How the Global Middle Class Can Save the American Middle Class

Here's the game plan: Hire over here, sell over there. More companies are creating jobs by taking advantage of rising global wealth -- and we should be cheering them on.

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Reuters

Last week, 41 American companies received awards at a little-noticed White House ceremony. Despite the recession, the companies -- most of them small and medium-size businesses -- have experienced rapid growth and handsome profits in recent years. And they've beaten Chinese, Indian and European competitors at their own game.

How? By selling to a burgeoning global middle class expected to grow by 1 billion people -- primarily in Asia -- over the next decade.

Zippo Manufacturing Co, the maker of the iconic American cigarette lighter, has experienced 1,000 percent sales growth in China over the last 20 years and 900 percent growth in India over the last eight years. While other American companies have shed jobs, the 650-employee, Bradford, Pennsylvania-based company has added 150 jobs in the last three years and experienced a 20 percent increase in sales, most of it overseas.

"It's tough to compete, but we're doing it," said Greg Booth, the company's president and CEO, referring to cheap lighters manufactured in Asia. "We're competing in a category that is under incredible pressure."

WORKING HERE, SELLING THERE

DSC Dredge, a small, Louisiana-based builder of dredges, has increased its overseas sales by 1,300 percent over the last 10 years and nearly doubled in size from 80 to 140 employees. Their biggest overseas customers? Nigeria and Bangladesh, countries that Americans think of as impoverished but are experiencing significant economic growth. The firm's overseas sales have risen from $1.4 million a year in 2002 to over $20 million last year and make up 65 percent of its business. Charles Sinunu, the director of international sales, said the firm just sold three dredges to Russia and sells to 48 countries worldwide.

"It's become something where it really wasn't a big deal 10 years ago, and now it's a huge deal," he told me. "Right now, we have a record backlog of business and are actively trying to hire additional people."

And OSIsoft of San Leandro, California has done the seemingly impossible. While other companies have outsourced programming and technical work to India, the $300 million business software firm has grown from 150 to 750 employees in the last six years. Where are its new customers? In 110 countries around the world. Where are nearly all of its employees? Inside the U.S.

"We basically came to the conclusion that the cost of software development outside the U.S. is more expensive," said Nand Ramchandani, OSIsoft's director of business development and government affairs. "We just can't afford to have negative experiences. We'd rather develop that in-house."

A rough pattern emerged in interviews with senior executives of five of the 41 winning firms, which sell everything from vitamins to "waterless urinal technology" to oilseed presses. The rise of middle classes in China, India and other developing nations was not the death knell of the American middle class, they said. Instead, it represents an opportunity for American businesses that are willing to adapt.

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David Rohde is an investigative reporter for Reuters and a contributing editor for The Atlantic. A two-time winner of the Pulitzer Prize, he is a former foreign correspondent for The New York Times and The Christian Science Monitor. His latest book, Beyond War: Reimagining American Influence in a New Middle East, was published in 2013. More

He is also the author of Endgame and, with Kristen Mulvihill, A Rope and a Prayer. He lives in New York City.

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