Exports Keep Factories Rooted in South Georgia
An aircraft manufacturer teaches maintenance to a visitor from Cameroon. A chemical firm affixes Portuguese labels to Brazil-bound tubs. Across town, posters at a health products factory pitch their soothing powers in German.
All of these stories were playing out during a recent Global Atlanta tour of Albany with Next Generation Manufacturing, the southwest Georgia city better known for its fields than factories.
Here, MillerCoors beer is brewed, Mars chocolate is mixed and paper products are produced for consumer giant Procter & Gamble. But southwest Georgia has seen some factories flee overseas, and its host of smaller manufacturers are now learning the duality of the global economy with which local farmers of pines, pecans and peanuts have long been acquainted. On one hand, international integration brings more customers. On the other, it means increased competition.
Exports have become the lifeblood of Thrush Aircraft Inc., a company that could be considered new relative to its long history. In 2003, investors acquired the Albany factory and assets of the defunct Ayres Corp., which had made multiple models of Thrush’s agricultural spraying aircraft in a 227,000-square-foot building next to the Albany airport.
The firm’s renaissance has led to 180 current jobs, and plans are under way to bring 100 more over the next few years with the addition of a production line backed by a $200,000 job-creation grant from the Albany Job Investment Fund, a city program.
The city has buyers all over the world to thank.
“Eighty percent of our business is outside the United States, so exporting is everything,” said Payne Hughes, Thrush’s president, who in an interview highlighted efforts to diversify the company’s product mix.
While its planes have traditionally been used to apply fertilizers or pesticides across wide swaths of farmland, they can do much more than cropdusting (a practice the industry now prefers to call “aerial application”).
Thrush has designed a new gate-box attachment to help douse forest fires, giving owners a newfound versatility that could help justify the cost of a plane, which can run from about $700,000 to $1 million. It’s also building planes purposed for military surveillance, a product that caught the eye of the United Arab Emirates. The Middle Eastern nation ordered 24 of what some have called “militarized crop-dusters.” After being built in Albany, they’re shipped to IOMAX in North Carolina to be turned into Archangels, outfitted with assets like precision optics and missile systems.
“They’ve got more electronics in a plane than you can shake a stick at,” said Mr. Hughes, who added that they monitor borders with more flexibility and less upfront investment than unmanned aerial vehicles, also called drones.
Of course, cropdusting hasn’t gone away, especially as farms grow bigger and become more mechanized around the world. Spraying is banned in Europe, but it’s common on the banana farms of Central America and in the sugar cane and soybean fields of Brazil, a burgeoning market where Thrush has sent planes painted with green and yellow of the South American country’s flag.
“The agricultural industry is going very high-tech, and as it does get more high-tech, our products will get more and more high-tech,” he said. The firm doesn’t disclose revenues, but Mr. Hughes said they’ve doubled over the last five years.
China is also getting into the act: In July 2013, 20 Thrush planes were purchased by a state-owned company in the northeastern city of Harbin as part of a $55.6 million package that included U.S.-made tractors, combines and helicopters.
Overcoming Hurdles
But Thrush and others have found that reaching abroad isn’t always easy, and one problem is financing the orders when they come in.
Thrush’s China deal was backed by the Export-Import Bank of the United States, which provides credit to foreign buyers of U.S. goods, insures transactions and guarantees export loans by private banks and companies. The bank has been the subject of heated debate in Washington over the last year. At the end of June, Congress let its charter expire. It’s still limping along while awaiting a reauthorization vote, servicing existing loans without the ability to extend any new credit or guarantees. Some senators have said a highway bill coming up for a vote at the end of July would be a logical place to tack on Ex-Im for a vote.
A tell-it-like-it-is Georgia conservative, Mr. Hughes doesn’t seem like one to back an institution some influential Republicans have derided as a conduit for corporate welfare. He says he’s all for less government but that Ex-Im has plugged a gap in the private sector, insuring deals in places like Kenya, where Thrush first used Ex-Im in 2010. Buyers in such markets don’t have the same capital sources, and private banks and financiers can’t provide insurance for orders over $1 million.
If that weren’t enough, Ex-Im simply matches what other countries are already doing, he said.
“If we don’t do it somebody else will,” Mr. Hughes said.
Another Albany exporter, SASCO Chemical, takes a similar stance on the bank.
“Whether you fundamentally agree with the program or not, the U.S. cannot be the only country without this program. There are currently 67-ish other countries with the same program that U.S. manufacturers compete against every day. One thing we cannot have in the current times is the government taking tools away that makes us competitive,” said Marc Skalla, president of SASCO.
SASCO has been lauded for its use of state and federal resources to boost global trade, which the company says has supported growth at home. SASCO has a research center in Macon, a global sales center in Atlanta and an expanding manufacturing base in Albany.
SASCO’s main product is PolyCoat, a chemical used to keep rubber from sticking to machines used in tire manufacturing. In 2011, the Georgia Department of Economic Development helped introduce the company to the Mexican market, leading to a huge increase in sales there. Last year, SASCO received the President’s E Award for Exports from the U.S. Commerce Department. The current director of sales, Ed Juline, was recruited from a position Mexico.
Now, about 10 percent of the company’s sales go to places like Brazil, South Africa and Central America, and its export proportion is growing despite international headwinds, Mr. Skalla said.
Even before Ex-Im’s expiration, the company was hit by the dollar’s appreciation against both the euro and Brazilian real, which made SASCO’s products more expensive for buyers and gave a relative cost advantage to its main competitor, a European firm.
Meanwhile, SASCO was investing in boosting competitiveness at home. It launched its own trucking arm to gain more control over logistics, and it’s now finishing out a 40,000-square-foot factory in Albany, just a few streets over from its current Pine Avenue complex. That facility will support two new product categories: colorants for mulch and an anti-adhesive agent used in engineered wood production.
“We are always innovating at home in a search for continued diversification,” Mr. Skalla said.
Arguing for ‘Made in the USA’
While SASCO is an independent, family-owned firm, some other local manufacturers have had to prove themselves in a broader corporate context.
International pharmaceuticals giant Pfizer Inc. operates under the same 200-acre roof as Procter & Gamble’s massive Albany facility, but the two plants are separated by a wall representing the corporate lineage of the ThermaCare line of heat wraps.
Pfizer inherited the product when it acquired Wyeth, which had bought it from P&G. ThermaCare represents more than $100 million in annual sales for Pfizer’s consumer health care unit, and Albany is the only place in the world ThermaCare is made.
Jim Donovan, site leader in Albany, said ThermaCare is now available in 25 countries, and outside the saturated U.S. is where it’s is seeing the most growth. New releases of menstrual and flex-use wraps in Germany are shattering forecasts. Demand continues to build in international markets with recent launches in Russia, and multiple Mediterranean and Middle Eastern countries are set to see ThermaCare introduced this year.
But that international success cuts both ways: The more sales move abroad, the more the factory has to prove to company executives there is no better “central hub” for production than Albany. In the face of global competition, employees understand how important it is to keep things efficient at a factory that cranks out 50 million wraps per year, Mr. Donovan said.
“Theres’s a significant amount of engagement to ensure everyone puts in their efforts to ensure the site remains competitive,” he said, noting accolades the plant has won within the Pfizer system for employee engagement. “Everybody knows that there’s a constant external threat.”
Pfizer is a prime example of how global brands can compete from Albany, says Barbara Rivera Holmes, vice president of the Albany-Dougherty Economic Development Commission and interim president and CEO of the Albany Area Chamber of Commerce.
“Aside from being relevant to the consumer, industries need to be innovative, efficient and profitable, and from Albany, they can be. Low overall costs of doing business, partnered with a talent pool from which to draw and the infrastructure to move product, allows Albany industries to compete with their corporate peers and with other industries,” she told Global Atlanta.
The community is also getting its 15 biggest manufacturers to talk to each other through an industry roundtable where they gather each month to share challenges and best practices. The sessions also allow them to speak with one voice to economic development community.
“It’s an incredible program in that it harnesses the scale of industry to say, collectively, ‘This is what we need’ or ‘This is how we can give back,’” Ms. Holmes said.
As for exports, the community connects its companies with resources at the state level: The Georgia Department of Economic Development operates 11 trade and investment offices in 10 countries worldwide.