Southeast U.S. companies that operate facilities and conduct sales abroad make more money on average than domestically oriented firms in the region, according to a new study by HSBC Bank USA.
A study tracking 35 publicly traded companies in Florida, Georgia, North Carolina and South Carolina from 2007-12 showed that those with a more international orientation had average profit margins of 3.5 percent compared to a -1.2 percent margin for companies with “low internationalization.”
The disparity in the region closely tracked the results of the national study of 259 companies, which concluded that companies looking to boost growth should seriously consider getting outside the U.S. borders.
The report’s observations about the Southeast cut both ways.
On one hand, the region was praised for having an economy that has historically been more globally integrated than many realize.
“From the time European settlers planted the first cotton fields and cultivated tobacco, global interest in Southeastern products has buoyed its economy,” reads the report, which was conducted by the Economist Intelligence Unit with HSBC funding.
The South was also highlighted for its emerging auto and aerospace clusters, with every major Asian car maker and many European ones setting up factories in the region in recent years. This could “presage a manufacturing renaissance in previously economically depressed areas,” the report noted.
In terms of global sales, though, the Southeast was “the real regional laggard.”
Companies in California, considered a region for the purposes of the study, got 43 percent of their revenues from abroad, while the Southeast came in last at just 25 percent.
The report profiles Coca-Cola Co.‘s growth as the world’s premier international brand and examines how Old Dominion‘s rail service and Delta Air Lines Inc.’s Atlanta air hub connect the South regionally and globally.
While the south boasts cheaper labor costs than other manufacturing regions, the region must address educational challenges to ensure its continued competitiveness, the report said.
Read the full report here.