Global Indy: Indy Chamber exhorts smaller firms to export | Crain's

Global Indy: Indy Chamber exhorts smaller firms to export

Guy Mascaro could talk for hours about the regulations his company, Hodei Technology, has had to ponder as part of its plan to export its telemedicine devices around the world.

There are value-added taxes, unique accounting challenges and product conformity certifications such as the CE mark – which signifies European regulatory approval of the product – to consider.

“There’s a lot of nuance to this,” said the CEO of Indianapolis-based Hodei. “Especially for a startup, there’s a real high wall in front of you,” sometimes.

Yet Mascaro is undaunted, with Hodei among four metro companies in recent months each awarded $5,000 in “GoGlobal” grants to help them boost exports as part of the Indy Chamber’s Global Indy trade and investment program.

Chamber partner JP Morgan Chase provides the matching funds to support export growth among mid-market companies.

Indianapolis metro companies exported $9.8 billion in goods in 2015, while Indiana as a whole exported goods worth more than $34.7 billion last year, according to the U.S. Department of Commerce. Transportation equipment, chemicals and machinery led the way.

Untapped potential

But Indy chamber officials estimate there are more than 1,200 mid-sized firms in the Indianapolis MSA identified as potential exporters but not taking advantage of international trade opportunities.   

“Our goal in our export effort is really how do we get companies in the pipeline?” said Maureen Donohue Krauss, chief economic development officer at Indy Chamber.

Indianapolis was one of 28 cities picked in 2013 for the Global Cities Initiative, a project by the Brookings Institution and JP Morgan Chase. As part of the initiative, Indy Chamber last year released a regional trade and investment strategy. It includes a plan to build an ecosystem of support services and resource to drive more exports among middle-market firms.

One big reason to consider international trade is that some 95 percent of the world’s consumers live outside the United States, said Derek Gianino, director of International policy at the U.S. Chamber of Commerce, who was in Indianapolis last week.

Nationwide, he estimated that over 90 percent of exporters are small and medium-sized companies.  

Yet Krauss said many of those businesses believe that exporting is the province of the larger companies in the metro area. Some of those smaller companies also mistakenly believe that jumping on a flight for China or some other intended export destination is the first step. Rather, she rattles off a list of foreign countries with offices in cities such as Chicago. Austria, for example, has staff in Chicago focused on the automobile industry and can be a good first stop in devising an export strategy.    

“It’s all about making connections. And we’d like to see ourselves as the connector,” Krauss added.

The chamber’s Indy Partnership program has also been hosting trade envoys, from countries including Cuba, Canada and South Africa. But some of those efforts have also gone toward trying to attract foreign firms to locate in central Indiana, in part by selling the region’s central location and transportation infrastructure.  The arrival of overseas firms here could bring opportunities for Indiana firms as suppliers.

“International trade is a two-way street,” added Krauss.

Robust opportunities elsewhere

Former Eli Lilly and Co. and Johnson & Johnson executive Mascaro said while a lot goes into delivering a piece of equipment across international borders, prospects can be lucrative. 

Countries with single-payer national health systems are especially likely to embrace Hodei’s devices, which can clip onto eyeglass and transmit audio/video and data to a remote site for viewing.

Canada, for example, sees value in such devices for use in remote rural communities, from where it can be expensive to transport a patient to a larger medical center. 

The Hodei system, built on the Google Glass platform, enables a specialist at a larger medical center to view the patient up close and advise a rural doctor about the best course of treatment. Hodei’s devices are also being used as a training tool among other applications.

Mascaro and his team have not only mastered the logistics of exporting products into Canada; they’ve also spent the last six months learning Canada’s healthcare system. They’ve also had to make their product work in areas of Canada where Internet service isn’t as robust.

But the payoff of exporting could be huge for Hodei. Mascaro figures the company could do about $600,000 to $1.4 million in business this year. But that number could grow to $11 million in the next year or two if exports take off, he says of his rosiest scenario.

Hodei is putting the $5,000 grant from Indy Chamber and JP Morgan Chase toward establishing a physical presence in Canada.  The other firms receiving grants are Word Systems Inc., M&M Competition Engines and Noblesville-based Helmer Scientific.

NAFTA wrinkle

U.S. firms exporting to Canada or Mexico may have a whole new set of considerations in the months ahead. Earlier this month, the Trump administration formally notified Congress it intends to renegotiate the North American Free Trade Agreement.

President Donald Trump campaigned on the downside of NAFTA: the loss of U.S. factory jobs to lower-wage factories in Mexico.

Gianino said the U.S. Chamber welcomes the opportunity to update and modernize NAFTA, noting it was created before the explosion of e-commerce and high-speed internet, for example. “It is a 23-year old agreement, after all.”

On the other hand, the U.S. Chamber represents a number of businesses that have based their business models heavily on the agreement, claiming 14 million U.S. jobs are tied to NAFTA.  

August 14, 2017 - 1:48pm