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Friday, April 16, 2021

The Fort Worth brand? International trade prospects are bright despite looming concerns

With NAFTA renegotiations, BREXIT tensions and presidential threats of sanctions and tariffs, it might seem like an inauspicious time for Fort Worth to raise its international profile.

But at the Mayor’s International Luncheon on Wednesday, Nov. 1, Mayor Betsy Price and three area leaders involved in international trade said the city’s profile already is high and can be higher.

One of the speakers was Raanan Horowitz, president and CEO of Elbit Systems of America, a subsidiary of Israel-based Elbit Systems Ltd., celebrating its 25th anniversary in the U.S.

Based in Fort Worth, it employs 700 locally and 1,600 nationwide, making technology-based systems for defense and commercial applications, including Lockheed’s F-35 project.

Elbit is working on an unmanned aerial vehicle project currently doing testing in North Dakota. But Elbit is also working with Texas A&M and considering a Texas venture with the project.

“Regulations will have to change and some other things, but we really want to pioneer using this as a commercial venture to provide services to farmers and energy companies and utilities for disaster recovery and so forth,” said Horowitz. If they decide to do it Elbit plans to locate the venture in Fort Worth, Horowitz said.

Price was pleased to hear that, which fit right in with the message of the luncheon.

“That would be fabulous,” she said. “And North Dakota? It was 19 [degrees] yesterday in North Dakota with wind chill. I happen to know because my husband was crazy enough to be hunting in North Dakota.”

Others on the panel were Maria Mejia, senior vice president and chief financial officer of Ulterra, a fast-growing drill bit company, based in Fort Worth with more than 300 employees worldwide, and Phil White, founder of Cervelo Cycles of Toronto, Canada.

Here are some excerpts from the discussion:

Price: What do you think the future of international business looks like, particularly in relation to the nationalist movement with Brexit, the redo of NAFTA?

Horowitz: I’ll look at it from a short-term perspective and a long-term perspective, and I think those are two different perspectives.

Short-term, you have disruptions and discussion about things like border attacks and the tariffs and treaties, I think it can have a negative effect.

You mentioned, Betsy, the amount of trade we do here from Texas and other places and we don’t want to disrupt that.

I think in the long-run, my belief is that a lot of those things cannot counter the macro market forces and businesses like us, or any businesses are looking for strong markets, vibrant markets.

An example: Texas and the DFW Metroplex is a vibrant and growing market. So, in the end, those metro dynamics market forces of trade, supply and demand, I think [those are] going to overcome the short-term tendencies of protectionism and barriers to trade.

I’m generally very optimistic. I think it’s a cycle. I think we need to stay on course. We need to make sure we develop ourselves as an attractive market. This is a good place to do business. And I think businesses will come.

Mejia: I think, as Raanan was saying, this is probably going to lead to companies like us bringing more product back to the U.S. and maybe manufacturing more in the U.S.

But, it may generate also some counter tariffs for countries that we do quite a lot of business with.

Maybe in the mid-term, the solution would be companies like us where we are forced, or we have to establish more repair facilities, or smaller presence in other countries, because if we become national, and we start putting up barriers they’re going to put up barriers.

We’re already seeing some countries starting to demand more local content, that we put more plants in different places. NAFTA for us has been – we’re net exporters to Canada and Mexico – so anything that prevents us from exporting an American product is only going to force us to continue to expand plants in other places.

I think it will allow us to continue to serve local markets. You’re not going to pull back from the market where you are successful, but we we’ll find a way to do business. I think international trade treaties are a critical part of our success.

White: The world is changed since we started. We were the last mid-sized or larger American-based bicycle manufacture to go overseas for production.

And you look back and you know, in 2000, the Chinese manufacturing wage was 2 percent of the American wage. But right now actually in 2016 I think it reached cost parity. Not wage parity but cost parity.

So, the game is totally different now. The manufacturing that has moved off shore has actually come back to America. North America being Canada, the U.S. and Mexico together. The jobs haven’t come back because we’ve automated a lot of them.

I think the challenge now is not to say that the problem is what we’re going to do about the Chinese; the problem is how are we going to take care of those workers that have been displaced out of their former manufacturing jobs.

I think that’s the real challenge that maybe as a government that’s what we should be focusing on.

But clearly, I’m a free trader. We built a business on a global model. We said we couldn’t survive just on the local model. We had to go global to make it work.

And I think everyone sees that the world is global. You can source globally, you can sell globally, it’s really easy. This is just going to make it more difficult, I think, for both sides of the thing, for companies outside the U.S. and also inside the U.S.

Horowitz Thinking about what my colleagues here talked about, especially in aerospace and defense, it is not new. When we do business, when Lockheed does business, or Bell, they want to do business in India, or in Brazil, or anyplace, there are much stricter requirements to transition technology and open facilities.

This is not new. … We focus on America first as if it’s something new, but a lot of countries have done the same thing.

I think the challenge for the business community and the opportunity, is to use it as a force multiplier.

If you have technologies and capabilities and you can make yourself more attractive to international countries and partners and say, “I’m going to help you build some of your industry, as long as you buy stuff from me, as long as you invest in me,” I think that’s actually a force multiplier. The secret to that is having businesses and industry that have high valuated capabilities.

It’s very hard to do this with commodities, because with commodities if you go and outsource internationally, you just give the whole thing away. But if you produce … a helmet mono display system like we do, there’s a lot of elements of value there, and you can share some of that and gain a lot of capabilities.

Other nuggets from the discussion:

Fort Worth strengths and weaknesses:

Horowitz: You know the people here are one of the biggest assets. The community is welcoming. The community is friendly. I have facilities in other places in the United States, especially in the northeast, and it’s just different. I’ll leave it at that. OK?

Mejia: From a weakness perspective I would say, I would hope that with these efforts that the chamber, and you guys are doing is that we build a little bit more of a brand on what the city is actually about.

You have Silicon Valley and all the technology companies go there. You have Houston and all the energy companies that go there. So, companies can also see it themselves from the brand of the city.

Trying to get a clear communication and a clear message to the world in general: What are we about? What kind of businesses are we looking to attract? I think is something we can definitely continue to work on.

White: This is a fun city, and people are fantastic. It’s very inviting. If you’re trying to convince someone to move here, it’s a livable city with great people that you can make easy friends with. That’s not the same in a lot of places in the world.

I think that’s a significant advantage. I don’t know how you leverage it, but you’ve got to get that story out because right now, as a statement of fact, I would say the perception of America is that it’s not that inviting, that it’s more xenophobic, and it’s not looking forward.

But you’re all of these things. So how do you get your message out that we’re inviting, diverse, looking forward, and a great place to be that’s a very livable city?

The Mayor’s International Luncheon was put on by the Fort Worth Chamber of Commerce at the Cendera Center. The presenting sponsor was Frost.

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Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

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