Unlike the weather, international trade is a topic medium and even small businesses not only talk about but many are doing something about as well. Like most businesses, these firms are disinclined to discuss the specifics of either profits or losses, but what they can share offers valuable insights that can help others follow their lead. Here are some of the South Sound companies that are blazing a trail:
Jesse Engineering of Tacoma was founded in 1976 by Darrell W. Jesse and currently has three divisions. One is involved in heavy steel fabrication and another makes cranes of all sizes. Its Wallace Coast division makes cutting tools and pipe benders used by shipyards and is involved in international trade.
Wallace Coast has customers in 17 nations, including Canada, India, Egypt and Poland, but China is its largest trading partner. The company began exporting 12 years ago after Jesse visited China and recognized a market for his products.
Jesse Engineering, which ships directly to customers, has a sales director in Europe and agents in various nations. The company relies on translators to help with business transactions.
“Often companies in China will have an engineer on staff who is fluent in English,” says Tom Morgan of the Technical Sales Department. It is best to have an engineer handling the translations, he explains, since much of these negotiations involves technical terms.
The rate of exchange is locked in at the time the contract is negotiated, Morgan says.
He points out that Jesse Engineering sends an employee to the sites where its products will be operated to assure they are installed properly. In addition, he says, Chinese engineers and technicians travel to Tacoma for training.
“Most of our Chinese visitors enjoy this part of the country,” Morgan observes.
Pacific Harbor Trading in Gig Harbor imports and exports fresh produce. It began operation in 1998 and now has three employees in Gig Harbor and a fourth operating out of a California office. Pacific Harbor has no overseas offices.
The company conducts most of its international trade in Asia but also buys produce from South America and is working to develop sales on that continent of produce from Asia and the United States.
Most of its sales go to wholesalers, but in some markets, the sales are made directly to retailers. The company conducts most of its business in English, according to Director Barbara Broom.
“We typically deal with U.S. currency,” Broom says.
The company considers it too risky to deal in foreign currencies, Broom says, and due to currency devaluation in many Asian nations over the past few years, Pacific Harbor is not likely to offer open account terms to customers anytime soon.
The biggest problem Pacific Harbor faces is weather and its affect on the productivity of orchards and farms.
“We’re really subject to weather concerns,” she says.
Smith-Western in Tacoma exports postcards and books to Asia, and imports souvenirs and gifts. It was established in the 1950s but didn’t become involved in international trade until 1963.
The company began trading with Japan, then added other Asian trading partners. It has brokers overseas, some of whom Smith-Western has done business with for 35 years.
The firm ships to both wholesalers and direct to retailers.
In dealing with Japanese partners, the company uses the rate of exchange on the day products are shipped. Financial transactions take place between the company’s bank and the overseas banks of the buyers.
“We negotiate in their currency on a floating basis,” explains CEO Kyle Smith, Sr., whose brokers handle import duties and other local concerns at overseas ports.
Smith is one of three co-founders of the Postcard Distributors of North America, a trade organization that assists companies in the industry.
Trout Lodge of Sumner supplies rainbow trout and Atlantic salmon eggs to fish farmers around the world. The South Sound operation is the world’s No. 1 supplier of rainbow trout eggs.
Trout Lodge was established in Soap Lake in 1945 and remains a family-owned business. It began exporting eggs to Europe in the early 1970s and now supplies customers in 34 nations in Europe, the Middle East, South America and Asia.
Customers range from government agencies to aquacultural interests. Trout Lodge ships to wholesalers, as well as direct to customers.
The company has sales representatives overseas, but no offices outside the United States. It is, however, building a fish egg farm in Chile.
“That’s a huge market for us,” Sales Account Manager Camilla Timm says of Chile.
Trout Lodge has one employee in its Sumner office who speaks Spanish and another who speaks German, French and Italian. Most of its overseas business is conducted in English, however.
“English is the international business language,” Timm explains.
Transactions are handled in U.S. dollars, he says, adding that it is easier for customers to acquire U.S. dollars than it is for Trout Lodge to acquire the currency of each individual nation.
Government health regulations in various countries pose one of the problems for an exporter such as Trout Lodge. That’s because many nations expect immediate compliance with new laws, Timm explains.
The company faces special problems in Europe, he continues. The European Union has not developed regulations for fish eggs from outside sources, he explains, so Trout Lodge must accommodate the laws of individual nations that have one.
“Some parts of Europe are open to us,” he says, “some are not.”
When problems arise overseas, customers try to settle them. When Trout Lodge needs help stateside, they turn to the Department of Commerce or Department of Agriculture.
Flex-A-Lite Consolidated of Fife manufactures cooling fans for engine parts. It also is the only company in the world that makes incubation systems for salmon and trout hatcheries. The company also owns Cascade Plastics, which specializes in custom plastic injection molding.
Flex-A-Lite began exporting in the early 1980s and has customers in Scotland, Ireland, the Scandinavian countries, Canada, Mexico, Chile, Argentina, New Zealand, Australia and Thailand. Cascade also sends products to Ireland.
The company has a distributor in Bangkok, Thailand, for auto parts. Some products are shipped to wholesalers, but hatchery equipment is sent directly to customers.
All Flex-A-Lite products are shipped with instructions in English, French and Spanish.
“We generally trade in U.S. dollars,” says President Rainer Willingham, who provides an anecdote that helps describe the sort of problems he and other overseas exporters seldom anticipate.
Canadian customs officials assumed fish hatchery equipment Flex-A-Lite was shipping across the boarder was designed to be used with chickens. Since a Canadian firm already makes chicken hatchery equipment, the Canadians wanted to impose a duty. Once the confusion was cleared up the Flex-A-Lite product was allowed in without the duty.
Flex-A-Lite belongs to two automotive parts trade associations, both of which have offices in Mexico and Australia, Willingham says, adding that overseas customers typically check out the company’s product line at an annual trade show in Las Vegas.
SCS Refrigeration Service of Tacoma began operation as Seattle Cold Storage in Seattle in 1969. In 1985, it purchased a cold storage facility in Algona that is largest of its kind in the Northwest. The company changed its name to SCS after buying a cold storage facility in Tacoma and relocating there in 1994. It has been involved in exporting fresh and frozen food ever since.
“We’re part of the logistical supply chain,” says Executive Vice President Hugh Carr. Frozen seafood from Alaska shipped to the SCS cold storage on the Tideflats, for example, might later be shipped to Asia.
Japan is the primary destination for SCS exports, but other trading partners include Russia, China, South Korea, New Zealand and Australia.
SCS does not have offices overseas and ships exclusively to distribution centers.
Companies that produce the food products that SCS stores and ships are responsible for overseas sales and details associated with those transactions. SCS’s role is to store the products and make sure they are loaded on the appropriate ships.
The main challenges facing SCS are managing the flow of goods and dealing with factors such as weather, says Carr.
“Many of the goods are dependent on seasonable variables and market cycles,” he explains.
M. Brashem Inc. of Fife was founded in 1983, but the founding family has been involved in exporting and importing metal since the 1950s.
The company imports graphite and other material used in aluminum and steel production. A separate division, M B Metals, exports scrap metal and imports steel products. The company has customers in India, China, Vietnam, Malaysia and other Asian nations.
The company has seven warehouses scattered about the United States and ships from whatever port is nearest the individual facility.
M. Brashem, which ships directly to its customers, has a permanent sales representative in Beijing, China.
“When we’re overseas we have someone who speaks English involved with business transactions,” says Vice President Marvin Brashem.
“Every transaction is handled in U.S. dollars,” Brashem adds.
The company belongs to the World Trade Center in Tacoma, as well as the Washington State/China Relations Council.
Johnson Group of Sea-Tac exports finished building products to Japan. Founded by Dick Johnson in Fife in 1985, the company moved its headquarters to Sea-Tac in February.
Johnson Group purchases doors, windows, cabinets and other items used in home construction from manufacturers throughout North America. It delivers to both retailers and wholesalers, but Japan is its only export destination.
“Most of our customers speak English,” says Johnson Group President Greg Collins, but one of the employees in the Washington office speaks Japanese and a Japanese employee in the company’s Tokyo office speaks English. The company also has made it a point to be establish membership in the Japan External Trade Resource Organization.
The company deals strictly in U.S. dollars, Collins says.
The Puget Sound region is ideally situated for an operation such as the Johnson Group’s, he says. Collins points out that the ports here are a full day closer to Asia than any California port, and the forests of the Northwest provide an abundance of wood.
“The raw resources are here,” Collins says. “The Japanese love American living styles. They like the natural look of wood.”
Japanese home owners enjoy American doors and cabinets that have been altered to suit Japanese tastes, he says. His biggest problem is finding American manufacturers who will make products that reflect Japanese styles.
Down cycles in the Japanese economy have created the biggest problems for the company. They’ve taken their toll on companies such as Johnson Group, which are known as consolidators, meaning they buy products from a number of sources and sell them overseas. Collins says there were 150 consolidators in the Seattle area three years ago. Now there are less than 30.
By John Larson, Business Examiner staff