US Exports a shot in the arm for US Manufacturers 2008

Dec. 12, 2008 - PRLog -- “While domestically-oriented manufacturing industries have been hurt by the housing-led domestic slowdown, export-intense manufacturing industries have seen production surge 17 percent since the fourth quarter of 2005, and production employment grew by 119,000.” adds Mr Engler

In fact, in late August, the U.S. Commerce Department revised second-quarter growth in gross domestic product to 3.3 percent, up from the previous estimate of 1.9 percent – the fastest rate of increase in nearly a year. The reason: higher exports.

A NAM report released prior to Labor Day indicates that exports increased 11 percent since 2007 and have added more to GDP growth since 2005 than residential investment has taken away. In fact, U.S. exports of manufactured goods have accounted for nearly 61 percent of America’s economic growth over the past year when U.S. exports grew by more than $270 billion for a grand total of $982 billion. Most remarkable, 97 percent of U.S. companies that export are small and mid-sized companies (SMMs).

“If your company is not exporting, it needs to,” charges Dan Akman, NAM assistant vice president for Marketing & Business Development. “There’s never been a better time than now.”

As Ajax explained, the current weak U.S. dollar is making American products cheap abroad. Escalating shipping costs are chipping away of advantages of buying low-cost items from places like China. Plus, U.S. products are preferred because of their quality. America stands behind its goods.

New Export Markets - Dubai and Abu Dhabi in the UAE and the Middle East Region

Although the United Arab Emirates is poised for two years of slower economic growth as the Gulf state’s property sector is hit by the global financial crisis and banks rein in expansion. Growth in gross domestic product (GDP) in the world’s fifth-largest oil exporter shoud fall to a manageable 4% in 2009 and 2010, said David Altman at the US Export Council in New York

“The present global financial crisis will reduce the prospects for economic growth in Dubai and Abu Dhabi from high single-digit to low single-digit growth in 2009 and 2010, however the growth continues to provide excellent export opportunities for US Manufacturers and US Service Companies in the Middle East ” Mr. Altman said

Ex-Im Bank

SMMs considering exporting to emerging markets can engage the help of the U.S.  Export-Import Bank (Ex-Im). While Ex-Im is associated with assisting with the finance of large projects, 80 percent of its transactions involve SMMs.

“We characterize ourselves as the bank of last resort,” says Diane Farrell, member, Ex-Im Board of Directors. “That’s because we can take a risk in emerging markets such as Vietnam, India and those in Central and South America that are attracting a lot of business.”

Weldy-Lamont Associates, Inc., a 13-employee engineering firm in Mount Prospect, Illinois, engaged Ex-Im when it decided to bid for a $350 million rural electrification turnkey contract from the government of Ghana. The contract involved procuring equipment and services from U.S. suppliers.

Thanks to Ex-Im’s backing of a $344 million loan, Weldy-Lamont Associates was able to overcome foreign competition and win the contract.

“We’ll be contracting with U.S. suppliers from the Midwest to California, Florida, and Georgia,” says the company’s president, Patrick J. Hennelly. “This five-year project is going to help them immensely because normally they are suppliers to the housing industry, which is in a slump. This will help manufacturers avoid layoffs.”

Ex-Im also assists SMMs with European transactions.

“The goal is to provide the support necessary to give SMMs and banks a sense of confidence,” Farrell says.

Among one of Ex-Im’s popular services is its Letter of Interest (LI), a pre-export tool that helps companies obtain loans that facilitate the export of goods or services. These loans, made by commercial lenders and backed by Ex-Im’s guarantee, provide SMMs with the liquidity to accept new business, grow their international sales and compete more effectively internationally.

“This is especially helpful if a company has never exported and/or wants to expand their business,” Farrell. “When the SMM is eager to expand and go into a foreign market, they can present their bank an Ex-Im guarantee so that banks feel they are taking less risk. In this tight credit market, this may make a big difference.”

Ex-Im also offers Credit Insurance, a special product for small, financially viable businesses that are new to exporting or have only occasionally exported. It can help increase an exporter’s international sales by extending competitive credit terms while minimizing risk. The insurance is particularly valuable as a risk mitigation tool to insure receivables against nonpayment; a marketing tool for extending competitive credit terms; and a financial tool to arrange attractive financing with the exporter’s lender by using insured foreign receivables as additional collateral.

In addition, for the first time Ex-Im provides Medium Term Export Credit Insurance, which delegates authority to certain lenders to perform special expedited procedures. This way financial institutions can support the sale of U.S. capital equipment, its installation and a complement of spare parts (if necessary) by insuring a company’s foreign receivables against losses. This protects U.S. sales to a single foreign buyer against the buyer’s failure to pay an obligation due to unforeseen commercial or political reasons.

“It offers a longer tender for loan guarantees—generally up to five years after the goods arrive at the port of importation,” Farrell says.  

Policies are also available to accommodate both single and repetitive sales for more sophisticated and bigger project up to $10 million.

“We want to give business the kind of support that gives them a sense of confidence when they visit lenders,” Ferrell says. “After all, in the end, it’s about retaining and growing jobs in the United States. That’s our primary mission.”

Here’s Power Curbers, Inc. advice to exporters: “Just do it!”

With 40+ years of exporting under its belt, this Salisbury, North Carolina manufacturer of construction machinery has been exporting since the 1960s. Unlike companies today, the small business had to forge its own path.

“Today it’s easy with the Internet,” says Dyke Messinger, company president. “Companies can gather so much information that for us 40 years ago was difficult to locate. In the 1970s and even 1980s you still had to get on a plane to start asking questions. Today you can save yourself a trip—and even make a visit very profitable—just by doing the work on the Internet.”

Today, this small company, with less than $50 million in annual sales, exports worldwide. Nearly 40 percent of its business comes from overseas markets.

“The biggest change we see is we are exporting to more developing countries,” Messinger says.

The 4th Annual - Connect Forum 17th-19th March 2009 Jumeirah Beach Congress Center, Dubai, UAE

US Companies seeking export sales opportunities and local economic development leaders seeking Foreign Direct Investment are invited to participate in the 4th Annual Connect Forum - US Export Council, Trade and Investment Mission to Dubai and Abu Dhabi, March 17th 2009

For Information http://usexportcouncil.com/forum.html  or call Tel: +1(212) 904-0248

http://www.usexportcouncil.com

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The US Export Council provides assistance to American firms seeking access to international export markets in the Gulf States, Middle East and Africa. http://www.usexportcouncil.com