Ag products take over top spot in Kansas exports in 2013

03/01/2014 11:36 AM

03/03/2014 1:42 PM

Editor's note: An earlier version of this story incorrectly identified Kansas Global Trade Services.

The old saying “thank a farmer” was never truer in Kansas than last year.

Although squarely in the middle of the country, Kansas has long relied on international trade to bolster its economy. It grows or makes plenty of things that are popular around the world, from steaks to GPS systems.

But last year was different. The state’s biggest trade product for years has been aircraft and aircraft parts made in Wichita. But the worldwide market for the small corporate jets and general aviation aircraft made in Wichita has been in a near depression since 2009.

Although the state last year exported more than $2.1 billion worth of transportation equipment, which includes aircraft, that was the least amount in five years and less than half the $4.9 billion it shipped in 2008, according to the U.S. International Trade Administration.

For the first time in years, transportation equipment became the state’s second most valuable export, landing behind agricultural products.

The state’s farmers and agribusinesses exported $2.6 billion worth of goods in 2013, 20 percent of all of the state’s exports by value.

Soybean exports to China likely drove much of the increase. According to the International Trade Administration, the export of Kansas crops to China rocketed from $1.7 million in 2009 to $836 million in 2013. Kansas was part of a record U.S. soybean export crop, the biggest portion of which went to China.

The U.S. Department of Agriculture projects that U.S soybean exports will remain on a record pace throughout 2014. In addition, corn prices have fallen steeply and supplies are ample because of a big harvest, making it more likely for stronger international trade.

Kansas exports rose

What makes 2013 remarkable is that the value of all Kansas exports rose 6.5 percent to $12.5 billion – almost equal with 2008, the state’s best year ever – even though the state’s biggest export category fell.

The strongest sales growth in terms of percentages for the state was to Peru (up 239 percent), Venezuela (up 199 percent), Hong Kong (up 95 percent) and Brazil (up 91 percent).

The state’s main categories of exports are agricultural products, food and kindred products, transportation equipment, machinery and chemicals.

Wichita is the state’s biggest exporter, according to the International Trade Administration. In 2012, the year for which the most recent figures are available, the Wichita metro area exported $4.3 billion worth of goods. Other Kansas metro areas with large exports were Topeka, $265 million; Lawrence, $66 million; and Manhattan, $33 million.

Kansas has a trade surplus with the rest of the world, exporting more than it imports, said Karyn Page, president and CEO of Kansas Global Trade Services.

The United States reached a record in 2013 for exports of U.S. goods and services, reaching $2.3 trillion in 2013.

Other exporters

The state’s overall growth meant that many parts of the state’s economy enjoyed an unusually strong export year.

Jeff Lange is the managing partner of Wichita’s Red Guard, which makes blast-resistant buildings out of what look like steel shipping containers. The products are sold to refineries and chemical plants as safety offices. The business has grown from $8 million three years ago to $37 million last year, he said.

The company moved to a 72,000-square-foot location on 47th Street South last year. Earlier this year, it announced that it had bought a 100,000-square-foot former Skyline mobile home plant in Halstead for more production space. Lange said he expects to hire 30 workers at the facility.

Exporting is the big push this year, he said. He’s brought in a couple of people whose job is to develop international markets. He said the company will soon be going to the Middle East to solicit clients.

“We probably have 5 or 10 percent of our products that are going international or off-shore,” he said. “In five years, I expect that to be 50 percent.”

Not all of that work will be done here. He said he is looking for acquisitions.

“We are blessed with a lot of opportunity,” he said. “We have the ability to grow at the rate we feel comfortable with rather than the rate set by the market and competition.”

Growing internationally

Paul Daemen, a local trade consultant, thinks more Kansas businesses will engage in global trade in the future – they don’t really have a choice.

International markets are not only growing faster than the U.S. market, they are becoming wealthier and more sophisticated, buying products more likely to be produced here.

But, he cautioned, while those economies look more like the U.S., they’re not the same. To penetrate those markets, Wichita companies have to adapt better to local conditions both in products they make and in how the selling is done, Daemen said. You can sell lawn tractors in Asia and Europe, he said, but only if they are adapted to small-scale farming or dirt work rather than for cutting giant lawns.

“Our problem is that we have never been used to adapting,” he said. “It doesn’t help that we’re really only interested in it when times are bad. When our market is good here, we say, ‘To heck with international trade. It’s too difficult.’ ”

Page, the Kansas World Trade Services president, hopes to get Wichita companies much more deliberate about trade.

She is helping to lead a community trade planning process using a procedure developed by the Brookings Institution. A number of other, larger cities have gone through this.

It starts with a market assessment of what’s here now, with a close look at the data, a survey of local companies about practices and intentions and some detailed follow-up interviews to examine barriers to trade.

Then comes the writing of a plan on how to build exports, followed by a plan on how to make that strategy happen.

It’s still very early, she said. The process will take months.

Even with aircraft makers’ deliveries way down, Wichita remains an export powerhouse. In 2012, according to Brookings, more than a quarter of the local economy relied on trade.

“Even though I deal in this every day, it shocks me to see how high it is,” Page said. “We’re one of the most export-dependent economies in the nation.”

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