Typically when a publication prints an issue designating the Top or Best anything, you can cup your ear and hear the faint sound of sharpening pitchforks and torches being dipped generously in kerosene. But relax, gang. In our eyes everyone’s a winner; these states just won the most. We’ll save you a trip to our front lawn and explain our methodology:
As always, we began with a question: “Which states are the best for exporters?” Specifically, how are our various states doing for small and midsize enterprises (SMEs), those everyman companies with fewer than 500 employees?
To start, we thought, let’s see which are exporting the highest volume of SME goods—as reported by the International Trade Administration (ITA)—and call those our Top 10. Next we felt it necessary to examine what each Top 10 state offers in terms of world access (Logistics Infrastructure) versus its regulatory hurdles (Red Tape). Finally, there was a lot of impressive math en route to producing this, our Top States for Global Trade report.
$51,200,446,724 (9) | Infrastructure:8 Red Tape: 9 | Total Score: 26
In our 2011 report on Top Cities for Global Trade, one fact stood out as we gathered the data: Of those top 50 metro areas—ranked, as they were, by official export totals compiled by the ITA—Texas stood tall with an impressive six—SIX!—spots on the list. Had we used the same methodology this year, the state would’ve added three to its previous total; and yet, ranked by export volume increase, the state still contributes six cities to our Top 25! They include three from last year’s ranking—Houston, Dallas and San Antonio—plus newcomers to 2012’s list: Corpus Christi, Brownsville and Beaumont. The Lone Star State’s export volume from small- to midsize manufacturers was outpaced only by California, but where the state laps the Bear Republic is business friendliness.
With hopes of sniping off some of the herd expected to bolt California’s heavy regulatory environment, Texas Governor Rick Perry headed to wealthier areas such as Beverly Hills where he tossed out this not-so-subtle pitch: “You’re at a tipping point in California from the standpoint of high-wealth innovators. Many are looking for somewhere else to go, and we’d like them to consider Texas.” Not surprisingly, businesses listened.
Texas’ success is no doubt a sum of its parts. Its excellent infrastructure—punctuated by ports belonging to the “Top” cities and others such as Port Arthur and Galveston—its commitment to low regulatory burdens and the wealth of global enterprises already established among its many cities all make the state the undisputed frontrunner for global trade. — Patrick Dooley
$33,557,306,907 (7) | Infrastructure: 9 | Red Tape: 7 | Total Score: 23
A peninsula state can be counted on for excellent port infrastructure, which Florida has in spades with PortMiami, Port of Tampa, JAXPORT, Port Everglades and several others. It also has Florida East Coast Railway—whose 77 percent intermodal volume tops all domestic railways—connecting the state to America’s Southeastern region and logging excellent distribution times, not to mention the lower transportation rates that attend rail versus truck. These are just a couple reasons the Sunshine State snagged our second-highest ranking for infrastructure, behind only California.
But again, where the Golden State loses ground is with regulation—the repeal of which has been a focus of Florida Governor Rick Scott. In a highly publicized effort to kill more than 1,000 state laws and overhaul an additional 1,200, Scott took direct aim at cutting laws ranging from environmental protection (for which he says federal laws were stricter and the state would therefore remain protected) to rules governing contract bidding and hiring immigrants. But did his efforts bear fruit? They couldn’t have hurt; according to Global Trade’s own report, “Flocking to Florida,” the state has added 100,000 jobs per year for two years running.
When you factor in the quality of life found in its many beach cities, there’s no surprise so many global traders have found a home in Florida, and the state has found its own home at the No. 2 spot on our list. (PD)
$68,087,967,616 (10) | Infrastructure: 10 | Red Tape: 1 | Total Score: 21
Oh, California.… May we have a word?
With perfect 10s in both infrastructure and SME export volume, our home state could be trampling the competition like Godzilla in the ‘burbs. Its SME volume is indisputable and there’s little room to argue the supremacy of its logistics infrastructure. Its top-notch ports are led by those in Los Angles and Long Beach, and its wealth of international airports, railways and interstate highways connect this Shining Sea with the other. World access? San Diego’s border with Mexico is the most heavily traded in the world, and it’s about as close to Asia as America is going to get. But what of its “Red-Tape” ranking?
The underlying problem is that too much red tape costs too much green. The state government’s general administration costs, for starters, are higher than found in the rest of the country, meaning Californians will be ponying up come tax season. For all the state’s beauty and world access, its businesses—and the many excellent cities and counties working hard on their behalf—are hamstrung by state-level laws governing labor, minimum wage and health, and the many nanny-state regulations such as Prop. 65, which requires manufacturers to notify the public of any potentially dangerous chemicals when trace elements might be found in a product. (Our thanks to Governor Jerry Brown for looking to reform the 27-year-old law.)
Here’s the thing: We’re pulling for our state to be the very best. Despite all the seething when Gov. Perry paid a visit, it wouldn’t hurt to walk a mile in his Lucchese cowboy boots and report back on what’s working for the current King of the Hill. Everything else is in place. (PD)
New York No.4
$34,394,384,364 (8) | Infrastructure:5 Red Tape: 3 | Total Score: 16
With a $1.2 trillion gross state product, the Empire State’s economy would be the world’s 14th largest, after Spain, were it a country. Its exports totaled $81.36 billion in 2012, versus $84.79 billion in 2011; SME exports were $34.39 billion in 2011. A behemoth of banking, finance, venture capital and media, New York has 41,218 firms that export. Of those, 94.5 percent are SMEs. The state is America’s undisputed bling capital: its top three 2012 exports were $11.22 billion in diamonds (13.8 percent), $6.58 billion in non-monetary gold (8.1 percent), and $5.1 billion in jewelry. Other major export categories include paintings/drawings ($4.5 billion), civilian aircraft engines ($1.6 billion) and passenger vehicle components ($1.3 billion), ranking fourth, fifth and sixth, respectively.
Its infrastructure contains an awesome 141 airports, 390 miles of inland waterways, 52 ports and 37 freight railroads, but its red tape can be daunting. New York’s gas sales tax is 50.6 cents per gallon and was raised within the year, making trucking expensive. To recharge the state’s international trade, Kenneth Adams, president and CEO of the Empire State Development agency, urges exporters to check out Business First Resource, a one-stop shop for international traders. “We provide many resources for New York State firms seeking new and expanded overseas marketing opportunities. For example, the Export Marketing Assets and Global Marketing Services programs can help business go further,” he says. — Marlene Piturro
New Jersey No.5
$15,122,026,840 (6) | Infrastructure:7 Red Tape: 2 | Total Score: 15
A strategic Eastern Seaboard location, global access to markets through first-rate logistics infrastructure and a strong business climate helped more than 21,000 New Jersey companies—92.4 percent of them SMEs—export $37 billion overall in 2012, with $15.12 billion from SMEs. With North America’s third-busiest port, the East Coast’s most active maritime cargo center fresh off $1.3 billion of improvements to allow post-Panamax ships access to terminals in Newark and Elizabeth, five FTZs and 46 airports, the state is a hub for manufacturing, distribution and exporting. Top exporting sectors were chemicals ($8.6 billion), petroleum/coal products ($5.9 billion), and metal manufacturing ($2.3 billion); top destinations were Canada ($6.9 billion), Mexico ($2.1 billion) and the Netherlands ($1.9 billion).
The Office of International Business Development and Protocol offers to help the state’s SMEs looking to increase exports. “As a global gateway with a world-class infrastructure it’s little wonder that New Jersey is among the top trade-friendly states,” says Lt. Governor Kim Guadagno. The state is home to 21 Fortune 500 firms, 17 of the 20 largest pharmaceutical companies, 350 biotechnology companies and a burgeoning medical device cluster. The Commercialization Center for Innovative Technology helped 29 Jersey firms make Forbes’ list of world’s most innovative companies. Advanced manufacturing, aerospace, aviation and IT benefit from the Garden State’s high-tech workforce. A bipartisan “Red Tape Commission” is cutting legacy regulatory and tax hassles, while a gas tax that hasn’t increased in 21 years advance the state’s competitiveness. (MP)
$12,519,691,700 (4) | Infrastructure:3 Red Tape: 8 | Total Score: 15
The Keystone state has 15,881 exporters; 89.3 percent of them are SMEs. They generated 36 percent of the state’s 2011 exports. In 2012, Pennsylvania’s top export categories were chemicals ($7.8 billion), machinery ($4.9 billion) and primary metal manufacturing ($3.8 billion). Ten Regional Export Network’s business development consultants provide technical and strategic services to help Pennsylvania’s companies develop viable markets while mitigating risks and reducing costs.
“Today’s statistics show that 58 percent of U.S. firms export to just one country, typically Canada or Mexico,” Governor Tom Corbett says. “Pennsylvania has a tremendous opportunity to become more involved in a global economy that is virtually on our doorstep.” Pennsylvania’s top export destinations are Canada ($11.4 billion), China ($2.9 billion), Mexico ($2.8 billion) and Germany ($1.8 billion).Trade missions to Lyon, Paris, Stuttgart, Dusseldorf, Sao Paolo, Rio de Janeiro and Santiago may soon add new country destinations. The state’s ports handled 90.8 million tons of goods; with 55 freight railroads the state ranks fifth nationally; and its gas sales tax has remained flat for six years. It gets high marks for continuing efforts to cut red tape. Governor Corbett’s priority? “To create an environment in which companies can grow by our state enacting business tax, unemployment compensation and regulatory reforms projected to save businesses $1 billion annually.” (MP)
$10,506,510,110 (2) | Infrastructure:2 Red Tape: 10 | Total Score: 14
As noted elsewhere, it is decidedly ironic that a region which fought so passionately against free trade agreements nearly two decades ago now benefits so much from them. Since 2002, Michigan’s goods exports to Free Trade Agreement (FTA) partner countries have increased 54 percent and by 2012, $39.2 billion of Michigan’s goods exports—68 percent—went to FTA partners. In that time, the state’s goods exports have grown five and a half times faster than the state GDP.
“Trade is a powerful engine for economic growth, supporting American jobs and increasing U.S. exports to countries around the world,” says Business Roundtable (BRT) President John Engler, former governor of the state. “With 95 percent of the world’s population outside of the United States, and more than one in five American jobs supported by trade, U.S. international trade and investment agreements have a major role to play in maximizing economic growth.”
Indeed. Consider that the majority of Michigan’s international trade is done by what would be considered relatively small outfits. In fact, 91 percent of the state’s exporters have less than 500 employees. Still, those businesses helped create an estimated 1.1 million jobs in the state and generated a good deal of the $57.7 billion in goods exported in 2012. — Steve Lowery
$ 10,051,122,079 (1) | Infrastructure:6 Red Tape: 6 | Total Score: 13
Massachusetts is renowned for offering local businesses and manufacturers a ready supply of well-educated, skilled workers, a fact often cited for the region’s success in trading globally.
“There has been a resurgence of Made in America products that counter a 30-year trend of producing goods abroad,” says Emily Fitzmaurice of the state’s Executive Office of Housing and Economic Development. “An entrepreneurial, innovate state like Massachusetts has the know-how, labor force and market to be part of this trend.”
But it also offers those same businesses and manufacturers a multitude of support and ongoing education. The Coalition of New England Companies for Trade (CONECT) is a private consortium of business owners and international trade experts that keeps members updated with the daily shifts in global trade.
“International trade is pretty complex, with a lot of moving parts,” says Robert Worth of Worth Imports Inc. “CONECT … is very helpful in keeping me abreast of changes and better ways of conducting international business.”
The state offers its own support with the Massachusetts Export Center, one of the nation’s oldest and most respected international trade programs. The export center provides resources such as counsel and international trade market research and assessment, as well as frequent webinars with such blockbuster titles as “Meeting the India Customs Challenge” and “Complying with Encryption Export Controls and Import Requirements,” which, as one would expect, is a laugh riot. (SL)
$ 11,017,998,632 (3) | Infrastructure:4 Red Tape: 5 | Total Score: 12
The program has been so successful that, according to Jaime Smith, a spokesperson in Governor Jay Inslee’s office, the state is looking into exploring opportunities to make the programs developed through the STEP program a permanent part of its business services in collaboration with private and nonprofit business development and export assistance organizations.
“Our plan is to expand our foreign sales office network in more high-growth countries,” Smith says. “Our state’s government is committed to being a partner with our SMEs to help them reach their full potential by reaching new markets.” (SL)
$ 14,445,622,703 (5) | Infrastructure:1 Red Tape: 4 | Total Score: 10
Being located near the center of the country may mean that Illinois occasionally gets overlooked in the national zeitgeist—Chicago’s self-imposed title of “The Second City” is a type of recognition of the area’s uncomfortable feeling that it is a sort of regional middle child—but definitely has its advantages when it comes to trade. Illinois offers easy access to and from the rest of the world with three international airports and the largest railroad hub in the nation. And there is the fact that it has the largest inland port in America which, not coincidentally, has helped Illinois claim to be the largest inland exporter in the state as well as the fifth-largest exporting state in the U.S. Exports rose 4.9 percent to $68 billion in 2012, exceeding the average U.S. export growth for the second consecutive year. Direct exports accounted for 10 percent of the gross state product in 2012.
The state’s trade office operates International Trade Centers (ITC) across the state as part of its Department of Commerce and Economic Opportunity’s (DCEO) Small Business Development Center network. There are 12 ITCs throughout the state providing counseling and training to existing as well as new-to-exporting companies.
“This type of network is an incredibly powerful tool,” says DCEO spokesperson Sandra M. Jones. “Many companies need one-on-one counseling to expand their business and they need to be able to access these services in close geographic proximity.” (SL)