New markets, supply chain solutions and entrepreneurialism contribute to Georgia’s continued international trade success.
After a year marked by a global pandemic, disrupted supply chains, shortages of key parts, clogged ports and general confusion about the state of the global economy, it was with relief and pride that Georgia officials announced in February that the state achieved record trade flows of more than $166 billion in 2021, while exports climbed to $42.3 billion.
Relief was even greater when comparing those numbers to 2020. Then trade slumped and Georgia’s merchandise exports slid 6% to $38.8 billion – although still better than the 13% decline endured by the U.S. as a whole. Despite this setback, 2020 was the first time Georgia made it into the top 10 of U.S. exporting states.
Beneath the bold bottom-line numbers, the data reveal shifting trends in Georgia’s export markets as new entrants shake up the order. Data also show how small companies can find a place in world markets among the giant multinationals, through persistence and good products.
Canada remained the leading destination for Georgia exports, followed by China, but a 40% decline in exports to Germany relegated it to fourth place, moving Mexico up to third. Singapore and the Netherlands remained in the top 10, joined by South Korea.
India, which became one of Georgia’s top 10 export markets in 2017, consolidated its position by purchasing goods valued at more than $1 billion and moving ahead of the United Kingdom, to which exports declined 10%. Overall, Georgia’s trade with India increased 53% to $4.6 billion, with imports from India also up sharply.
Vietnam reinforced its importance as one of Georgia’s top trade partners, largely on the strength of U.S. imports. The country’s purchase of $500 million of Georgia products, especially cotton, was a bright spot.
These adjustments are partly due to ongoing changes in global and national trading patterns and partly the result of Georgia’s constant search for new markets for its products.
While Georgia intends to maintain its strong trade relationships within North America and Europe, it is also looking for new markets that demonstrate growth in consumer spending and disposable income, says Mary Waters, deputy commissioner for International Trade at the Georgia Department of Economic Development (GDEcD). In particular, the focus is turning to the countries within the Association of Southeast Asian Nations (ASEAN), especially Singapore, Thailand and Vietnam.
“For Georgia, these countries stood out because they have growing markets, growing middle classes, strong populations, and they are eager to diversify their economies and their trading relationships, and companies will follow,” says Waters.
Waters notes that Georgia’s exports to India, which have risen 29% over the last 10 years, are dominated by aircraft and aircraft parts. That speaks to the growth in India’s aviation sector, she says. Other exports to India include scrap aluminum, chemical wood pulp, insecticides and diesel engines. To that list, Georgia growers would dearly love to add pecans. On the import side, Georgia is the gateway for Indian goods like linens, tractors, carpets, shellfish and jewelry.
Waters says trade between the two nations has been fostered by Indian distributors’ growing familiarity with U.S. products and services. Binational chambers of commerce, educational links and scientific collaboration, business ties, cultural activities and the presence of an Indian consulate in Atlanta have strengthened the bonds.
For its part, India seeks closer economic ties with Georgia. Dr. Swati Kulkarni, India’s consul general for the Southeast, has urged Georgia to open trade offices in India, citing the success South Carolina found after it did so. She has also encouraged Delta Air Lines to establish an air cargo facility to improve Georgia’s direct connectivity to India.
In addition, Georgia is eyeing the Middle East’s Gulf states as a growth opportunity, Waters notes. Exports of civilian aircraft and other technical products to Qatar, the United Arab Emirates (UAE) and Saudi Arabia brought in $1.7 billion in 2021 – though Qataris appeared to have a taste for Georgia poultry and ice cream. A number of trade events in the UAE are attracting Georgia companies in the healthcare and life sciences, food and agriculture sectors. For example, six medical device manufacturers took the opportunity to co-exhibit in the Georgia booth at the Arab Health Exhibition in Dubai this year.
Korea is deepening its relationship with Georgia. The Korea Trade-Investment Promotion Agency (KOTRA) has opened an office in Atlanta to promote economic cooperation with the state and help Korean companies establish themselves here.
The German state of North Rhine- Westphalia also opened a trade and investment office in Atlanta, its third in the U.S.
They join a host of other trade offices and consulates intended to foster trade and foreign investment between their native countries and Georgia. At the same time, there are many opportunities for increased business in Latin America in view of U.S. free-trade agreements with many countries in the region, says Evaristo Fernando Doria, a senior lecturer in international business at Georgia State University’s J. Mack Robinson College of Business.
Reading between the statistics of the trade data reveals the story of the thousands of small Georgia companies with entrepreneurial leaders who have taken the bold step of entering world markets. U.S. Census figures show that 87.5% (12,288) of the state’s exporters were small-to-medium-sized companies (SMEs) and accounted for almost 32% of the known value of Georgia exports in 2020.
The percentage of small exporters is not unusual by national standards, according to the U.S. Census. But it shows the vitality of Georgia’s economy, sometimes obscured by the larger heavy-hitters in the trade arena.
As usual, in 2021 the state’s high-dollar exports were led by the aerospace industry, including civilian aircraft, engines and parts. Exports for 2021 at just over $9.1 billion were slightly down from $9.98 billion in 2020. Exports from the automotive sector, another major player, held steady at $4.49 billion. Agricultural exports, a vital component of Georgia’s economic vitality that encompasses poultry, cotton, peanuts and forest products, rebounded from $4.25 billion to $4.88 billion. as turbine components, chemical wood pulp, medical instruments, Kraft paper and paperboard, automatic data-processing machines and insecticides contributed significantly to the state’s export totals.
And then there was Delong’s Gizzard Equipment, Inc., a family-owned Macon firm that makes turkey- and chicken-gizzard peeling rollers, poultry de-fatters and neck skinners. It won a Globe Award from the state in 2021 for entering a new international market. The award is one of 17 issued by GDEcD to companies that expanded sales to new international markets.
CocoaTown, another Globe winner, found its niche by manufacturing equipment that enables small businesses to establish themselves as “bean-to-bar” chocolate makers. Balu Balasubramanian, who founded the 11-person company with his wife Andal Balu, says Cocoa- Town’s machines enable small players to enter a market previously limited to big companies. The Alpharetta company now exports to over 100 countries, and foreign sales account for more than three-fourths of its revenue.
He credits the state’s economic development department, the University of Georgia (UGA) Small Business Development Center (SBDC) and other agencies for making the company’s success possible. “They helped us in trying to understand the culture and the marketing, in doing research and finding partners to work with. When they go out of the country, they exhibit our products and help us to arrange meetings at trade shows,” Balasubramanian says. His company has also received help in handling the challenges of shipping and other technical issues.
Darrel Hulsey, director of the international trade center at the SBDC, says the biggest barrier for small companies contemplating the export business is lack of knowledge about the process. They want to understand the risk involved and how to mitigate it. Language and capital barriers can be an issue. They want to know they can be paid securely and safely. U.S. exporters should also be aware of the licenses required once their product gets to another country.
“We work with established Georgia companies that are either looking to export for the first time or are already exporting and need assistance on some issue such as expanding into a new market,” Hulsey says.
“To succeed, you have to know your costing well and be familiar with the foreign country you are going into. Sometimes it requires patience and the ability to adapt your product to a foreign market.”
Entrepreneur Robin Tommalieh, founder of Atlanta-based AGRI International, leveraged his background, experience and overseas connections to become a distributor of agricultural products from Georgia and other states to 20 countries.
Still, Tommalieh says the export business is tough. “There’s a lot involved, and it is risky. You really need to know your market, to have a plan and to have the expertise.” He warns that the inexperienced may ship a product and not get paid. Or a product could get held up in a port, leaving the exporter liable for port fees and other charges.
Seydel International, Inc. in Pendergrass is another company that has benefited from the state’s assistance. The company develops, manufactures and markets specialty chemicals for the textile and apparel, paper and packaging, personal care, agricultural and metalworking industries. Its exports now comprise about 25% of company revenue, reports spokesperson Cathy Skelton. She credits Georgia’s economic development department with helping the company identify new markets and potential agents in those markets.
Skelton says the usual challenges of exporting have been compounded by the pandemic, but the trust the company has established with its export customers has helped maintain relationships.
The pandemic and subsequent shipping chaos have affected many Georgia exporters. Scott Ellyson, CEO and cofounder of Atlanta-based East West Manufacturing, says the impact is still being felt.
With five production facilities in North America and another five abroad, the company’s Atlanta-based engineering team works with customers to design specialized high-tech products, develop the needed technology to make prototypes and take them through mass production and distribution. The company has 3,000 employees worldwide, including 100 in Atlanta, and prides itself on having offshore, onshore and near-shore capabilities.
The effect of COVID hit the company especially hard in Vietnam where the government initiated strict isolation measures. “Some of our workers practically lived in the factory for two months,” Ellyson says. Logistic issues and soaring freight costs were another headache. But the biggest issue he says the company now faces is the global shortage of electrical components, with delivery times increasing from the standard 30 to 60 days to 12 to18 months and holding up production. He notes that some customers are trying to shift their supply chains into this hemisphere. In May, East West acquired an integrated electronics manufacturer with operations in Juarez, Mexico and El Paso, Texas, to give customers greater near-shore potential.
Big exporter or small, there is universal agreement that the main driver of Georgia’s export success is its efficient ports in Savannah and Brunswick, managed by the Georgia Ports Authority (GPA), and the rail lines that serve them. The authority has won special praise for its response to an unprecedented 20% jump in container traffic in 2021 – much of it the result of pandemic-related supply-chain disruption. In response, GPA invested in increasing container capacity at Savannah’s Garden City and Ocean Terminals and roll-on/roll-off capacity at Brunswick’s Colonel Island terminal, which handled 650,000 auto and heavy machinery units last year. In a further effort to address the container stockpile, GPA set up six pop-up storage yards in Georgia and neighboring states to reduce port congestion.
“As companies move to Georgia and establish supply chains here, exports will increase exponentially over the next decade,” Chris Clark, president and CEO of the Georgia Chamber of Commerce, predicts. He backs a drive called “Can’t Wait for Freight” by members of the transportation industry and some legislators to increase spending on infrastructure. Foreseeing an increase in container movements at Georgia ports from 4 million to 8 million a year by 2028, the group says investment in freight and logistics infrastructure should be a priority.
Clark says it is also “critical” to create more inland ports that serve as intermodal hubs, allowing goods to be shipped by rail to and from Georgia’s ports and reducing truck traffic on the state’s highways.
Building on its current advantages, Georgia is well-placed to flourish in the years ahead, says GSU’s Doria. “Georgia not only has a world-class infrastructure that efficiently connects us with the world, as well as offering several programs and initiatives to help our entrepreneurs become more global, but also Georgia’s top-ranked higher education system successfully prepares an important pipeline of global-minded leaders to successfully support our growth internationally.”