Global Midwestern Companies Have Healthier Bottom Line
** New study from HSBC reveals that highly international businesses in the
region were three times more profitable than their domestic peers**
NEW YORK -- November 7, 2013
In the past six years, Midwestern companies with high international sales and
operations were about three times more profitable than their more domestic
peers, according to a new report by HSBC Bank USA, N.A. (HSBC).
Findings from the report ‘HSBC Spotlight on U.S. Trade: Midwest’ show that
highly international Midwestern companies had an average profit margin of nine
percent while their less international peers had an average profit margin of
about three percent during a six-year period between 2007 to 2012.
Furthermore, highly international Midwestern companies demonstrated more
consistent performance over the six years. Following the onset of the
recession, these companies maintained healthy profit margins that never fell
below seven percent, while profit margins at low international Midwestern
companies dipped into the red before recovering in 2009.
“The report clearly shows that a diversified geographic customer base or
operations have an impact on business performance,” said Steve Trepiccione,
Senior Vice President and Managing Director, Head of Midwest Region,
Commercial Banking at HSBC. “Highly international Midwestern companies were
able to insulate themselves from domestic market fluctuations throughout the
past six years and remain consistently profitable.”
The HSBC report analysed the level of overseas sales and operations at leading
U.S. publicly listed companies based in the Midwest and across the nation to
understand the impact of internationalization on business profit margins by
region and select sectors, including consumer goods, healthcare, industrials,
and information and communications technologies (ICT). Companies examined in
the Midwest report included leading public companies in Indiana, Illinois,
Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio,
South Dakota and Wisconsin.
According to the report, Midwestern companies had the second highest average
profit margins and the third highest level of internationalization compared to
companies in other U.S. regions. Companies in the Midwest also had the highest
average percentage of international sites (50 percent) compared with other
regions. Still the region takes a backseat to other parts of the country in
sheer export terms. The national export average is 12 percent of GDP while
exports in the Midwest range from 12 percent of Michigan’s economy to just 4.5
percent of South Dakota’s, according to the Business Roundtable.
Consumer Goods Lead Midwest Growth Potential
Companies in the consumer goods sector, which dominate the Midwest sample in
the report (nearly 52 percent), have benefited from global trade. In fact,
highly international consumer goods companies were twice as profitable as
their domestically-oriented peers (eight percent vs. four percent).
According to the latest HSBC Global Connections Trade Report, U.S. business
leaders see Latin America as the most promising region for export trade growth
in the near term, followed by China.
“The buying power of emerging economies holds great potential in not only
buffering consumer goods companies from the fluctuations of the market, but
also in satisfying an appetite for U.S. brands and goods abroad,” said
Trepiccione. “More Midwestern companies may want to consider expanding abroad,
and with the help of HSBC’s global footprint, heritage and expertise in
connecting customers to international opportunities, they will find the
support they need to build their cross-border trade activity and business.”
In July 2013, HSBC announced a $1 billion, 18-month dedicated loan program for
small and medium size U.S. businesses looking to export or expand
internationally, to help companies find global growth opportunities and to
boost U.S. economic growth.
About the HSBC Spotlight on U.S. Trade
Conducted by the Economist Intelligence Unit, the ‘HSBC Spotlight on U.S.
Trade’ is a series of reports and analyses of select publicly-traded companies
in key regions across the U.S. that investigate the relationship between
international activity – specifically operations and sales – on company
performance between 2007-2012. The reports are based on a sample of 259
publicly listed U.S. companies, in four sectors and five regions which were
categorized as having high or low levels of internationalization. For more
information or to download the full report, visit:
Notes to editors:
HSBC Bank USA, National Association, with total assets of $183.9bn as of 31
March 2013 (US GAAP), serves 3 million customers through retail banking and
wealth management, commercial banking, private banking, asset management, and
global banking and markets segments. It operates more than 250 bank branches
throughout the United States. There are over 165 in New York State as well as
branches in: California; Connecticut; Delaware; Washington, D.C.; Florida;
Maryland; New Jersey; Pennsylvania; Oregon; Virginia; and Washington State.
HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect,
wholly-owned subsidiary of HSBC North America Holdings Inc. HSBC Bank USA,
N.A. is a member of the FDIC.
HSBC Bank USA, N.A.
Laura Powers, 212-525-0115
Press spacebar to pause and continue. Press esc to stop.