Small exporters see green

Small exporters see green More government support needed to establish toehold in overseas markets.

By Chris Gillis

      While many large American companies are witnessing the red ink of economic recession, smaller firms see green by increasing their exports abroad.
      Many government officials and international trade experts believe small and midsized U.S. exporters will be at the forefront of the country's economic recovery, and a number of federal programs are available to assist with this effort.
      'More than a quarter of a million U.S. firms export goods. Ninety-seven percent of those firms are small- and medium-sized businesses who particularly need our help accessing global markets,' said U.S. Trade Representative Ron Kirk in a May 18 speech to the U.S. Chamber of Commerce about the Obama administration's trade agenda.
      The Commerce Department's Census Bureau reported in April that small and midsized manufacturers, which the agency defines as having less than 500 employees, contributed nearly 16 percent of the sector's $675 billion in exports in 2006 and 2007.
      Although the economic toll of the recession in 2008 and early 2009 has yet to be tallied, the Obama administration plans to actively concentrate on promoting exports.
      'Obviously, one of the best ways to grow America's business ' both large and small ' is to open additional markets for their goods and services,' Kirk said, citing that three-quarters of global purchasing power and about 95 percent of the world's consumers are outside the United States.
      'Exporting firms tend to increase employment more rapidly, have higher productivity, and can pay as much as 13 to 18 percent more than the national average,' he added. 'That's the kind of trade we can all embrace.'
      'Small businesses are often more agile than larger ones, and can do well based on small sales,' said James Morrison, president of the Small Business Exporters Association (SBEA), in an interview. 'There are currently a lot more overseas buyers at the $200,000 and $500,000 level than at $2 million or more.'
      SBEA is the largest and oldest U.S. nonprofit association dedicated to small and midsized exporters, and serves as the international trade arm of the Washington-based National Small Business Association. According to the SBEA, members have sales in the range of $50,000 to more than $200 million a year. The average member has about 40 employees engaged in exporting and sells about $10 million a year abroad.
      'It's a very common path for small and midsized enterprises to boost exports when they're experiencing the effects of an economic downturn. They feel like they need to find somewhere else to sell in order to keep their heads above water,' Morrison said.


'Do The Math.'    The average SEBA member ships to about five countries. Combined, the membership's global coverage includes 85 countries.
      Morrison believes that the U.S. government could make a more concerted effort to unleash the country's export potential.
      'It's often difficult to get the first shipment out the door,' he said. 'The small exporter needs a lot of handholding initially, and I don't think we do a good job at it.
      'Once an exporter learns how to ship to one country, it's often easier to ship to two, three or more countries,' he added.
      SBEA offers its members a selection of benefits, including free or discounted access to:
      ' Online tutorials on exporting.
      ' Extensive databases of trade leads.
      ' A regular newsletter with money-saving tips for small exporters.
      ' Representation at overseas trade shows.
      ' Export financing and export credit insurance.
      ' Shipping.
      ' Foreign language translations.
      ' Overseas market research.
   ' Help with foreign labeling and product standards requirements, as well as international product quality assurance standards.
      ' A variety of free tips and help in the 'member center' of its Web site (www.sbea.org)
      The association is also active in the legislative arena:
      ' Supporting the national network of U.S. Export Assistance Centers, particularly by ensuring the Small Business Administration continues to offer export financing through these local offices.
      ' Ensuring that international trade agreements developed by the Office of the U.S. Trade Representative take full account of the needs of small and midsized U.S. firms.
      ' Working with the U.S. Export-Import Bank to make adequate export financing is available to small exporters, strengthening the Ex-Im Bank's outreach to smaller exporters, simplifying and streamlining small business access to the bank, and assuring that the Ex-Im Bank has the financial resources needed to achieve these objectives.
      ' Backing efforts to get more banks involved in financing small business exports.
      ' Supporting a strong push for U.S. export promotion.
      It's estimated that of the 240,000 U.S. exporters in 2008, 97 percent of them were considered by the federal government to be small and midsized enterprises. Overall, the number of small and midsized companies engaged in exporting today is still less than 1 percent of the estimated 26 million small businesses operating in the United States.

James Morrison president, Small Business Exporters Association
'Do the math. The trade deficit would go away if we could get even 5 percent of our small businesses exporting.'

      Morrison noted that other industrialized countries do a far better job at promoting their exports. For example, in Australia and Finland, 10 percent of small companies are engaged in exports.
      Many industry analysts argue that the U.S. market is still large enough to absorb most of what these small companies produce, but Morrison doesn't buy it.
      'Find whatever reason you want, but these other countries have got their SMEs exporting,' he said. 'We have less than 1 percent exporting. Do the math. The trade deficit would go away if we could get even 5 percent of our small businesses exporting.'


Helping Hand.    A myriad of state and federal government programs, such as local world trade clubs, chambers of commerce, the Commerce Department and Small Business Administration, are available to assist small exporters, but the recession has left many of them with anemic budgets.
      The SBEA is particularly concerned that Congress will cut the budget for the Commerce Department's Commercial Service (USCS), whose officers are stationed throughout the country and around the world in U.S. embassies to help small exporters on a fee-for-service basis find overseas buyers and distributors.
      The association said demand for 'Made in USA' goods and services remains strong in many developing countries where economic growth is expected to continue in 2009, according to projections by the International Monetary Fund and World Trade Organization.
      'Developing countries abound in niche markets, for which smaller U.S. exporters are ideally suited,' the SBEA said in a March 20 statement. 'But small companies don't have networks of foreign sales agents. To identify bona fide buyers and distributors, small exporters typically depend on the USCS.'
      In 2008, the Commercial Service documented assistance to more than $80 billion in U.S. exports. The White House Office of Management and Budget last year concluded each dollar spent on the Commercial Service yields $415 in exports.
      'Our Commerce Department has been a godsend to our company,' said Bob Bracher, president of San Angelo, Texas-based Aermotor Windmill Co., who often works with the Commercial Service staff in Midland, Texas, when the company has exporting questions. 'They have helped us on numerous occasions in a number of countries. They've informed us about regulations involving where we can ship and who we can ship to. They have even helped us twice secure payment from overseas buyers.'
      Today, the Commercial Service is struggling to meet spending mandates that require it to divert more than $20 million annually to the State Department. One result has been the loss of hundreds of Commercial Service positions through attrition in the past five years. Since 2007 alone, 19 Commercial Service overseas posts have been closed. The Senate's proposed appropriations cuts would reduce the Commercial Service's budget by another $3 million.
      'If we're serious about reducing the trade deficit, why are we cutting this program?' Morrison said. 'This is how we help get rid of the trade deficit.'