U.S. companies significantly increase their engagement in exporting as firm revenue grows and businesses mature, according to the Middle Market Power Index: Taking the Global Stage from American Express (NYSE: AXP) and Dun & Bradstreet (NYSE: DNB).
This second in the series of reports, analyzing Dun & Bradstreet’s proprietary database of more than 19 million commercially-active(1) U.S. firms, explores the characteristics of U.S. middle market companies (defined as businesses generating between $10 million and $1 billion in revenues) engaged in exporting their products and services. The series of reports is designed to uncover opportunities for middle market companies to expand their customer base and sources of revenue, based on a virtual census of all of the commercially-active businesses in the United States.
The analysis finds firms generally establish themselves domestically before selling abroad. Five percent (5%) of middle market businesses engage in exporting, while significantly more companies (34%) with more than $1 billion in revenue sell internationally. Additionally, the data reveals that the longer middle market companies are in business, the more likely they are to export. Less than 5% of middle market firms in business for less than nine years sell to foreign markets, while more than two-thirds (68%) of middle market companies in business for 25 years or more export their goods or services.
Earlier this year, the U.S. Department of Commerce announced that in 2014, total merchandise exports from all 50 states helped the U.S. achieve the fifth consecutive record-setting year of goods and services exports, which reached $2.35 trillion.
“One of the greatest signs of an economic recovery is growing exports and these results are very encouraging for the U.S. markets,” said Jeff Stibel, vice chairman of Dun & Bradstreet. “As middle-market companies increase exports outside of the U.S., there is also a high likelihood for increased opportunities for domestic job growth.”
Middle Market’s Expanding Exporting Opportunity:
Middle market companies, which today represent less than 1% of all U.S. businesses, account for 29% of all U.S. business revenues and 18% of the firms that export their goods and services, according to the U.S. Census Bureau. That said, the International Trade Administration shows that middle market companies account for just 9% of the value of U.S. exports, showing that while more likely than average to export their goods and services, the value of middle market exports exports lags that of larger firms. Exporting represents a $928 billion opportunity for U.S. mid-sized companies over the next 10 years.(2)
“Middle market firms are cautiously—and strategically—entering foreign markets,” said Susan Sobbott, president, Global Corporate Payments, American Express. “Mid-sized companies are driving job growth domestically,(3) and many could benefit from overseas expansion earlier in their lifecycles.”
To help middle market firms evaluate the risks and rewards of exporting, American Express launched Grow Global, a program providing free exporting resources, including interactive development and learning workshops, online materials and webinars, mentoring and one-on-one connections.
Middle Market Product-Focused Firms are More Likely to Export
Analysis by industry finds middle market manufacturers and those in wholesale trade are far more likely to engage in exporting than the average middle market business. Compared to the industry-wide average of 5% of middle market businesses that export, industries most likely to export include:
- manufacturing (14%)
- wholesale trade (12%)
Industries with the least exporting participation—all with less than 1% engaging in exporting—by middle market companies include:
- social services (less than 1%)
- educational services (less than 0.5%)
- health services (less than 0.5%)
Middle Market Exporters are Found Throughout the Country
Among the 25 most populous metro areas, middle market companies that export are more likely than the U.S. average to take place in:
- Miami, FL (20%)
- Houston, TX (9%)
- Tampa-St. Petersburg, FL (9%)
- Los Angeles-Long Beach (8%)
Puerto Rico (26%) and the U.S. Virgin Islands (14%) are also significantly more likely than average to have middle market firms engaged in exporting.
The data reveals a fairly consistent percentage of middle market exporters in each state. States with the highest levels of middle market firms engaged in exporting include:
- Florida (10%)
- New Jersey (8%)
States with the lowest levels of middle market exporters include:
- Montana (2%)
- North Dakota (2%)
- South Dakota (2%)
- Oklahoma (2%)
- West Virginia (2%)
- Wyoming (1%)
- Washington D.C. (1%)
- New Mexico (1%)
American Express and Dun & Bradstreet will release additional reports in the coming months, which will explore other characteristics and economic contributions of middle market firms.
To read the full Middle Market Power Index: Taking the Global Stage, please visit http://about.americanexpress.com/news/docs/2015x/2015-07-08-Middle-Market-Power-Index-Taking-the-Global-Stage.pdf.
The Middle Market Power Index report is based on an analysis of all of the firms in Dun & Bradstreet’s commercial databases of nearly 19 million businesses between 2008 and 2014: the first a virtual census of all of the commercially-active businesses in the United States (defined as firms that have obtained a D-U-N-S® number and that sell and receive goods and services and utilize credit transactions in their business); the second commercial database is Dun & Bradstreet’s credit scoring archive database, which collects and models business commercial activity and business financial strength. All subsidiary and business establishment data are combined; only enterprise-level data (top of the business family tree, or Ultimate D-U-N-S® number firms) are reported. Additionally, public sector entities are excluded.
About Dun and Bradstreet
Dun & Bradstreet (NYSE: DNB) grows the most valuable relationships in business. By uncovering truth and meaning from data, we connect customers with the prospects, suppliers, clients and partners that matter most, and have since 1841. Nearly ninety percent of the Fortune 500, and companies of every size around the world, rely on our data, insights and analytics. For more about Dun & Bradstreet, visit DNB.com.
About American Express Global Corporate Payments
Through its Global Corporate Payments division, American Express offers a suite of B2B and T&E payment solutions that can help organizations streamline processes and identify opportunities to help drive savings and efficiency. American Express can help your organization improve working capital flexibility and your relationships with suppliers. For more information, visit https://business.americanexpress.com/us/
About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. Learn more at americanexpress.com and connect with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
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(2) Capitol Economic Advisors research brief for American Express
(3) Middle Market Power Index