Officials at a government agency that assists American businesses in landing overseas sales contracts are hoping that federal lawmakers cast their votes in favor of maintaining the U.S. Export-Import Bank’s charter prior to its June 30 expiration deadline.
Formally designated as the Export-Import Bank of the United States and commonly called Ex-Im, political opponents ranging from conservatives to union leaders contend that the program is a boondoggle benefiting mostly huge conglomerates with questionable needs for taxpayer largess. However, 89 percent of its record-high 3,413 transactions in 2013 were for small businesses – and the department turns a profit. In October, it disbursed $675 million to the U.S. Treasury, reflecting a 47-percent growth pattern since 2009.
Automotive enterprises, especially entrepreneurs in the aftermarket, have certainly benefited from the offerings as over the past five years Ex-Im has directed nearly $2 billion to help facilitate exports of domestically produced completed cars and trucks along with parts, chemicals, services and equipment to international markets.
“These numbers are another clear demonstration that the global demand for products stamped ‘Made in America’ continues to grow,” declares Chairman and President Fred P. Hochberg.
“I look forward to working with Congress on the passage of a long-term reauthorization of the Export-Import Bank in order to bring certainty to the hundreds of thousands of Americans whose jobs depend on a level playing field for U.S. goods and services,” he says.
“Quality American goods shouldn’t lose out to aggressive foreign competitors because of the Export-Import Bank’s still-uncertain future,” says Hochberg. “Overwhelmingly bipartisan majorities in Congress have extended our charter 16 times, and I’m confident that together we can again find a long-term solution. Small businesses and workers in communities across America are counting on it.”
A variety of financing mechanisms, including working-capital guarantees, export credit insurance and financing to help foreign buyers purchase U.S. goods and services are provided. Regional Ex-Im offices are spread throughout the nation, offering business owners referrals to participating private-sector brokers and bankers.
Ex-Im’s upcoming April 23-24, 2015, Annual Conference at the Omni Shoreham Hotel in Washington, D.C. “presents a unique opportunity for companies from around the world to meet U.S. exporters,” says Hochberg. “Attendees include more than 1,100 exporters and representatives of financial institutions, foreign trade partners and government officials. At the event participants also meet Ex-Im Bank staff and obtain detailed information about our export credit products and programs,” he reports.
Wheeling and dealing
“By selling Made-in-America goods and services internationally, U.S. business can grow faster, hire more employees, pay higher wages and help spread American ideas, innovation and values,” according to U.S. Secretary of Commerce Penny Pritzker, who personally presented West Virginia’s Wheeling Truck Center with the President’s “E” Award for Exports at a Washington ceremony in June.
“Exporting has helped our 81-year-old company increase sales and employment,” says fourth-generation operations director Chad Remp. Preceding family members established the small business in 1933 while living above their garage selling White trucks and parts before evolving to Volvo. Wheeling is the oldest continuing White/Volvo dealer in North America, providing parts, repairs and maintenance, new and used-truck sales plus leasing and rentals from a 22,000 square-foot facility with 14 bays.
With the assistance of a broker, the company began using Ex-Im’s export credit insurance in 2011. “The export credit insurance has allowed us to offer open accounts to some of our international customers,” Remp reports. “These open accounts have helped us and our customers increase sales. We plan on expanding the number of customers we offer open accounts with because of Ex-Im.” Wheeling currently sells its wares in 98 countries.
“They guarantee that you get paid,” he explains. “For an international buyer it’s kind of like using a credit card at an auto parts store,” adds Remp, recommending the program to any aftermarket colleague regardless of the specific types of vehicles being serviced. “The product mix is very, very comparable, but a truck is bigger, heavier and more expensive.”
Domestic sellers and overseas buyers each send in applications for review by Ex-Im staffers to verify credit worthiness and other factors. “We started rocking and rolling because it was a relatively easy process,” says Remp. From a potential foreign purchaser’s perspective, “you’re not going to do business with someone in the U.S. if they’re difficult to do business with.”
Not a single customer has thus-far defaulted. “Most buyers are keen to understand that you don’t want to mess up U.S. credit,” he notes. “The Ex-Im Bank is a wonderful opportunity,” says Remp. “International sales have been very positive for our company.”
Strategic dialogue
Entry into the challenging Chinese marketplace was eased by Wheeling’s Ex-Im affiliation, according to Remp.
“As the world’s second-largest economy and the third-largest importer of U.S. goods, China represents an incredible opportunity for U.S. small businesses,” says Hochberg. The Ex-Im chairman recently toured the country – where American exports have nearly doubled since 2009 – while taking part in the U.S.-China Strategic and Economic Dialogue initiative. The agency is on track in 2014 to authorize a record-setting $1.8 billion in transaction authorizations.
“Both through direct sales to China and supplying larger U.S. exporters, American small businesses, with the help of Ex-Im Bank, are competing on a more level playing field while expanding their exports to China and creating jobs in the United States,” Hochberg points out.
“Ex-Im Bank does not compete with private banks or lenders, but still continues to play a vital role in opening China’s vast market to U.S. small businesses through its loan-guarantee and trade-credit-insurance programs,” he asserts. “That’s because often-times small business exporters have shipments that are too small for commercial banks to deem worth their time. With just over 400 employees, Ex-Im Bank is nimble enough so that there is no American small business exporter that is too small for Ex-Im to support.”
Specialized vehicle applications – fire trucks and the like – have proven to be popular purchases by overseas entities such as the Chinese government.
“We are finding that the ability to talk about and offer a loan is critical to our success for fire apparatus and equipment sales in many parts of China,” says Peter Darley, vice president at W.S. Darley of Itasca, Ill.
“Due to the Ex-Im framework agreement, interested fire departments are able to purchase products from the U.S. and can spread out their payments, affording them the opportunity to purchase the right amount of equipment with the desired quality and technology,” he says. “We have a lot of good people working for us that are employed because we are able to offer project financing that is backed by Ex-Im Bank.”
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