Trade: Thinking Small to Increase Growth

Mar 31, 2014 | Updated May 31, 2014

For the U.S. economy to grow more robustly, we absolutely must step up our exports -- 95 percent of consumers reside elsewhere -- and our greatest potential for increasing exports lies with our small and medium sized manufacturers.

For the most part, larger corporations are already engaged in world commerce, but small and medium sized manufacturers in the U.S. have been slow to think globally. They comprise the last major sector of business that is not yet fully engaged in global commerce.

Of course it would be nice if we could come up with the next big thing like the VHS that revolutionized home entertainment to storm world markets, but if memory serves we let that one get away from us. We invented it but other nations seized control of manufacturing them.

Yet opportunities abound if we only take time to look for them. Sometimes it's a matter of creating consumer demand for products that are unfamiliar to citizens of other nations. For example, Emerson Electric Company's InSinkErator unit that makes garbage disposals is making a big play for the Chinese market where most people are unfamiliar with the concept. The U.S. market for disposals is about $1 billion a year but cannot grow much because most homes already have one. To grow, Emerson knew it had to go global.

The China market loomed as a great potential market because the Chinese are building millions of new housing units. Garbage disposals are most cost efficient when installed in new facilities. Retrofitting older homes and apartments is prohibitively expensive.

Of course, InSinkErator's first task is to educate the Chinese about garbage disposals which they are unfamiliar with, but the need seems clear because the Chinese eat less processed food than we do and have more leftover vegetable peels, fish and chicken bones and other stuff that needs to be ground up. Also, Emerson had to develop a tougher kind of disposal for China to deal with items like bullfrog skins, eels, duck heads and white radishes that are very dense.

InSinkErator recently opened a factory in Nanjing, China, to make garbage disposals for the Chinese market - but that is its only manufacturing plant outside the U.S. The main plant in Racine, Wisconsin, employs about 900 workers serving the U.S. market.

I believe InSinkErator's China initiative offers a prime example of how a strong smaller company can go global while keeping management and R&D here and strengthen its financial position in the process. We need more of our smaller firms out there identifying niches for U.S. products and taking advantage of them. As Willie Sutton said, that's where the money is.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute.