with a company wanting to export a product?

HG: For a small- to medium-size company that has no prior experience in international trade, we would meet with the company, tour their facility, sit down with their management, assess what level of commitment the company is willing to make, take a close look at their product and decide if it is globally competitive. Could it be exported? If so, where? Then we would go back to our office and do some market research. We look at the company in terms of their commitment level, what their resources are and try to develop a feasible export marketing plan for that company’s product.

EL: How does the KWTC provide these services on an ongoing basis?

HG: If it’s a small company, and they’ve done nothing, then we really do a lot more hand-holding. Sometimes we get a request from a company that we’ve worked with in the past and they’re getting inquiries from an unusual market place. It really varies – the size of the company, their experience, how long they’ve been in business and what they’ve done globally.

EL: Do you have an example of a company that the World Trade Center helped from ground zero that is now excelling in the export business?

HG: ELAN Home Systems is a good example. We’ve worked with them for a number of years and that company continues to expand. Exports are playing a growing role in their total sales. Their management is so committed that they ended up joining our board of directors, so that they could give back some of their expertise to other companies in the community.

EL: How does the Internet affect export sales?

HG: It’s absolutely increasing the number of companies that at least want to think about going global. The Internet reminds me of the fax machine. The fax machine created a substantial increase in the number of companies calling and having questions about international sales. People were faxing inquiries from overseas. You can only imagine how business inquiries have grown exponentially with the Internet.

EL: If a company were interested in going global or is already global, is having a Web site really critical to their operations?

HG: It’s really important, but webmasters create some positives and negatives. Companies can be inundated with a lot of inquiries, making it very difficult to manage and promptly respond to the number of worldwide inquiries.

EL: The Kentucky Department of Agriculture is promoting the export of agriculture products. What type of relationship does the KWTC have with this department?

HG: In the last couple of years, we have seen a much stronger focus from the Kentucky Department of Agriculture regarding international sales. Agricultural exports are very important. I obviously feel strongly that Kentucky should emphasize the export potential of the agriculture sector of our economy.

EL: Kentucky had 25 percent of all U.S. livestock export sales and was ranked No. 1 in this category among all states in 2001. What factors make Kentucky top ranked?

HG: The Thoroughbred industry obviously dominates Kentucky’s export livestock sales. To a lesser degree poultry and cattle are also significant.

EL: For each one billion dollars in export sales, how many jobs are created in Kentucky?

HG: Approximately 12,500 jobs are created for one billion dollars in sales. This means Kentucky’s export sales are creating jobs for about 125,000 persons.

EL: How is KWTC funded?

HG: Our funding comes from both public and private contributions. Publicly we have funding from both Lexington-Fayette Urban County Government and Louisville-Jefferson County Metro Government. Companies join as members and pay fees to access our services. We also have corporate sponsors that underwrite large seminars, programs and events.

EL: Have proposed budget reductions by local government put operations at the KWTC in jeopardy?

HG: KWTC had a substantial decrease in funding from Lexington-Fayette Urban County Government, which will certainly impact us. The whole KWTC organization is down 30 percent in staff. It’s a credit to the staff that the Trade Center has been able to do as much in terms of programming and services. As the global economy expands, we talk about more need, more companies, more opportunities to bring more delegations in and yet we have less resources – it’s difficult.

EL: What is KWTC doing to retain government support?

HG: Part of our mission is to educate companies about the importance of being globally competitive. On the other hand, we have to continue to educate our government officials so they really understand how being globally competitive impacts the local economy. Obviously, exporting is an important economic development tool; international export related jobs are more sustainable, they’re better jobs, they pay higher wages. The World Trade Center really needs to continue to drive that point home.

EL: When the U.S. economy is weaker, is the export economy sometimes stronger because of the international trading value of the dollar?

HG: That is an important point that I tried to address with Lexington’s urban council members. Kentucky’s going through a stagnant period in terms of economic growth. That’s the time when government should not cut back on economic development. It’s important to keep those companies looking globally, diversifying their markets, and not relying on just the domestic market.

 

U.S. Exports Per Capita 2002 - Top 20 States

Sources: "Origin of Movement Series," 2002, Massachusetts Institute of Social and Economic Research, University of massachusetts. United States Census Bureau mid-year population estimates for 2002 reflect state population estimates available as of 7/1/2002.


Ed G. Lane is chief executive of Lane Consultants Inc. and publisher of The Lane Report.
edlane@lanereport.com

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