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A ship-to-shore crane unloads a shipping container at the Georgia Ports Authority Garden City terminal in Savannah, Ga. (STEPHEN B. MORTON/AP)
A ship-to-shore crane unloads a shipping container at the Georgia Ports Authority Garden City terminal in Savannah, Ga. (STEPHEN B. MORTON/AP)

Economy

As smaller firms look abroad, a U.S. trade shift takes hold Add to ...

The locals along the portion of the Mississippi River that separates western Kentucky from eastern Missouri call the non-native Asian carp that clog their waters “junk fish” or “garbage fish.” Angie Yu, a Chinese immigrant from Los Angeles, calls them money.

“In Asia, we don’t have cod, we have carp,” said Ms. Yu, a fish broker who bought a house in this outpost at the confluence of the Mississippi and Ohio rivers with the intention of exploiting a resource that Wickliffe’s commercial anglers long have considered a scourge, not a profit-maker.

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“This is a disaster for the United States,” she says of the carp, which were introduced in the U.S. South a few decades ago to clean aquaculture ponds and now threaten to invade the Great Lakes. “But in China, the market for food, there are a lot of problems lately. People are desperately looking for wild food.”

Thanks to Ms. Yu, who founded Two Rivers Fisheries in July, 2012, western Kentucky is now the United States’ biggest exporter of Asian carp. As of March, Two Rivers had processed about half a million pounds, all of it for buyers in China.

Her story underscores how the Great Recession has forced the United States’ smaller companies to take a harder look at doing business somewhere other than the 50 U.S. states.

Ever so slowly, Americans are becoming exporters. In volume terms, the U.S. always has been among the biggest traders. But that’s because it is home to so many of the world’s biggest corporations. Smaller companies tended not to look outward. So great was the demand at home, there was little reason to do so.

U.S. exports equalled about 9 per cent of gross domestic product a decade ago, while personal consumption was the equivalent of more than 67 per cent of the country’s economic output. Last year, exports were 13.5 per cent of output for the third consecutive year, the biggest percentage on record. Government figures released last week showed exports in February were 1.9 per cent higher than a year earlier, albeit down 1.1 per cent from January.

“We were in a great growth mode,” Ron Roy, director of sales and marketing at Highlands Diversified Services, a custom manufacturer of automobile and aerospace components, said in an interview at the company’s factory in London, Ky., last month.

The recession “tanked us,” as revenue was cut in half, Mr. Roy recalled. Highlands now is considering possibilities in Canada and Latin America, which would represent the company’s first serious foray into selling abroad.

Exports add to GDP and imports subtract from it. For years, net trade was a drag on U.S. growth. The rise of China and other emerging economies gave U.S. consumers access to goods at prices U.S. companies couldn’t match. Net exports subtracted from GDP in 14 of 15 years starting in 1992, according to U.S. Department of Commerce data.

The recession changed the trend. Exports have exceeded imports in six of seven years since 2007, narrowing the trade deficit – the difference between shipments and services sold abroad and imports of the same – to its smallest since global commerce collapsed in 2009. Excluding the recession, the $474.9-billion (U.S.) trade deficit in 2013 was the narrowest since 2002.

When budgets tighten, boosting trade becomes an attractive way for governments to generate wealth without having to cut taxes or spend money.

U.S. President Barack Obama in 2010 pledged to double exports in five years, a target he could make in inflation-adjusted terms, but likely will prove elusive in nominal terms. The global economy hasn’t co-operated, as Europe suffered through an extended recession and economic growth in big emerging markets such as China has slowed markedly. Congress also has hindered Mr. Obama’s ability to negotiate free-trade agreements by refusing to pass legislation that would deny lawmakers the ability to amend completed trade pacts.

Still, the change in mindset on the ground is undeniable. Kentucky’s Democratic Governor, Steve Beshear, boasts of overseeing consecutive record annual increases in the state’s exports. Last year, he became the first governor in the state’s history to lead a trade mission, taking a group of executives to Canada. Next month, Mr. Beshear is scheduled to lead a mission to Britain, another English-speaking market where the state’s inexperienced exporters should feel relatively comfortable.

“It’s not as sexy as announcing a new company in the state,” Mr. Beshear said of his emphasis on exports in an interview at the state Capitol in Frankfort. “Most of our medium- and small-sized Kentucky companies really don’t know much about exporting. They need education, training on how to do this.”

Exports alone won’t bring back the boom years that preceded the financial crisis. For now, Ms. Yu is providing work for about 20 people. Her operations manager, Jeff Smith, last worked at a Goodyear Tire plant that closed because it was uncompetitive.

“Factory after factory in this area has been closing,” Mr. Smith said. “Around this area, there’s not a lot.”

Ms. Yu, who got her start in North America by sending a container of Newfoundland lumpfish to China in 2005, never will fill the void left by the decline of the U.S. manufacturing industry, but she does intend to get bigger. China is a massive market and her plant sits a mile away from a cheap supply of one of the country’s most popular staples.

“In 20 years, people here will be rich,” she said.

Follow on Twitter: @CarmichaelKevin

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