The Baltimore Sun
Written by Lorraine Mirabella
Baltimore area businesses are missing out on a crucial opportunity — exporting goods and services to a growing global market — a business advocacy group said in a report released Monday.
Exports make up less than 7 percent of the region’s economy, a share that puts the Baltimore area well behind other regions, according to an export market assessment led by the Greater Baltimore Committee. The Baltimore metro region, which exported $12 billion of goods and services last year, ranked 90th among U.S. metropolitan areas in exports’ share of gross domestic product, according to the report, “Exporting to the Global Economy.”
The region long has relied on federal and defense spending to boost the economy, “but that’s not where the future of growth is going to be,” particularly for small and midsized companies, said Donald C. Fry, president of the business group.
The group and its partner organizations began assessing Baltimore’s export market and its potential for growth after the region was selected this year for the Global Cities Initiative, a Brookings Institution-led project that aims to strengthen the international competitiveness of regions. A committee leading Baltimore’s effort surveyed and interviewed businesses and collected data, and will issue a final report early next year outlining a strategy for expanding the region’s exports. The top export industries now are education, health care, tourism, information technology and manufacturing.
At a time when improved technologies and fewer trade barriers are spurring global trade, area businesses are missing out, the GBC report found. Many small and midsized businesses are reluctant to export, with some saying they don’t understand their export potential and are unaware of export-related assistance programs. Some businesses have failed to expand products beyond the needs of the federal government.
“Additionally, businesses often fear regulatory, financial and logistical barriers to becoming exporters,” the report said.
And it found that regional companies that are exporting or planning to export are not focused on emerging markets such as India, China and other Asian countries. Those markets will offer greater opportunities as their populations grow and their economies become more mature, while the expansion of Southwest Airlines at Baltimore-Washington International Thurgood Marshall Airport should give a boost to South American markets, the report said.
The results show Baltimore is “a region that has the potential to significantly expand its exporting activities” from its current 6.9 percent of gross domestic product. By comparison, exports account for nearly 32 percent of the economy in Baton Rouge, La.; nearly 18 percent in Greensboro, N.C.; 13 percent in Dallas; and nearly 12 percent in Knoxville, Tenn.
Many of the regions Brookings works with on exports face similar challenges and barriers and also are failing to meet their export potential, said Marek Gootman, a Brookings fellow and its director of strategic partnerships and global initiatives. But economic development efforts, focused on developing retail, public amenities such as stadiums and taking business from competing jurisdictions, are no longer sufficient, he said. And, he added, companies aren’t opening new plants as much.
“The magical plant is not appearing anymore,” said Gootman, who spoke Monday morning during the GBC’s economic outlook conference.
Instead, new jobs are coming largely from business expansion. Increasingly, he said, businesses will need to look outside U.S. borders — especially to developing countries — for new customers. That will bring higher-quality, better-paying jobs, he said.
While people tend to think of places such as New York, Tokyo and Paris as “global cities,” Gootman said, “any city, any region can become a global city.”
The GBC report highlighted the success of Pixelligent Technologies, an East Baltimore maker of nanomaterials for lighting and flat-panel displays, which serves mostly customers outside the U.S., many in South Korea and Japan. President and CEO Craig Bandes said most of the leads that come through the company’s website are international.
“Figuring out the export strategy often requires creating new partnerships around the world,” Bandes said in the report. “But you need to do it to compete effectively in the global marketplace, and it can be done.”
The growth of global commerce likely will have an “enormous” impact on the regional economy’s future, especially as spending power increases in emerging markets, said Richard E. Cripps, chief investment officer at Stifel Financial Corp., who spoke at the GBC conference.
“That’s the opportunity that the Global Cities Initiative is trying to capitalize on,” he said.