Johnston, president of the World Trade Center Buffalo Niagara, believes that exports can be a big catalyst that could transform the local economy, turning it from a long-sputtering laggard to one that is steadily growing and creating much-needed new jobs in the process.
Johnston argues that the region needs to "embrace export-led growth, to fuel the economy, which will lead to jobs and increase output and productivity."
Of course, that's much easier said than done. But in today's global economy, the company that stays at home often gets left in the dust by its globe-trotting competitors. "We have to be focused globally," he said. "This is really the cornerstone of domestic prosperity."
That echoes the vision of Brookings Institution economist Bruce Katz, who has been advising the Western New York Economic Development Corp. on how to get the biggest bang out of the promised $1 billion in state aid to Buffalo. Katz has been preaching a sermon of innovation, clean energy and exports.
Katz has pointed out that in 1980, the Buffalo Niagara region got about 37 percent of its jobs from occupations that were involved with making products here that were consumed someplace else. Today, it's less than a quarter of all local jobs.
That's important because, as Katz notes, jobs that produce goods for consumption elsewhere create wealth and encourage innovation. The rest - jobs tied to stores, hotels, restaurants and other businesses that provide goods and services that are consumed in the same region - mostly just recycle income.
Not that businesses in the Buffalo Niagara region don't export. They do, and they do it pretty well, ranking 46th out of the top 100 U.S. metro areas, according to Brookings, with $6.4 billion in exports during 2010.
The trouble is that many local companies often don't have the first clue about how to sell their wares outside the United States. "We've got our work cut out for us," Johnston admitted.
That's where last week's announcement of a new initiative to help the region's 160 or so medical device manufacturers learn the ropes about exporting to China comes in.
Johnston sees it as a starting point in a campaign to make exports a bigger part of the region's economy and its economic development efforts. If it works, it could be a model for future initiatives, not just for the 160 or so companies in the region's budding medical device industry and the Chinese market, but for all sorts of businesses across Western New York.
"This is really the template going forward," he said.
If the initiative is successful, it would lead to a big change for the region's medical device manufacturers. For now, most of them only export to Canada, our neighbor and, not coincidentally, our biggest trading partner, accounting for about 17 percent of all exports from the Buffalo Niagara region.
"They do an incredible job locally, but if we're going to grow our economy, it's because we've found new markets for these emerging technologies and these emerging businesses," said U.S. Rep. Kathy Hochul, D-Hamburg. "That's what this is all about: Keeping those jobs here at home."
Why China? It's the world's biggest country and it's got an aging population. But Chinese medical devices generally aren't as sophisticated as ones available from U.S. manufacturers, so there's an opportunity to sell those more advanced products there.
"It's one of the largest markets in the world," and will soon spend more on medical devices than the United States does, Johnston said.
The initiative will show companies how to break into the Chinese market, which often means teaming up with an agent, a partner or a distribution network. It also will help local companies work with federal agencies and private lenders to find the financing they need, ship their products there and navigate the customs hurdles they might encounter.
"There's that whole logistical process of 'How do I sell this product,' particularly into a global economy," said Marnie LaVigne, the University at Buffalo's associate vice president for economic development. "Our innovators typically haven't done that end of the business."
"We're finally to the point where we're ready to get the product to market, and our companies are stymied," she said. "Our small companies, in many cases, literally don't know how to get into a market like China from step one. Our more mature companies, or even those with a couple million dollars in revenues, are saying our big worry is it's taking too much time to get through their regulatory process. Can you help us with that?"
Doing business in China comes with a host of potential hurdles. Despite its recent moves to open its economy, it's still a communist country and its regulation can be difficult for companies to get through. "It's a very cumbersome, challenging environment," Johnston said.
How the local device manufacturers protect their technology against piracy is another big concern, Hochul said. "If they're going to steal the idea and use it to compete with the company that came up with the idea, that's not a good outcome. The Chinese government needs to do more to stop that."
But the potential gains - the World Trade Center is hoping the initiative yields $25 million in new Chinese sales over a four-year period - are too great to be stymied by the hurdles and the potential risks.
"There are challenges. We know it," Hochul said. "But the opportunities there are endless."
Learning the export game can yield riches
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