CASE STUDY: Tierra Dynamic

THE COMPANY

J. Dan Kelley is chief executive officer of Tierra Dynamic, a Phoenix-based environmental firm specializing in removing toxins from soil and water. Kelley’s firm cultivates bacteria that occur naturally, and a special process induces them to eat spilled hydrocarbons at an accelerated rate. “We increased their appetite,” says Kelley. Tierra Dynamic has negotiated the rights to another patented technology that destroys PCBs (polychlorinated biphenyls)—a particularly lethal source of carcinogens.

THE CHALLENGE

A few years ago, Kelley and his 30 employees set their sights on entering some emerging markets. The move was a matter of common sense. The U.S. environmental industry is very competitive. In contrast, Kelley says, “The environmental industry is new to many developing countries, and we can compete better over there than we can in more developed countries.” He explains that competitors with similar technologies tend to be bigger firms for which a $300,000 contract isn’t worth the effort. “There’s a big void in the market, and we’re happy to fill it.” But Tierra needed guidance.

THE SOLUTION

With help from the U.S. Commercial Service, Kelley’s international business has gone from nothing to 25 percent of annual revenues. In the process, his key assumptions about the viability of developing markets were challenged.

Tierra Dynamic began its international business in Latin America and Southeast Asia in the late 1990s. Those markets were booming at the time but soon experienced recession and currency devaluation. Business, which began well, evaporated not only because of economic conditions but also because countries in those regions lacked laws requiring companies to clean up their environmental messes and lacked the basic infrastructure that needed cleaning, such as sewage systems.

Faced with an unacceptable level of uncertainty, Kelley headed to Western Europe, where the legal system recognizes third-party liability for environmental damage. He participated in a Commercial Service trade mission to Italy and Spain. Encouraged by interest expressed by potential partners and purchasers, Kelley later returned to Italy to participate in a trade show and to close some deals. “The Commercial Service in Milan found the partners for us,” says Kelley. “We couldn’t have done it without them.” In fact, he adds, “Our success internationally over the past 10 years is a direct result of the substantial help … provided by the Commercial Service.”

Kelley says Tierra has signed one contract worth $1 million and is negotiating another of similar value. The company will do soil and water remediation at a solvent plant and a pharmaceutical factory. Those projects, which are expected to be long term, will add 10 percent to the company’s total revenue for the year.

LESSONS LEARNED

Kelley has this advice to other U.S. businesses contemplating entering international markets:

  • Spread the risk. Kelley learned it’s best to have a presence in dissimilar markets. Then, if one goes south, the other may not.
  • Look at lower-risk options in higher risk markets. In Argentina, Tierra Dynamic lowered its risks by doing business with an international development bank.
  • Don’t rule out a market by assuming it is mature. It may not be as competitive as you think. “Ultimately, we found ourselves doing very good business in Italy,” Kelley says.
  • Focus in one core area rather than try to deliver different services in different markets. “We were trying to do air pollution monitoring in Singapore, water systems management in Malta, and something else in Argentina,” Kelley explains. “Now we do the one thing we do best—site remediation services.”
  • Find a good partner. “Your partner will go through the rigmarole of helping find clients,” Kelley advises, “and this will greatly accelerate market entry.”
  • Respect your customer. Kelley notes, “You can never go wrong by showing a client too much respect—even if it means wearing a suit and tie … on an impossibly hot summer afternoon in some dusty place.”
  • Adapt to the culture. “We Americans like to cut to the chase in business,” Kelley observes. “Other cultures like to orate more than we do, and only eventually get around to what they want.”
  • Be patient. Kelley believes that “Americans think in quarters. If nothing happens in three months, ‘I’m out of here.’ You need to invest some money and time developing new markets.”
  • Enjoy the intangible benefits. “International work experience has allowed me to live and work on six continents, among diverse cultures,” Kelley says. “I’ve learned five languages and developed a worldview that no educational training could ever provide. It has given me a sense of self and a self-confidence that have served me very well in the business world, allowing me to develop a keen insight into the commonality of man.”

In his travels, Kelley found that “‘Made in the U.S.A.’ means everything. It means the best.” But more motivates Tierra Dynamic than pride of place and any competitive advantage associated with it. “This is an idealistic business. At the end of the day, I want to say I got this paycheck for doing something good for somebody else.”

ACTION

How can you make the “Made in the U.S.A.” label work for you?

  • Travel to overseas trade shows. They are a good place to meet buyers and business partners. The Commercial Service certifies more than 100 overseas shows representing many different industries each year. Typically, a U.S. pavilion at each show features exhibition space and assistance from Commercial Service specialists. The pavilion offers U.S. companies exhibition space at a lower cost than if they purchase it directly. For more information, visit www.export.gov/tradeevents.
  • Register on Export.gov. Comprising 19 federal agencies, the Export.gov community is involved in opening foreign markets and promoting U.S. exports. These agencies are known as the Trade Promotion Coordinating Committee (TPCC). Export.gov is the TPCC’s gateway for a broad range of export assistance, export finance, and trade advocacy services. By registering on Export.gov, you will enable TPCC agencies to contact you with targeted information on trade opportunities, market research, and government services. Registration also allows you to access a vast library of country and industry market research reports and trade leads. To register, visit www.export.gov.preading Risks: Cleaning Up in the International Environmental Market