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Small businesses turn to outsourcing for growth

Jennifer Collins Jan 2, 2012

Stacey Vanek Smith: One thing we’ll be hearing a lot about this election year is ways to grow the economy. Small businesses are looking for their share of the action, but could that have unintended consequences?

Jennifer Collins has more.

Jennifer Collins: Jared Carr’s family owns Osagian Canoes in Lebanon, Mo. Carr has always wanted to export more of the boats. The trouble was — the shipping added $500 to a $1,000 canoe.

Jared Carr: With our canoes, you can’t really fold them up. I wish I could create the one that was like the Jetsons’ car.

So, instead of making a canoe that collapsed into that briefcase George Jetson carried to work, Carr hired a small manufacturer in Denmark to do the finishing work.

Carr: By not welding them together, we’re able to stack them up in hundreds and two-hundreds where we can actually ship them and make it cost-effective for the end user.

And it puts Osagian among the ranks of the 250,000 U.S. small businesses that bring in $500 billion a year through exports.

Karen Mills: Small businesses are the fastest growing part of exports.

Karen Mills is the head of the Small Business Administration. Her agency — along with the Commerce Department — advises small businesses to access loans and trains them to tap into overseas markets. Osagian attended a training last year.

Mills: More exports means more American jobs.

But it may mean sending some jobs overseas. Dante Di Gregorio teaches international trade at the University of New Mexico. He says there’s a fine line between exporting and outsourcing.

Dante Di Gregorio: In the process of developing export ties, most international partners want to see it in both directions.

Chile buys mining equipment from the U.S., but Chilean workers put it together. South Korea buys high-tech equipment from the U.S., but it’s installed by Korean engineers. He says that kind of activity is a good thing.

Di Gregorio: Trade is a two-way street and there can be direct benefits to the U.S. from certain outsourced activities.

Osagian hires at least two workers in Missouri for every person in Denmark.

I’m Jennifer Collins for Marketplace.

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