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World Trader - June10
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June/July 2010
Volume 7 | Issue 4

World Trader

From the President

Upcoming Events

How Walmart Ships from China

Falling Euro: What Does It Mean for Europe?
by Zdenek Kuhn

Emerging Market Perspective: A Series on South American Trade & Culture
by Paul Hanscom

Member Spotlight: Jason R. Switzer, Varied Industries Corp. (Vi-COR)
by Jonathan Pixler

TSA Posts CCSP FAQ
from Expeditors

Manufacturing in China – A Commonly Missed Opportunity to Leverage Your Investment
by Rodney Hiel, Asia Business Consulting

Thank You, Skyline

Congratulations, Sue Senger!

Who Said It?

The Grab Bag

 


From the President

by Mari McClafferty, MGTA President

Mari McClaffertyDear MGTA Members:

I hope this latest edition of the newsletter finds you well and ready to enjoy another Minnesota summer!

As we move into summer, let me recap some of the exciting events that the MGTA has been involved in this spring:

2010 ANESA Conference
This year Minnesota hosted the annual ANESA Region Business Conference in Minneapolis. The International Trade Administration provided 18 Senior Commercial Service Officers to present information about each of their respective countries. Before the conference I had the pleasure of accompanying them to a Twins game at the new Target Field, which for me made for a particularly special Mother’s Day celebration with my two adult children Sarah and Colin. (Twins won 6-0 against Baltimore!) Following the game, the MGTA hosted a welcome dinner downtown at Kieran's Pub.

During the conference the MGTA booth was a hit! All of our promotional materials were gone after the first day! The ANESA conference was a great opportunity to hear about business from the government representatives who live in the regions without having to travel to all of those destinations. Click here to view the full presentation.

Visit from the Ambassador to Luxembourg
In May, MGTA volunteer legal counsel Mark McNeil, Lindquist & Vennum LLP, and I attended a luncheon with the Ambassador to Luxembourg, Jean-Paul Senninger. We discussed various challenges in the region and Ambassador Senninger reassured us that there is stability and solidarity in the EU financial system. Click here to view the full presentation.

Port of Duluth Event
The Professional Development Committee planned an event at the Port of Duluth on June 9. We had a networking scavenger hunt on the bus with the members and it was tons of fun! We all laughed and learned a lot about one another that day! We were fortunate to have wonderful hosts, Adolf Ojard, Adele Yorde and Ron Johnson. They provided attendees with informative presentations on the Port of Duluth. Click here to view the full presentation. We were surprised to learn the luxury cruise liner Celia II will visit the Twin Ports five times this summer between Duluth and Toronto for week-long cruises. A very special thank you to Mary Jo Stangl, who took the time out of her everyday commitments to plan this event.

National Export Initiative Event
On June 11, Board member John Novak from Bremer Bank and I represented the MGTA at the first locally held National Export Initiative (NEI) medical device event at Medtronic headquarters. Courtney Gregoire, ITA National NEI Director, gave the keynote – stating the primary goal of this new initiative is to match companies with international expertise with small or medium sized businesses to expand their export markets.

Upcoming Event
As summer heats up, we will enjoy an annual favorite, our MGTA Golf Outing and Dinner on Wednesday, August 18. This wonderful event has become a business-building networking opportunity members get excited about!

The MGTA offers SO many opportunities for both career and business development. Please don’t hesitate to take advantage of these opportunities and let us know how we can continue to provide you with valuable resources in the future.

This is just a snapshot of all the events going on with MGTA, so make sure to follow us on LinkedIn, Twitter, and of course the MGTA website to stay apprised!

Enjoy your summer,

Mari McClafferty, MGTA President

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Upcoming Events

Eliminating the Mystique of a Letter of Credit

July 22, 2010
General Mills, Golden Valley, MN

You’ll learn the "ins” and "outs” of letters of credit and the importance of being proactive in international trade. It’s not a boring or bland seminar. On the contrary, it’s light, amusing, and filled with real life examples, which illustrate the technical points being discussed.

Register now

8th Annual Midwest Global Trade Association Golf Tournament

August 18, 2010
Crystal Lake Golf Club, Lakeville, MN

Register now

 

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How Walmart Ships from China

The Emma Maersk, part of a Danish shipping line, is shown in the photos.

What a ship! No wonder "Made in China" is displacing North American-made goods big time. This monster transports goods across the Pacific in about five days!

This is how Wal-Mart gets its goods from China. 15,000 containers and a 207' deck beam! The crew size: 13 people on a ship longer than a U.S. aircraft carrier (which has a crew of 5,000).

Notice that 207' beam means it cannot fit through the Panama or Suez Canals. It is strictly trans-Pacific. Cruise speed: 31 knots. The goods arrive 4 days before the typical container ship (18-20 knots) on a China-to-California run. So this behemoth is hugely competitive when carrying perishable goods. The ship was built in five sections. The sections were floated together and then welded. The command bridge is higher than a 10-story building and has 11 cargo crane rigs that can operate simultaneously.

Additional info:

Country of origin – Denmark
Length – 1,302 ft
Width – 207 ft
Net cargo – 123,200 tons
Engine – 14 cylinders in-line diesel engine (110,000 BHP)
Cruise speed – 31 knots
Cargo capacity – 15,000 TEU (1 TEU = 20 cubic feet)
Crew – 13 people
First trip – September 8, 2006
Construction cost – U.S. $145,000,000+
Silicone painting applied to the ship bottom reduces water resistance and saves 317,000 gallons of diesel per year.

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Falling Euro: What Does It Mean for Europe?

by Zdenek Kuhn

As the 16 nations that use the Euro struggle to limit the damage of the Greek debt crisis, the value of the single currency against the dollar continues to fall on the world's currency markets. However, despite the gnashing of teeth this has caused in some political corners, economic analysts say there is little to fear from the drop of the Euro. According to Dominique Barbet, senior economist at French bank BNP Paribas, the Euro is likely to fall even further, likely hitting parity – that is, where 1 Euro is worth 1 dollar – by early next year. "Today, we have an overvalued Euro, so there is no reason to be concerned by the decline," he said. "It is far more part of the solution, rather than the problem."

Hotel and restaurant owners across the continent certainly agree. They are probably rubbing their hands in gleeful anticipation of hordes of bargain-hunting tourists – from non-Euro countries such as the United States and China – spending freely as their purchasing power grows. Due to the falling Euro, U.S. tourists have a golden opportunity to take advantage of a relatively weak European economy. In just the past six months, the U.S. dollar has risen almost 17 percent against the Euro, making travel more affordable for Americans.

Other sectors of the European economy will also be aided by the fall of the Euro, as that will increase those countries' competitiveness on world markets, said Societe Generale economist Olivier Gasnier. "Europe is going through an unprecedented crisis," he said. "A lower Euro that increases exports with moderate inflation can only be a good thing. In fact, this is the only variable (in the European economic situation) that is truly positive." Barbet noted that fiscal consolidation – the imposition of measures to reduce budget deficits, such as spending cuts and tax increases – as it is now being carried out in Greece (and to a lesser extent in Spain and Portugal) has historically almost always been accompanied by currency devaluation. "And fiscal consolidation will have to be carried out by every single country of the Euro zone," he warned. The fact that German leaders are discussing giving up promised tax cuts "is a signal that everyone now needs to do part of the job," Barbet said.

The weak Euro will also aid the Euro zone’s ailing child, Greece, in its efforts to emerge from its debt crisis, especially as the single currency weakens against the Turkish lira. "Turkey is Greece's most important trading partner," Barbet said. "It is also Greece's biggest competitor in its most important product, tourism. The weak Euro will draw tourists away from Turkey."

Concerns that a weak Euro will drive up energy prices, because crude oil is billed in dollars, are mistaken, Gasnier said. "In fact, the barrel price of crude oil has fallen more sharply than the Euro over the past few weeks," he said. Barbet said that if fiscal devaluation is carried out throughout the Euro zone, it will put downward pressure on oil prices. "So we are not concerned with this," he said.

The only possible dark cloud on the horizon is a possible overly precipitous fall of the Euro. "That could create a double problem," Gasnier said. "It could destabilize companies, because it would make international trades difficult to manage, and it could create a loss of confidence in the Euro zone, leading investors to flee from certain markets." It could also force the European Central Bank to intervene, to shore up the currency, he said. But such a move could only be envisaged if it were coordinated with the U.S. Federal Reserve.

BNP Paribas' Barbet said that the main reason for the decline in the Euro was that "people are worried about the lack of coordination" in the Euro zone. "The Euro zone is the only economic area in the world without a forex (foreign exchange) policy," he said. "Every other country has a forex policy. The Swiss, for example, openly manage their currency. A discussion will have to be held on this issue." This means that, ultimately, the current Euro zone crisis could be beneficial for the future of the single currency. "Europe has been built from one crisis to another; hopefully this one will end with progress in integration, both political and economic." Barbet said.

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Emerging Market Perspective: A Series on South American Trade & Culture

by Paul Hanscom

Brazil is the fifth largest country in the world, geographically speaking, and the eighth largest economy (following the U.S.A., China, Japan, India, Germany, Russia, the UK, and France). Rio de Janeiro is the second largest city in Brazil (to São Paulo). Before the nation’s capital was relocated to Brasilia, Rio de Janeiro was established as a leading political and commercial center for global trade in the region; characteristics that remain to this day. Many of Brazil’s largest trading companies are based in Rio de Janeiro and the city promises to play an even greater role on the world stage in the near future, hosting the 2014 World Cup and 2016 Summer Olympics.

Minnesota's exports to Brazil jumped nearly 29 percent from 2007 to 2008, adding up to $286 million. This is only a small portion of the total $17 billion in Minnesota's annual exports. Even so, Brazil ranks as the state's 15th largest export market.

I traveled to Brazil this spring (South American fall) to visit Rio de Janeiro for myself and learn about the history and wealth of opportunities that this port city has to offer. I found the city bursting with energy and welcoming to visitors. Much of the historical districts and scenic areas are already beginning renovations in anticipation of the world’s attention in the coming years. The corcovado statue was under scaffolding, the famous glass gondola system on Pão de Açúcar was newly remodeled, and around every corner there was a sense of excitement and the vivacious Brazilian spirit so evident in this town.

While there are a number of outstanding restaurants, one I would strongly recommend is Cervantes on Rua Barata Ribeiro. It is a short walk from the Copacabana beach-front traffic and you can’t go wrong with any of the steak options. Follow up any meal with a freshly mixed caipiriña and you’ll surely be in the Brazilian spirit!

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Member Spotlight: Jason R. Switzer, Varied Industries Corp. (Vi-COR)

by Jonathan Pixler

Q: Pls. tell us how you got involved with MGTA and a little about your interest in international business trade.
A:
I have a B.S. degree in International Business with a focus in International Marketing from Minnesota State University-Mankato. My interest in international business goes back to when I was in my late teens and how I saw the future potential of this type of career.

Q: What are some of your future goals in regard to MGTA?
A: My future goals with the MGTA are to increase the awareness of this organization to help educate export and import companies with their specific constraints and learn about their successes that can help accommodate other international companies in the Midwest. Another goal of mine with the MGTA is to "get connected” or "network” with others in the same field of business. Networking is very important in business today. The MGTA offers great opportunities for networking.

Q: This there a particular area of trade that interests you, and if so why?
A: I am particularly interested in trading of animal feed ingredients, as this is what I do for Vi-COR. The need for exceptional animal feed ingredients has grown over the years as feed costs, inputs, etc. have been increasing.

Q: Can you share a little about your background leading up to this point?
A: Believe it or not, my background sometimes fascinates people, as I am not your normal international business guru. In my middle teens, I decided to home school myself, taking some courses from BYU in Utah, which allowed me to get a job to save money to go to college. During this time, I worked full time in the masonry business, building and constructing retaining walls, patios, fireplaces, etc. At 17 years of age, I started my own landscaping and masonry business, which lasted for 5 years. These experiences shaped my career in a powerful way, giving me a respect for business, sales and service. At age 23 I sold all of the assets of my small business and decided it was time to go to college. I attended a small 2-year college in Mason City, Iowa and finished up at Minnesota State University in Mankato, MN.

After graduating college, I called many companies, including Vi-COR, animal feed ingredient supplier, in Mason City, IA and stated I was getting a degree in International Business and asked if they were looking for new employees to help them in international trade. On June 4, 2007, I was employed at Vi-COR and started in International Sales, particularly working and traveling in China, Taiwan and Malaysia. In early 2008, I was asked to develop the European market and have traveled in many European countries including Germany, UK, Netherlands, Belgium, Norway, Sweden, Finland, Poland, Romania, Italy, Spain and Lithuania. I have also traveled to Russia and UAE. The international experiences I have had in the past few years have given me an appreciation for the cultural and intellectual diversity in our World. This appreciation has been the fundamental value that has given me the opportunity to help grow Vi-COR. I am currently the European & Middle East Sales Manager for Vi-COR, located in Mason City, Iowa.

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TSA Posts CCSP FAQ

from Expeditors

The Transportation Security Administration (TSA) has posted on its website a set of Frequently Asked Questions concerning the Certified Cargo Screening Program (CCSP).

The FAQ page addresses several CCSP-related questions, including (but not limited to):

  • What is the 100 percent screening requirement?
  • What is the TSA strategy with regard to this requirement?
  • What is the CCSP?
  • How to join the CCSP as a Certified Cargo Screening Facility (CCSF)
  • What is the difference between the Known Shipper Program and the CCSP?
  • Benefits of joining the CCSP

According to the CCSP page on the TSA website and as previously communicated in various Expeditors' Newsflashes, starting August 1, 2010, the TSA will require 100 percent of cargo transported on passenger aircraft from a U.S. airport to be screened.

The full text of the FAQ can be accessed online here.

The CCSP web page can be accessed online here.

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Manufacturing in China – A Commonly Missed Opportunity to Leverage Your Investment

by Rodney Hiel, Asia Business Consulting

For most manufacturers, the reason to move manufacturing to China is for cost reduction and to follow major customer(s) into this market. In this move, many manufacturers focus on operational and logistic aspects of the move in respect to these customers and neglect the multiple market opportunities that are presented by this opportunity. Many midwestern executives do not realize the global opportunities available to sell their products that directly originate from the China market.

The 2009 AMCHAM White Paper supports the fact that approximately 2 of 3 U.S. businesses in China are producing goods/services in China "for the China market.” In this global economy, every company in the world is trying get into the China market, and many are also targeting your customer as well. Given this, if you do not strategically plan your entry with a thorough, tactical, and detailed marketing plan with preopening marketing activities, it is only a matter of time before competitors will take your customer, thereby nullifying the reason for the investment.

Given the natural bias of manufacturing and operational executives who normally drive these decisions, allocating more resources to the pre-marketing efforts for your facility in China will pay off exponentially. A common error for many manufacturers entering the China market, this can result in a mistake that can set your company back years in forecast projections, or deliver the confidence your investment will be well rewarded from the very beginning. Driving the top-line with a strong and thorough market analysis should be a major driver in the decision to move to China.

For further information on how we can help you resolve your challenges and accomplish your business goals in China, please visit our website at www.asiabusinessconsult.com.

Rodney Hiel is the Managing Director of Asia Business Consulting, a Minnesota based firm that researches, develops, and tactically executes a proven process to create cost effective strategies for market entry in today's China and Southeast Asia.

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Thank You, Skyline

On behalf of the MGTA, we thank you for your donation of the new MGTA Banner along with your willingness to host seminars for the MGTA. You did an excellent job with the booth and we are very pleased with how the seminars have been going. We look forward to continuing in our partnership with you in our goal to improve and grow MGTA. Once again, thank you for your help.

 



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Congratulations, Sue Senger!

The Board of Trustees Award for Excellence in Teaching is intended to recognize superior teaching at our colleges and universities. The award proclaims, on behalf of the entire system, the Board of Trustees’ pride in the dedication and accomplishment of our faculty in providing instruction that prepares Minnesota’s college and university students for their professional, scholarly, and civic lives.

Sue teaches at Saint Paul College and is Chairperson of the MGTA Professional Development Committee and two time past president of the MGTA.

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Who Said It?

"Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”
– John Quincy Adams

"Let those who follow me continue to build with the plumb of honor, the level of truth, and the square of integrity, education, courtesy and mutuality.”
– John Wanamaker

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The Grab Bag

When working in an international context with college students, I was always coming across interesting articles or pieces of information. I began putting them in folders and one day I got the idea that it would be fun to provide all of these ideas for my students. In the same way, in international trade and business we all come across pieces of information that we find interesting and would like to share with others. We would love to hear from you our readers what kinds of interesting articles or ideas you have and then put them in our reader's "Grab Bag."

New Freedom Tower

Following the destruction of the World Trade Center towers in the September 11, 2001 attacks, there was much debate regarding the future of the World Trade Center site. Proposals began almost immediately, and by 2002, the Lower Manhattan Development Corporation organized a competition to determine how to use the land. Public rejection of the first round of designs, the "Preliminary Design Concepts," led to a second, more open competition in December 2002, the "Innovative Design Study," in which a design by Daniel Libeskind was selected. This design went through many revisions, largely because of disagreements with developer Larry Silverstein, who held the lease to the World Trade Center site on September 11, 2001.

A final design for the tower was formally unveiled on June 28, 2006. To satisfy security issues raised by the New York City Police Department, a 187 foot (57 m) concrete base was added in April of that year. The final design included plans to clad the base in glass prisms to address criticism that the base looked like a "concrete bunker." Contrasting with Libeskind's plan, the final design tapers the corners of the base outward as they rise. Its designers stated that the tower will be a "monolithic glass structure reflecting the sky and topped by a sculpted antenna." Commenting on a completion date, Larry Silverstein stated, "By 2012 we should have a completely rebuilt World Trade Center more magnificent, more spectacular than it ever was." On April 26, 2006, the Port Authority of New York and New Jersey approved a conceptual framework that enabled foundation construction to begin while a formal agreement was drafted on the following day, the 75th anniversary of the opening of the Empire State Building. Construction began with a formal ceremony that took place when the construction team arrived. It is projected that the building's topping out will occur in late 2011. The building is projected to be ready for occupancy at some point in 2013. As of May 2010 One World Trade Center structure stands 26 stories above ground.

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Thank you Newsletter Sponsor:

Port of Seattle

2010 Annual Sponsors:

 

ZepolCH RobinsonBremerUS Bank
HMMNeville Peterson LLP

© 2010 Midwest Global Trade Association. All Rights Reserved.
World Trader is distributed bi-monthly to MGTA members.
Articles submitted by our membership do not express the views of MGTA or the Board of Directors. If you would like to submit an article for publication in the World Trader, please contact the MGTA office at office@mgta.org.

Midwest Global Trade Association
1000 Westgate Drive, Ste. 252 | St. Paul, MN 55114
p 651.290.7482 | f 651.290.2266 | office@mgta.org |
www.mgta.org



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