Olympia Business Watch

Washington wines finding new markets, fans in Hong Kong

As it turns out, that nice glass of Washington state cabernet sauvignon on your table might also be on the table of a consumer in mainland China or Hong Kong.

U.S wines -- especially those from Oregon and Washington -- are increasingly popular in Hong Kong and neighboring mainland China. And with any luck, they'll gain even more traction thanks to special meetings like the one held earlier this week at AWB.

Joining AWB President Don Brunell for lunch Tuesday were Hong Kong Commisioner Donald C K Tong, along with Hong Kong Economic & Trade Office Director Subrina Chow (L), Deputy Director Wendy Au and Barnard Griffin Winery Co-Owner Deborah Barnard.

U.S. wine, particularly Oregon and Washington wine products, are highly regarded in Hong Kong and China. Consider that in 2008, Hong Kong imported just $9 million worth of U.S. wine, but in 2011, that figure jumped to $75 million.The market dipped slightly last year -- just $67 million -- but Tong says this was a temporary fluctuation.

With about 7 million people, many of whom thirst for quality wines, Hong Kong represents an exciting new market for the state's wine community. The U.S. is currently the third largest wine exporter to Hong Kong. Red wines account for 96 percent of all wine sales in the one of the world's leading financial centers, according to Tong, and 81 percent of all wines sold in Hong Kong stay in Hong Kong. The rest find their way to mainland China.   

Wines are primarily purchased by Hong Kong consumers through supermarkets, specialty stores and restaurants. And since Hong Kong is also known for its multicourse meals, Tong said, that's "good news for the wine business."  

Tong noted two key advantages for Washington wineries exporting into Hong Kong. First, a 2010 wine memorandum of understanding with Washington and Oregon encourages wine-related trading, tourism, investment and education between the Special Administrative Region of China and the two U.S. states. Hong Kong's

Hong Kong also has an agreement with Chinese customs that ensures that products shipped into Hong Kong bound for mainland China are distributed within one to seven working days. Hong Kong has a specific memorandum of understanding with China on wine, giving the country a free trade pact with the mainland.

"We would like to see more Washington wine in Hong Kong," said Tong, a sentiment many AWB member wineries, like Barnard Griffin, would gladly cheer.

Outlook good for manufacturers despite uncertain times

McGladrey's Wendy Sancewich speaking at the 2012 AWB Manufacturing Summit. Photo: Dan Brunell / AWB

“Ninety-five percent of manufacturers expect to hold steady or see growth over the next 12 months.”

That’s according to Wendy Sancewich, a Seattle director with McGladrey’s Manufacturing National Practice, who spoke at AWB’s 2012 Manufacturing Summit Wednesday. McGladrey, the fifth largest accounting firm in the U.S., employs 100 workers in Washington and works closely with manufacturers.

Sancewich shared highlights from McGladrey’s 2012 Manufacturing and Distribution Monitor Report, which is a summary of 924 responses from manufacturers about their industry, including several from Washington state. This is the seventh consecutive year McGladrey has polled manufacturing and distribution industry executives.

The U.S. still has the largest manufacturing output in the world. Domestic sales at most organizations rose over the past year and are expected to keep growing in 2013. Washington is the fifth in job growth in the country and saw a significant amount of job activity in 2012.

Polish business leaders look to strengthen ties with Washington

Pawel Adamowicz, mayor of Gdansk, Poland, poses with AWB President Don Brunell, left, and Janice Jaworski of Washington Business Week, during a welcome breakfast Monday for a delegation of visiting Polish business leaders.

 “Gdansk is one of the most attractive business centers in the world.”

That was the message the city's mayor, Pawel Adamowicz, delivered Monday in Seatac during a welcome breakfast for a delegation of visiting Polish business leaders.

The group is in town to share their city's success story with leaders from such companies as Microsoft, Boeing, Weyerhaeuser and in hopes of persuading more Washington companies to invest in Poland.

They plan to visit the Microsoft and Weyerhaeuser campuses this week and also tour the Boeing plant in Everett.

They have a compelling story to share. Gdansk avoided going through a recession and businesses in the city saw decreased business costs while much of the world was in recession. And the mayor's claim is backed up by a 2009 report from KPMG identifying emerging destinations report. 

How a hundred dollar bill can change the US economy

In Wednesday's speech given before members and sponsors at AWB's Policy Summit, UPS CEO Scott Davis talked about the founding of UPS. Company founder Jim Casey borrowed a $100 from a friend more than a hundred years ago to start the company that became UPS. Davis used the visual of a $100 bill to remind attendees that despite economic challenges and setbacks, companies can still excel. The same is true for our country. 

"I think that this country that I love is at a crossroads," said Davis. "I want our elected officials in Washington DC to start running this country the way we run our companies -- with real leadership, courage, discipline, and foresight."

Davis talked about the impending fiscal cliff and tax cuts that are set to expire in January 2013 unless Congress takes action. Davis is afraid that if Congress fails to come to an agreement, it will send the economy back into recession. He also talked about the trade imbalance and how trade can be a big driver of growth.

Transportation secretary sees bumpy financial road ahead

First, the state lost the motor vehicle excise tax as a source of revenue to fund the ferry system.

Then the recession hit, leading to a drop in the number of miles people drove. Combine that with cars that are growing more fuel efficient -- and will continue to improve for many years -- and there are serious questions about how long the gas tax will be a solid source of revenue to fund transportation projects.

Finally, the federal government -- long a reliable source of transportation funds -- is expected to hold steady or even reduce the flow of funds it sends to Washington state.

Put it all together and it's leading Paula Hammond, Washington state's Secretary of Transportation, to wonder how the state will pay for its growing list of transportation needs.

"What do you do?" Hammond asked Wednesday during a presentation to AWB's executive board of directors.

Brunell: Export-Import Bank fuels trade and job growth

The Export-Import Bank of the United States isn't well known outside of the nation's capital, but it's an important part of the economy, AWB President Don Brunell writes in his weekly column.

What began with one loan to Cuba in 1935 for the purchase of U.S. silver ingots has grown into a substantial source of government-backed financing that supports export sales for thousands of U.S. manufacturers, including Boeing.

It operates at no cost to the taxpayer and in fact is returning money to the U.S. Treasury.

Unless Congress reauthorizes the bank soon, though, it will run out of funding ability, derailing pending sales of U.S. manufactured products and harming companies big and small.

President Obama has called for a doubling of U.S. exports by 2014 and recently asked Congress to reauthorize the bank and raise its lending cap, Brunell writes.

It makes sense for the nation, and especially for trade-dependant Washington state.

Brunell: Buying American products creates American jobs

With continued high unemployment, growing deficits and a sluggish economy, it's easy to think that a solution is out of reach.

But that's not the case, AWB President Don Brunell writes in his weekly column. By choosing to "Buy American," individual consumers can make a real difference.

Buying American is not anti-trade, but rather about consumer choice, Brunell says. He notes the case of Anders Lewendal, a Bozeman, Mont. contractor profiled by ABC News for building a home using only American-made materials.

Lewendal says that using just 5 percent more American products in construction projects would create 220,000 jobs. And yet the cost of his "all American" home was just 1 percent higher than homes built with materials manufactured offshore.

Former Cheers actor John Ratzenberger has become the face of the Buy American movement, and he's sounding the alarm about the shortage of skilled American laborers and craft workers that results from buying products from overseas.

It's not too late to turn things around. The Buy American movement shows that opportunities abound, Brunell writes. Even in the most dire situations.

Brunell: Thank goodness for farmers

With the holiday season nearly upon us, AWB President Don Brunell gives thanks to America's food producers, a group that leads one of the few bright spots in a persistently glum economy.

America's agricultural exports reached a record $127 billion this year and they are expected to grow another $2.3 billion in 2012, Brunell writes.

The sector got another shot in the arm last month, too, when Congress ratified new free trade agreements with South Korea, Columbia and Panama. Tariffs and trade barriers will fall as a result, and Washington state stands to be one of the biggest beneficiaries.

The trade agreement immediately wipes out a 24 percent tariff South Korea imposed on Washington cherries, reducing prices by 75 cents per pound.

It also phases out South Korea's 45 percent tariff on most apple varieties over the next 10 years and immediately eliminates that nation's 18 percent tariff on frozen potatoes.

"So while our nation and state struggle with record budget shortfalls and a skyrocketing federal deficit, it is good to start this year's holiday season with some good news," Brunell writes.

 

Canadian diplomat tells Wash. business leaders to look north

Denis Stevens, consul general of Canada in Seattle, made it clear Tuesday that Canada is ready and willing to partner with Washington businesses.

Stevens touted a long list of Canada's economic selling points during his address at AWB's Spring Meeting, including everything from low business taxes and a tech-savvy workforce to numerous free-trade agreements and an economy that weathered the recession relatively well.

"We've emerged in better shape than nearly every other economy around the world," Stevens said.

His message was aimed at strengthening what are already strong business ties between Canada and Washington state. Some statistics:

• In 2009, Washington exports to Canada totaled $5.3 billion, and imports from Canada totaled $11.8 billion.
• Canada was the state's second-largest export market after China, purchasing 13 percent of Washington's worldwide shipments. (Watch for the next issue of Washington Business for more on this topic -- due out next week.)
• Some 174,000 Washington jobs depend on trade between the two countries.

Stevens highlighted three points during his speech at Spokane's Davenport Hotel: Canada's business investment potential, the work that Canada and the U.S. are undertaking to improve perimeter security without hampering the flow of legitimate travelers and North America energy partnerships.

Lt. Gov. Brad Owen wants more diverse economy - and fewer NIMBYs

Lt. Gov. Brad Owen told AWB that Washington needs to diversify its economy in light of emerging Boeing competitors in places diverse as Brazil and China.

Owen, who spoke shortly before the announcement that Boeing won its bid to build the next generation Air Force tanker, noted the growth of Brazil's Embraer, which just opened a manufacturing facility in Florida, as well as China's development of the C919, a competitor for Boeing's 737.

Boeing realizes who its competitors are, Owen said. "The point is, we have to know this," he said Thursday at AWB's weekly Lobby Lunch meeting. "I don't think we can sit here and rely on The Boeing Company to continue to support the state of Washington for the next 30, 40 years down the road. They will continue to be incredibly important, but we need to find ways to diversify."

Owen, who was actually acting governor at the time of his visit, noted that he's now in his 35th year of public service in Olympia, counting his time in the House and Senate. As lieutenant governor, he has traveled on several trade missions, including eight or nine visits to China.

Gov. Gregoire's Keynote Remarks at AWB's 2011 Legislative Day

(Recorded: Feb. 03, 2011) Gov. Chris Gregoire’s keynote remarks at AWB's annual Legislative Day luncheon. Topics include unemployment insurance, workers' compensation, state employee pensions and education.

AWB Institute: Manufacturing and Distribution Summit (Part Two)(Video)

Greg Weeks, Ph.D. (Director of Labor Market & Economic Analysis, Employment Security Department)

AWB Institute: Manufacturing and Distribution Summit (Part One)(Video)

This is the first of two one-day summits from the Association of Washington Business Institute and McGladrey. It is taking place at AWB's offices in Olympia. Tomorrow's event is in Lynnwood (you can still register). Topics include:

• An industry and U.S. economy outlook
• The impact of global activity on profitability
• Cost management
• Demand for "green" products and processes
• What employee skills manufacturing and wholesale distribution companies are seeking and where they're recruiting

Speakers

Tom Murphy, executive vice president of manufacturing and wholesale distribution, McGladrey: Murphy is a 25-year veteran in the industry and national practice leader. He shares his views on the latest industry trends, and reviews highlights from an annual survey conducted by McGladrey this spring.

Greg Weeks, labor market and economic analysis director, Washington State Employment Security Department: Weeks provides insight into the Washington economy and an out industry outlook from a workforce perspective.

Brunell: Selling America to China

China is pumping billions into the Greek economy, bailing out an over-extended nation and raising alarm among some Europeans about China's plan to flood their markets with cheaper Asian imports, AWB President Don Brunell writes in his weekly column.

The Greek government views it as a necessity, however, even though the money comes with strings attached, including demands that it take on its powerful unions to eliminate inefficiencies and improve productivity.

"Before Americans get too smug and dismiss what's happening as just a European problem, they should realize that we're on the same path," Brunell writes.

Ninety percent of the 440,000 jobs created in the U.S. last month were government jobs. Public and private-sector unions fight even the most modest efforts to privatize government services.

At the same time, the U.S. Treasury continues to borrow from cash-rich countries, including China.

"Do we have the political will to reverse course and avoid the same fate as Greece?" Brunell asks. "Or will we sell America's sovereignty to China in exchange for a bailout?"

Read the full column here.

Brunell: 'Buy America' sounds good ... until you dig deeper

 

There was a time when the patriotic call to "Buy American" made sense, but that time has long since passed, AWB President Don Brunell writes in his weekly column.

Although it's aimed at supporting American workers and companies, protectionism ends up hurting America because today's manufacturer's are international. He cites Campbell Soup and Boeing as examples of companies that depend on cross-border trade with Canada - companies that would suffer if that trade was curtailed.

"The fact is, the world's economy is all interconnected," Brunell writes. "The North American economy, especially, is highly integrated, and whatever actions government takes on one side of the Canadian border causes and equal if not greater action on the other side."

Washington Wine in Hong Kong

Update: Today's Seattle Times includes an editorial on Hong Kong's interest in Washington wines and wine tourism.

Hong Kong's Commissioner of Economic and Trade Office in Washington, D.C., is looking for ways to attract more Washington wine to Hong Kong.  Donald C K Tong J.P, met with AWB to discuss trade and business opportunities while he was in Olympia on May 26.  He is particularly interested in wine and wine tourism.

Hong Kong is a 427 sq. mile part of China with 7 million people.  Hong Kong is one of the world's leading financial centers. Its highly capitalist economy has been ranked the freest in the world by the Index of Economic Freedom for 15 consecutive years.

Currently, the Washington Wine Commission is working with Hong Kong to sell more wine to Hong Kong.  Given Washington's population is 6.5 million and passion for wine (and coffee),there should be plenty of opportunities for Washington wines (and coffee) in Hong Kong.

I'll be meeting with Commissioner Tong again on June 10.

Don C. Brunell, President (DonB@awb.org)