Consumerism crosses borders, creating a vast marketplace

With all the fuss and controversy surrounding the increasing globalization of our economic lives, let’s start by defining our terms: What is globalization?

Experts define globalization as a process of interaction and integration among the people, companies and governments of different nations. It is a process driven by international trade and investment, and aided by information technology.

“It is a shift toward a more integrated and interdependent world economy,” said Steve Lawton, Oregon State University professor emeritus of international business. “There are two components: The globalization of markets and the globalization of production.”

Globalization affects the environment, culture, political systems, economic development and prosperity, and human physical well-being in societies around the world.

But even as global forces become increasingly important economic forces, Lawton noted that some economic truisms transcend borders: “The consumer wants a good price/value relationship. People want good quality at a reasonable price.”

International trade makes available parts and labor while allowing companies to ship products and provide services worldwide. It has been going on for centuries.

The mid-valley is a major player in the global economy.

Many companies with a big footprint in the mid-valley, including National Frozen Foods, Entek and Wah Chang in Linn County and Hewlett-Packard, Korvis and ATS Systems in Benton County, order from other countries and ship product around the globe.

John Sechrest, economic developer at the Corvallis-Benton Chamber Coalition, said HP and Oregon State University give the mid-valley a leg up in the global economy.

“The whole international program at OSU draws foreign students,” he said. Many of them choose to remain in the mid-valley and set up businesses. Other large companies draw employees who later spin off their own companies in the area.

Korvis is one such company. CEO Rich Carone came to Corvallis via OSU and was offered a job at HP. He and several others later left to start Korvis, which manufactures platforms that provide starting points for most custom automation projects.

Korvis, in Corvallis, competes with manufacturers in China. But the efficiency of Korvis makes up for the lower cost of labor in China, Carone said. About 50 percent of the content used at Korvis is locally made; the other 50 percent is obtained from worldwide vendors.

Linn County businesses also have strong global endeavors and the county houses many large agriculture and manufacturing companies.

“A lot of our members are able to sell their products all over the world, so it’s great,” said Janet Steele, president of the Albany Area Chamber of Commerce. “But at the same time, your businesses are impacted by other countries that sell to us.”

National Frozen Foods in Albany exports locally grown products, mostly to Asia, Australia and Chile.

“For our business, global shipping is a must,” said Bill O’Bryan, general manager of National Frozen Foods. “It is a world market so you have to be looking at all the opportunities. Those opportunities continue to present themselves. National had to step up and meet that.”

The domestic consumer continues to demand the same foods year-round, so two years ago an import division was created.

“That means you have to go to different parts of the world where the growing season has changed,” O’Bryan said. “It can’t be just produce grown here in the United States.”

With an international reach came more demand and growth. The company employs 185 year-round. That number rises to about 400 during peak season.

National has a reputation to uphold and has been in business since 1912. Bringing in outside suppliers raised some questions.

“Our customers have wanted to reiterate procedures we have in place,” O’Bryan said. “Are we doing the due-diligence needed to prevent the kinds of things happening now in China? Well, we haven’t seen a loss in orders. When people look at the food chain, we’ve always done the right things. It is a serious obligation we have to our customers.”

The company sees the need to continue to grow its global presence.

“With our sourcing arm,” O’Bryan said, “it’s going to allow us to meet our domestic demands and the distribution patterns we have with a global supply chain. We also will be able to meet our offshore customers’ needs. This sourcing arm represents our future.”

Albany’s Wah Chang has been in the global market since almost the beginning, 50 years ago, with more than 40 percent of its product being exported.

Operating with about 1,100 employees, the jobs at Wah Chang are very dependent on the world economy and the economies of the nations it trades with.

The company is one of the largest producers of specialty metals and chemicals in the world. Wah Chang materials are used in energy production, chemical and mineral processing, aerospace, medical, research and consumer products.

Companies that do global business pay much attention to the errors of other businesses. Wah Chang buys raw materials from China and from other companies in places such as the former Soviet Union. It is very concerned with quality and keeps a close watch.

“Because, as the toy companies found out, there really is no forgiveness for mistakes in that area,” said Jim Denham, public affairs coordinator at the company’s Albany plant. “You have to watch yourself.”

Selling internationally has the benefits of increasing standards. Brian Lee, now working as an independent toxicologist from Corvallis, used to work at HP. He said because the firm ships internationally, it adjusted standards to conform to European requirements.

“They have the toughest in the world,” Lee said.

Many HP products qualify for Blue Angel, a German eco-label based on criteria in product design, energy consumption, chemical emissions, noise, recyclable design and take-back programs.

“They aren’t going to just make things one way for Germany,” Lee said. “They do it for all the inks they sell all over the world.”

Another initiative that began in Europe is the taking back and recycling of inkjet cartridges and electronic equipment. With the import and export of goods, these initiatives have been installed in the United States.

Sell only your best

But with increasing globalization comes a threat: If something can be produced cheaper somewhere else, it no longer will be produced in Oregon.

“That means Oregon will have to focus on producing goods and services for which it has a comparative advantage,” said Julie Ann Elston, assistant professor of international business at Oregon State University Cascades in Bend. “That means goods it can produce more efficiently or more cheaply. You can compete on price and you can compete on value.”

Oregon has a reputation for world-class wines. She said the Japanese prefer sweeter wines and the French favor Oregon pinot noirs.

“Understanding these preferences opens an avenue for sales,” she said.

And Willamette Valley Vineyards takes advantage of its knowledge of its customers’ preferences worldwide.

At Hazelnut Hill in Corvallis, pushpins adorn a map at the entrance to the shop to show where in the world the producer is shipping its treats.

“Hazelnuts are special to Oregon,” said Sally Hilles, who owns the business with her husband, Rob. “Commercially they are grown here just in the valley. California has the almond. Oregon has the hazelnut. The largest grower is in Turkey, providing about 87 percent of the world production while Oregon does 3 percent to 4 percent.”

Hazelnut Hill is a family operation and has been shipping product globally since 1991. The company often sends packages to Japan and Europe.

“It makes the world seem smaller,” Hilles said. “It brings everybody together that way.”

Hilles often is amazed by the array of visitors who come down her driveway. From Ukraine to Mongolia, people worldwide are enjoying mid-valley hazelnuts.

From nuts to bolts, Entek Manufacturing Inc. in Lebanon is a niche player in the machinery manufacturing and battery separator business and ships all over the world.

“You have to be a global player to be able to compete with competitors,” said John Effmann, director of sales and marketing for the machinery side of the business. “Your competitors are coming at you from everywhere. Our competitors come from Germany, Japan and a few are U.S.-based. Most of our competition is European.”

Effmann said the weakness of the dollar is helping the company maintain an advantage.

“(The competition’s) machines cost more to bring in and our prices are fair,” Effmann said. “We do not raise our prices without angst.”

Entek employs more than 300 within the mid-valley with most of them working for the battery separator division. It began the research and development of polyethylene battery separator production in 1984 and began commercial production in 1987.

Within the battery plant, there are two divisions: one working on automotive applications, the other focusing on cell phone and camera batteries.

“It is quite a highly technical product,” said Steve Gerts, sales and marketing in research at Entek International Ltd. “We ship to more than 100 countries.”

Gerts and Effmann said they doubt that many in the community realize the company exists and what it contributes to the world.

“It is important to know that we have an industrial company making products from raw material in the valley that exports around the world,” Gerts said. “It makes for a somewhat better balanced economic base for the valley and the state. It’s not all services and it’s not all agricultural. We have industrial product.”

When he is traveling, Gerts said, he acts as an ambassador from Oregon and appreciates bringing things from countries he visits back to Oregon.

“I am making sure that exchange continues to take place,” Gerts said.

Working to meet needs

Globalization is a process, not an end point. Shift occurs unevenly around the globe. Many Third World countries in the Southern Hemisphere have yet to benefit from it. However, where there is a need, there is a supply.

Taking his skills to places in Africa, including Ghana, Liberia and Sierra Leone, is Sherlock Mahn, president and CEO of Kwaplah International Inc. Mahn, a native of Liberia, came to Corvallis in 1989 to pursue a doctorate in resource economics at OSU. He worked at HP for 15 years and then wanted to do something to make a difference. Aware of the needs in Africa, he started Kwaplah in 1993.

His initial intent was to export textbooks and educational supplies. Today, the firm provides international procurement services for World Bank-assisted development projects and United Nations field offices. He delivers everything from agricultural equipment to automobiles to household appliances, laboratory equipment and school and office supplies.

Another area businessman working around the globe is Bill Dean at Acewl Co. Inc. The Vietnam War veteran spent 30 years at HP and was retired for five when he decided to launch this year a company that would bring to the mid-valley cost-effective solutions.

Dean’s wife operates a human-resources company in Hanoi that has been helping the Japanese invest in Vietnam. By combining their connections, a plan has been created to offer services to help companies find cost-effective solutions in manufacturing, supply chain, quality systems and process control.

“When and where it makes sense, we offer an alternative to China,” Dean said. “We broker development contracts between U.S. and Vietnamese companies.”

A number of Corvallis companies have expressed interest in Dean’s services for procuring a supply chain and solving parts issues. Others are looking to Vietnam instead of China for software development and hardware manufacturing.

“What’s occurring now is the world is flat with respect to trade,” Dean said. “Countries and companies are beginning to get product and services from places in the world they can trust and afford.”

Teaching international skills

For the most part, mid-valley residents realize how much of the area is part of the global economy. However, OSU’s Lawton said, “most may not understand the implications of it. No one controls the global economy. This thing is morphing. Billions of dollars move with the click of a mouse.”

Lawton and his colleagues at higher-learning institutions are working to better prepare their students to prosper in a global economy.

“What we are doing within the business schools is focusing the classes and the examples to include training that will be useful to them in the global environment,” said Elston of OSU’s Bend campus. “We encourage them to learn a second language. We make sure they understand the international regulatory environment and how to calculate international exchange rates.”

It doesn’t stop there. Students should know how to do online research to determine which firms are doing international business so if they need a product, they can shop for the cheapest.

“We are focusing the training of students and preparing them for a global marketplace so they can get a job in Portland or Tokyo,” she said.

International skills are the one group of skill sets employers are increasingly finding that students don’t have.

“They want you to be able to read and write and do math, and they want you to be able to function in a global environment,” Elston said. “The No. 1 biggest reason that business employees sent overseas fail at their task is that they do not have enough training in the international environment.”

Maria Kirkpatrick is a Corvallis writer and a frequent contributor to Mid-Valley InBusiness.