International trade is high on the political agenda in the run-up to the American presidential election. It has caused me to wonder about its relative merits, and especially to startups.
If you ask the US Government (export.gov) they will tell you, #1 that 95% of the world's population is outside America. They'll also say that it helps companies here to reduce risk in the domestic economy and give other less compelling reasons as well. Other Government departments chime in, too. For instance, trade.gov talks of risk mitigation. Sales and profits can grow faster too, they say.
Cast Iron*
Cast iron storm water drain covers are an interesting subject. Why should so many 250lb monsters have been made in the UK by a French firm (Saint-Gobain PAM), be shipped across the Atlantic, and installed in my street in Georgetown, Texas, even though the US company CertainTeed is a Saint-Gobain subsidiary? Likewise, why did many smaller cast iron drain inspection covers get shipped even further, from India to the same city?
China is the runaway leader in casting production (46 million tons, 2014) worldwide, followed by the USA at a mere 12 million tons (!), but it's still a big producer. India comes in third at 10 million tons. The UK and France are out of sight in the table of big producers.
I wonder about shipping such hunks of metal so far. It begs the question about international trade and whether it makes sense. Is there an opportunity for founding (!) a drain cover foundry business right here in the US to compete with other municipal casting companies like Alhambra, D&L, Olympic and US Foundry?
Rice*
The USA produces less than 2% of the world's rice (13th producer in the world, 2014) and yet it exports half of its production to Mexico, Central America, Northeast Asia, the Caribbean, and the Middle East. China in Northeast Asia is the world's biggest producer by far.
India, Thailand and Pakistan between them account for 62% of world rice exports (2014). The US does about 8%. Shipping companies of course, are delighted, but is there a sense in this? In 2014, American consumption of rice increased to 26 pounds per capita, a one-pound increase compared to the previous year. About 20% of that was imported.
Since we seem to like rice so much, is there not a huge opportunity for domestic rice producers, millers and processors right on their own doorsteps? What about the organic rice producers? What opportunities result from the 'arsenic in baby rice' scare? Think about your own industry in this kind of way. You may be surprised at the opportunities that lurk.
*These are only examples and my lack of sector knowledge may hide obvious answers, but the principle remains: take a good look at your own business circumstance and ask yourself if you have opportunities for import substitution.
