Posted on Mon, May. 12, 2008

Even before the economy reached what many believe is a recession, it had slowed way down, depressing sales growth for many companies.

But for companies with international sales, the picture is not so difficult. Many economies around the world are outperforming the U.S. in growth. Gross domestic product growth in the European Union last year was 2.6 percent, for example, and 11.5 percent in China, compared with anemic growth of just 1.9 percent in the U.S.

And with the dollar weak, the demand for U.S. goods and services is even greater.

“The good news about the decline of the dollar is our exports have significantly increased,” said Michael Stellern, an economics professor at Rockhurst University who focuses on global economic issues. “The increase in revenue from exports is certainly welcome when domestic revenue may be slowing or decreasing because of the economic slowdown.”

At Overland Park-based YRC Worldwide Inc., one of the world’s largest transportation service providers, revenue from overseas operations has about doubled in the last five years and is approaching $1 billion, roughly 10 percent of the company’s total revenue.

“In a recession, it’s really important to focus on growth segments,” said Bill Zollars, YRC’s chairman and chief executive officer. “The companies that have bigger international footprints have tended to do better in the last 18 months, because international growth has offset weakness in the United States.”

Zollars said the fastest-growing segment of YRC’s international business is in China, where the company now derives about $400 million a year in revenues.

“We’ve made money every year we’ve been there, and this is the sixth year,” he said. “It’s not only good revenues, but a profit generator as well.”

YRC reported in March that its logistics subsidiary would start offering freight forwarding services in Mexico. Last month YRC Logistics announced the opening of a new office in Buenos Aires, Argentina.

International operations are not without their pitfalls. Doing business in other countries requires expertise in navigating currency exchange rates, for example.

“You’re always trying to manage the currency values,” Zollars said.

But he said the cost of doing business in China is so much lower than in the United States that “even a significant change in currency value doesn’t have much impact on our business there.”

North Kansas City-based Cerner Corp. saw its international revenue grow 10-fold over the past six years, to more than $290 million in 2007. That represents 19 percent of total revenue at Cerner, a leading provider of health-care information technology.

“We expect in the next two to three years that it will be as much as 25 percent of our revenues,” said Trace Devanny, Cerner’s president.

Driving that growth is the universal need for health care, Devanny said. Countries around the world need information technology to improve quality, safety and efficiency in the care they provide.

“I would never say we’re recession-proof,” Devanny said. “But we are less impacted directly by some of the global economic issues. People get sick, and they have to be taken care of.”

Cerner now operates in 16 countries outside the United States. Its highest-profile overseas endeavor is its participation in a $24.5 billion project to computerize health records and automate clinical processes for England’s National Health Service.

Cerner said in a financial filing that it had a 40 percent increase in global revenue in 2007 and that its work on the NHS project had generated one-third of that. The project has experienced some delays and drawn some criticism, but Devanny said Cerner is optimistic about the long-term outcome.

Devanny said Cerner is one of three finalists competing to supply information technology to the health system of Paris. Cerner recently landed its first contract in Africa with a children’s cancer hospital in Egypt, and it will enter the South American market this year.

“We very carefully consider our next move before we enter a new market,” Devanny said. “And we have never entered a market and left that market.”

Cerner has looked at the possibility of doing business in China but is not yet prepared to venture there, Devanny said.

Besides the obvious need to adapt software to incorporate Chinese characters, the Chinese use some traditional medicine practices that currently fall outside of the company’s experience, Devanny said.

“And I think one of the more important cultural points is that China is not forgiving,” Devanny said. “You better be really good when you get there, because if you make mistakes and fail, that’s a loss of credibility that’s difficult to overcome.”

At Garmin International in Olathe, North American revenue grew 89 percent to $2.1 billion in 2007. By comparison, European revenue grew 63 percent to $969 million.

That was somewhat of a switch from the previous two years, when the growth rate of European revenue exceeded that of North America. Spokesman Ted Gartner explained that Garmin’s personal global positioning devices became popular in Europe before they did here and that the company now is making greater inroads in North America.

Gartner said Garmin also sees great potential for growing sales in Asia, where its revenue grew 66 percent to $144 million last year.

“Asia for us is an emerging market,” he said.

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To reach Julius A. Karash, call 816-234-4918 or send e-mail to jkarash@kcstar.com.