The Future Success of Sacramento Business isn’t in Sacramento — Or is it?

Back Commentary Oct 14, 2016 By Andrew Grant

Efforts to attract outside companies to relocate their headquarters or expand their offices to the Sacramento region get all the glory, and deservedly so — it’s tough work to convince a business to move from one area to another. Even so, the reality is that local economies grow far faster through the expansion of businesses already in place. Brookings Institution analysis of Sacramento job growth data between 2003 and 2012 showed that 7 percent of job creation came from relocations while 61 percent came from business expansions.

That’s why encouraging companies currently based here to expand internationally makes so much sense. Exports, in particular, play an important role in a strong economy. With 95 percent of consumers living beyond our borders, companies that export have significantly higher sales — 100 percent higher according to the International Trade Administration.

Businesses in Northern California are especially well-positioned to expand globally. The region has a culturally diverse population and an enviable proximity to ports, airports, rail systems and foreign trade zones. Even as exporting makes sense for individual businesses, encouraging companies to expand internationally makes even more sense for the local economy.

Companies that actively participate in international trade tend to create more jobs and pay higher wages. They also invest more in innovation and tend to be more productive than their domestically-oriented counterparts. Encouraging the region’s already established businesses to consider international markets is, thus, a no-brainer.

As president and CEO of the Northern California World Trade Center, my plan is to create a strong membership of businesses that expand through trade. My team and I are incredibly fortunate to connect with such a diverse mix of companies and development groups across one of the most advanced and complex business communities in the world. The companies in the San Francisco Bay Area and Silicon Valley lead the way globally in technology and manufacturing and the Central Valley helps feed the world with its agricultural production. Sacramento’s service-based economy helps to account for nearly 50 percent of the region’s exports with IT royalties, management and consulting, financial services, research and development, and telecom services rounding out the area’s top five service-based export sectors.

In my role, I work with export businesses, prospective exporters and others that assist with trade and economic development to expand the value for organizations making the choice to go international. Don’t assume that most international businesses are large, multinational organizations with holdings and operations across the globe. Most export businesses are small to medium-sized organizations that have tapped into one or two countries and are selling a particular service or product that often leads in quality and pricing.

Quietly headquartered on the outskirts of Sacramento, for example, is one of the world’s leading companies in pavement resurfacing. Rayner Equipment Systems pavement sealing methods significantly reduce the costs of road maintenance in adverse conditions around the world. Rayner builds specially-modified trucks to apply the seal and its equipment is used in more than 200 locations around the world. They are even involved in country-level projects in as far away places as Egypt.

Out of Woodland, Four Wheel Pop-Up Campers fills a niche within the hunting and camping community for outdoors enthusiasts that want a highly capable, ruggedized and very high-quality camper for use in any conditions. CEO Tom Hanagan and his wife, Celeste, started the operation with an emphasis on quality and functionality. Hanagan sources fabrics and other materials from around the world and is constantly putting his campers in difficult environments. He encourages his toughest customers to stretch the limits of the product and provide him feedback.

Given that the NorCalWTC started in Sacramento, our strength in membership is in the Capital Region with a base of members in agriculture, technology, manufacturing and services. At the same time, we assist companies across Northern California and are actively looking to welcome more businesses into our network.

The reach of Northern California’s contributions to the world is amazing to learn firsthand. Global problems are solved by Northern California businesses. Not only is California an international leader in technology, innovation, agriculture, water and energy, there is a definite feeling — beyond commercial success — that the region is making a positive difference on a worldwide scale.

Fundamental issues in food supply, how we make and store energy in more sustainable ways, and how we respond to water shortages are challenges that Northern California businesses face head-on. The business community is a critical partner with local government and the academic community, creating international hubs for technology and innovation. These efforts enable us to look beyond the horizon to figure out what next big problem can be solved.

Still, the decision to make the jump into a foreign market must be a calculated one given the specific challenges related to international business. For starters, companies must strategize around trade compliance issues, including licenses, classification numbers and audit readiness. We’ve found that some of the most pressing issues for area exporters are around familiarizing themselves with IP protection regulations in specific countries and regions, navigating corruption in foreign markets, identifying export incentives programs, staying up to date on international tax liabilities and weathering the storm of fluctuating currencies.

While there is certainly room for improvement in our export activity, look around you: This is already an international town that is doing business across the world. The foundation is set to accelerate the region’s international engagement. The capital of the world’s sixth largest economy is already a hub of food and agriculture, and home to world-class healthcare, leading educational institutions and a growing presence in tech. As more and more businesses export their products and services beyond the domestic market, we’ll see our region strengthen its economy and better sustain its overall economic health.

At the NorCalWTC, our best days are when we support a business in overcoming an obstacle to fulfilling its international business goal. Whether we bring in an expert to meet with our exporters on international tax issues, connect an export-ready company with a more experienced exporter, or share a good foreign contact with a company looking into a specific market, we pride ourselves in providing the resources and connections that will help companies grow internationally.

We encourage companies across the region to have the confidence to become a member of the international community. There is an amazing amount of opportunity out there. You just have to take the first steps to find it.