Global Trade Peoria

A few years ago, a man drove to Peoria from Chicago, walked into my office at Axis, Inc., and handed me a bar napkin on which he had sketched a motorcycle. Not just any motorcycle, but his vision of the most powerful superbike ever to be manufactured in the United States.

We had an engineer in our New Delhi office with experience in motorcycle frame design for Komatsu and an engineer in our U.K. office who had been with BMW Motorcycles in Germany. We agreed to design the bike. At 6am, three times a week, we had a regular conference call to coordinate our activities around the world and make sure our designs maintained the rakish profile the French designer later recommended. We never met face to face as a group. The bike is now being manufactured in Maryland and is a big hit in Australia and Indonesia.

The way we design and manufacture in the U.S. has changed. Change can be unsettling, but if you live in the Tri-County Area, these changes represent new opportunities.

Decades ago, American manufacturers started migrating to the rural areas of the United States. It might have been because of organized labor, but then again, after World War II, our government funded the complete industrial rebuilding of Germany and Japan—anyone buy an American-made TV lately? In any case, competition from abroad was increasing and American industry was lured by inexpensive, if inexperienced, labor and tax breaks given by states in need of employment opportunities.

Now comes the challenge of China, and once again, U.S. industry begins a migration to cut costs. This time it is different. This time, U.S. industry has discovered something more important than low wages. In the case of manufacturing design, we moved offshore in the wake of our clients to save costs, but now, like the major international manufacturers, we operate offshore for the talent.

There is a lot of talk about why the U.S. is losing business to Asia, but the real problem is the failure of the U.S. education system. The United States graduates a paltry 70,000 engineers a year. India graduates 240,000 a year and China even more. We are losing the intellectual war—not because our students aren’t smart or because our professors can’t teach, but because, and I quote, “Engineering is too hard.” The U.S. isn’t alone. Europe is facing the same problem. U.S. outsourcing isn’t going to Germany, famous for its precision, or to France for innovation, it is going to non-industrial countries whose workforces have little industrial experience.

On the face of it, it just looks like a rerun of U.S. industry’s flight to the south. They do have cheap labor rates, but what they also have is an understanding of the need for technical education. This means that instead of U.S. industry eventually returning production to the U.S. as wages abroad reach parity, they may very well stay offshore.

Having made this unsettling observation, I have to point out an asset that makes Peoria the appropriate place from which to conduct international business during these challenging times. Bradley University attracts students from India and the Middle East; students willing to study engineering. The university has done more than attract engineering candidates—Bradley’s Amir Al-Khafaji has put Peoria on the international map for major construction. His International Construction Innovations Conference several years ago attracted high-ranking government officials and managing directors of the largest construction firms in the world. Ra Global Ltd., a Tri-County firm providing construction management in the Middle East, is a relatively obscure company. As president, I hardly register on the world scene, and yet, because I operate from Peoria, I had breakfast with the Iraqi Ambassador and his wife and lunch with the chairman of The Arab Contractors—60,000 employees.

Bradley not only provides engineers and high-level contact opportunities, Bradley’s Jim Foley manages the Small Business Development Center and the International Trade Center to help local firms export around the world. Peoria has over 100 foreign-owned and operated firms. There are 18 from the U.K., nine from Canada, 13 from France, nine from Germany, one from Belgium, six from Luxembourg, 15 from Switzerland, 12 from Japan, seven from India, and the list goes on. Peoria is a very international city indeed.

Rainson Associates received a call from its affiliate in Paris (CCR Ltd). A European firm wanted to build electrical equipment for sale in the Americas, but it had to be mounted on steel—and steel is heavy and costs too much to ship from Europe. Bradley’s International Trade Center suggested some Mexican banking contacts in Chicago and, through them, we found a Mexican firm that could fabricate the steel. Now the heavy equipment need only be shipped across the border instead of across an ocean.

One can argue that Peoria could be better located—near a larger international airport or closer to a major city—but advancements in communications have significantly reduced the distances between international players. I can tell whose computer is on at any of our offices in India or the U.K. If I want to talk to them, I simply click on the illuminated icon on my desktop and I hear their voice. More importantly, drawings that a few years ago would have taken days to download from my computer can now be shared in seconds.

Bradley, the local Chambers of Commerce and a supportive local government make a difference, but the elephant in the room is Caterpillar. Most people would recognize Caterpillar as an international firm and perhaps describe them as a U.S. company with operations around the world, but that description is out of date. Caterpillar has become a truly international firm with their production facilities and even their design engineering located all over the world and functioning seamlessly. It was once said that if it would “play in Peoria,” it would play anywhere in the country. I think now if it will “play in Peoria,” it will play anywhere in the world.

Posted by Ronald Rainson
Rainson Associates LLC
www.rainson.com

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