If you are a U.S. manufacturing firm that isn't exporting, then you are missing a huge opportunity. That's a piece of the message the Obama administration has been sending as it touts the National Export Initiative, a five-year plan to double U.S. exports.
Several facts seem clearly to support the message. No. 1, just 5% of the world's population resides in the United States. No. 2, two-thirds of the world's purchasing power is outside of the United States.
Yet, only 1% of U.S. companies export, according to Fred P. Hochberg, president and chairman of the Export-Import Bank of the United States, during a visit to the Cleveland area Monday. That's a percentage the U.S. government wants to see increase.
To that end, Hochberg was at Steris Corp., a Mentor, Ohio-based maker of health care-related products, for the Small Business Global Access Forum. The half-day forum, aimed at businesses with fewer than 500 employees, presented attendees with the second piece of the export message: Many financing options are available from the government to companies that want to export.
Don't Give in to Fear
More companies don't export because they fear losing business or not getting paid, the Ex-Im president told a group estimated at 130 attendees. The Mentor event was the 23rd forum presented around the country by the Ex-Im Bank and its Small Business Global Access partners.
The financing options available to small businesses aim to remove that fear, or at least mitigate it.
"I don't want you to lose sleep" worrying about getting paid when your focus should be on manufacturing, Hochberg said.
Hochberg cited Express Insurance as one example of financing products available to smaller manufacturers to minimize risk. This short-term insurance policy offers payment risk protection and allows small businesses to extend short-term financing to foreign buyers.
The bulk of the forum was devoted to two panel discussions. In the first, several local companies shared their stories about using government resources to obtain financing for exports. Industrial furnace manufacturer Rad-Con, for example, received export financing via the Small Business Administration Export Working Capital Program to support an international project twice as large as the firm had ever completed.
Rad-Con's Christopher J. Messina, vice president, sales and projects, told the audience about learning of the SBA program opportunity through his firm's bank and shared his firm's experience with the U.S. Ex-Im Bank. Messina said among the most challenging parts initially of obtaining export financing was simply gaining an understanding of the various government opportunities and how they worked.
He pointed to the local bank, the Small Business Administration and the U.S. Commercial Service (U.S. Department of Commerce) as good places to start when trying to learn of export financing opportunities and information.
Significant Exports in 2010
Rad-Con exported about 70% of its manufactured product in 2010.
A second panel featured representatives from several government agencies that support the National Export Initiative as Small Business Global Access partners. Sue Whitney of the U.S. Commercial Service, for example, discussed her organization's role in exports and the types of aid it can provide.
Like Hochberg, Whitney said the U.S. Commercial Service aims to "take the fear out of exporting."
Among a wide-ranging portfolio of offerings, the U.S. Commercial Service can help manufacturers find overseas buyers, determine how ready a domestic manufacturer is to export, provide assistance if a foreign buyer doesn't pay, set up personalized business meetings among potential partners and conduct background checks of potential foreign buyers.
The SBA's Patrick Hayes provided additional detail about export financing available from his agency, including the export working capital loan. He said the SBA does not want to see a company "lose a viable export sale due to a lack of working capital."
Working capital loans are available for up to $5 million, and the SBA provides a 90% guarantee, he said.
The Export-Import Bank's Mark Klein told audience members not to buy into the myth that the Ex-Im Bank supports only big deals, detailing a $5,400 loan extended to export hair care products overseas.
He also noted that loan programs from the Ex-Im Bank and the SBA are not neatly aligned in terms of requirements, meaning that one institution may support a loan request that the other agency cannot. For example, the Ex-Im Bank is largely unable to support loans for export products that go to a military buyer, while the SBA possibly can. On the other hand, the Ex-Im Bank may support loans to firms located in nations of which the SBA is wary.