The Ripon Forum

Volume 42, No. 4

Aug - Sept 2008 Issue

What Trade Means to My State

By on November 30, 2015

by TIM PAWLENTY

Twenty-five years ago this October, something remarkable happened in Minnesota: two governors, each from his nation’s heartland, put their names to a document formalizing their friendship. One line bore the signature of Minnesota Governor Al Quie; the other, the signature of Yu Mingtao, governor of Shaanxi Province in the People’s Republic of China.

That ceremony in the fall of 1982 – a moment that would have been inconceivable just a decade earlier when President Richard Nixon paid his historic visit to the communist nation – went virtually unnoticed. Even the state’s largest newspaper relegated the event to a brief buried in its B-section.

Governor Pawlenty meets with Chinese Vice Minister of Foreign Affairs Yang Jiechi during a trade mission to China in November 2005

Governor Pawlenty meets with Chinese Vice Minister of Foreign Affairs Yang Jiechi during a trade mission to China in November 2005

The significance of that first official meeting between Minnesota and China may have been lost on many, but visionary political, business and education leaders knew exactly what it meant. Three years had passed since the United States normalized diplomatic relations with its former enemy and it wouldn’t be long before the door opened again to trade with the West.

A year later, another governor, Rudy Perpich, brought Minnesota’s first official delegation to China and the state opened an official trade office to help our companies do business in markets all over the world. And as China slowly began the economic reforms that laid the foundation for its economic success today, Minnesota companies were among the first to invest there.

For example, 3M was the first foreign company to establish a wholly-owned subsidiary in China. Cargill also formed an investment company in Shanghai and was first to win approval to conduct business in China. And, Northwest Airlines was the first U.S. airline to provide non-stop air service between the United States and China.

By 1989, some 80 Minnesota companies were doing business in China. And today hundreds and hundreds of our small, midsized and large companies do business there, exporting more than $1.2 billion a year in manufactured goods.

In 2005, I became the fourth Minnesota governor to lead an official delegation to China. Our delegation had more than 200 members, the largest such mission undertaken by any state. Each governor’s visit was historic in its own right. And each built upon the work of his predecessor, opening doors, building bridges, and strengthening ties.

Beyond that mission, my administration launched the Minnesota-China Partnership, a nation leading initiative that brings together public and private organizations throughout the state to promote all facets of Minnesota’s relationship with China.

Over the years, each time Minnesota has extended itself, China has responded enthusiastically. Cooperative partnerships between Minnesota and China abound in many areas. More than 25 government delegations have visited Minnesota in the past decade, including some of the most prominent and influential leaders in China. And earlier this year, Minnesota and China formalized an agreement to work together to stimulate two-way investment between Minnesota and China.

…manufactured exports alone are responsible for nearly 111,000 jobs statewide. In fact, one in six manufacturing jobs in Minnesota is dependent on exports.

Of course, our trade relationships extend well beyond China, but I think our efforts there well illustrate the importance Minnesota places on international trade, as well as our commitment to cultivating international opportunities.

The year that the first Chinese delegation visited Minnesota, the state’s total manufactured exports to all foreign markets were less than $3 billion. In 2006, Minnesota companies exported more than $24 billion in manufactured goods, services and agricultural commodities to 205 foreign destinations.

Those foreign sales are an important part of our state’s economy – accounting for about 10 percent of our gross state product. They translate into thousands and thousands of good jobs and everything that goes with them – house payments, groceries, health care, vacations, college tuition, and retirement savings.

Between making, selling, and transporting goods to market, manufactured exports alone are responsible for nearly 111,000 jobs statewide. In fact, one in six manufacturing jobs in Minnesota is dependent on exports.

The breadth of companies involved in international trade is amazing. A few examples:

  • Satellite Industries sells portable sanitation equipment in more than 80 countries and employs 58 people in Minnesota. Export sales, up 20 percent from a year ago, represent 28 percent of the company’s total annual revenues.
  • Capital Safety USA manufactures fall protection equipment, employing 280 people. The company’s international sales, up 91 percent in the past three years, account for 9 percent of the company’s annual revenue.
  • Digital River is a global leader in e-commerce products and services. It has six global data centers, displays in 18 languages, and transacts business in 27 currencies. International sales accounted for 41 percent of sales in 2006, up from about 24 percent in 2003. The company employs nearly 1,100 people in Minnesota and has major offices in Germany, England, Ireland, Luxembourg, Taiwan, and Japan, and customers in nearly every country across the globe.
  • Excalibur Sires provides artificial insemination products and services for the Jersey livestock market. With five full-time employees, the company markets its products and services in at least 12 countries. International sales account for 41 percent of total revenue. The company’s international sales have risen tenfold in the past two years.

Even when Minnesota companies buy foreign components it can create and save jobs here at home. Not long ago, the future was uncertain for a struggling Minnesota company that manufactures emergency lights for police cars and other vehicles. Lackluster sales and increased competition were starting to hurt.

Things turned around after the company found sources in China to build the components for an improved product line. Today, parts are shipped in and the finished products assembled in Minnesota. The company, which cut its costs in half, is now one of the largest in its industry.

The pocketbook impact of international trade in Minnesota is further magnified when you consider foreign direct investment in the state. Today, several hundred affiliates of foreign companies call Minnesota home, including China’s Laiwu Steel Group, India’s Suzlon Energy, and Denmark’s Coloplast, just to name a few. Foreign companies employ more than 83,000 people in Minnesota, an increase of 8 percent over the past five years.

The basic benefits of trade are the same for Minnesotans as all Americans: reduced prices for goods and services, boosted economic growth and well-being, enhanced productivity, and higher per capita income. But – much like Minnesota’s first meeting with the Chinese governor – the significance of trade goes unnoticed or unacknowledged by many people.

Like some of my predecessors, I’ve led several trade missions to established and emerging markets around the world. In late October, I’ll take a delegation of Minnesota business leaders on a trade mission to New Delhi, Bangalore, and Mumbai to explore opportunities in India.

The missions are important for promoting our export industries to new customers and the state as a great location for foreign direct investment. But they’re also important opportunities to remind Minnesotans of the stake they have in the global economy.

In a world where sales in Beijing and Chongqing, China, have a direct bearing on life in Alexandria and St. Paul, Minnesota, it’s a lesson we can’t afford to forget.

Tim Pawlenty is the Republican Governor of Minnesota. He also serves as Chairman of the National Governors Association.

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