Lean and clean

Lean and clean By Chris Gillis

When Andy Kruse and partner David Calley launched Southwest Windpower in the mid-1980s, it was probably one of the worst times to introduce a residential electric-generating wind turbine to the U.S. market.
Oil prices then were at an all-time low, and the Reagan administration and Congress at the time had little interest in supporting the country's renewable energy sector. The only viable option for the fledgling company was to sell its products abroad.
'We recognized the market domestically was small,' said Kruse, now senior vice president of business development for the Flagstaff, Ariz.-based company. 'In order for us to realize a business opportunity, we had to go international right away.'
In 1987, Kruse and Calley worked with many federal agencies to help build their business. In the early days, the Small Business Administration and the Commerce Department assisted them in expanding their market. In 1995, the SBA provided them with their first small business loan, which gave them the financial resources to expand their operations, and more recently the U.S. Export-Import Bank assisted the company by assisting with financing of their distributors.
Southwest Windpower, named the Small Business Exporter of the Year by the SBA in March, is considered the world's leading manufacturer of small wind turbines, and it continues to seek innovative approaches to exporting and building its business both domestically and internationally.
The company manufacturers small residential wind generators used to produce electricity in remote areas around the world. These turbines are used to pump water, light schools and clinics, and power telecommunication towers for cell phones. They are also found on sailboats, remote monitoring stations, cabins and offshore platforms. The company has produced more than 140,000 wind turbines, which can be found in 120 countries. Southwest Windpower also has a distribution network in 88 countries.
Currently, Southwest Windpower's international sales account for 30 percent of its gross revenue, which is down from nearly 50 percent in recent years, but the company expects to increase that to 40 percent next year once it releases into the international market its new Skystream 3.7 wind turbine, with its characteristic three swept wind-catching blades. Depending on site specifics and prior to available incentives, the system costs $12,000 and $16,000 to install. The Skystream is a 2.4 kilowatt-rated wind generator that reduces or eliminates a homeowner's monthly electric bill.

Andy Kruse senior vice president of business development, Southwest Windpower
'We recognize the market domestically was small. In order for us to realize a business opportunity, we had to go international right away.'

In 2008, Southwest Windpower worked with Germanisher Lloyd, one of the largest safety certifying bodies in Europe, to prepare the Skystream for the grid-connected European market. The company recently opened a sales and distribution center in Cologne, Germany, to accommodate sales of this product in Europe, Kruse said.
Southwest Windpower knows that staying ahead of the pack internationally will be difficult. According to the American Wind Energy Association, the United States continues to command about half the global market share and is home to one-third of the 219 identified worldwide manufacturers. The association also noted that U.S. manufacturers' sales accounted for half of the $156 million global market in 2008.
Despite the global economic recession, the market outlook remains healthy for not just wind turbine makers, but also manufacturers of solar and geothermal technologies. More than $467 million from the American Reinvestment and Recovery Act, signed into law in February, will be provided by the Obama administration to expand development and implementation of solar and geothermal energy throughout the United States.
'Clean energy is going to be one of the most important areas as a country we're driving toward,' Kruse said. 'Many nations are headed in that direction.'

Bracher

Even the iconic American water-pumping windmill has increasingly attracted overseas buyers in recent years. San Angelo, Texas-based Aermotor Windmill Co. ships many windmills to Africa each year, and has recently started exporting them to customers in Iraq and Afghanistan.    'We often send windmills to countries where they need clean drinking water, but have no electricity,' said Bob Bracher, the company's president.
About 10 percent of Aermotor's total sales are export-related. 'Fifty percent sales based on exports is our hope. That's the future of our windmill business,' Bracher said.
However, exporting for small renewable energy technology firms, no matter how attractive the products may be, remains a difficult task.
'We're facing a downturn in most parts of the world,' said James Morrison, president of the Small Business Exporters Association, based in Washington. 'Customers are skittish and it's hard to get trade finance.'
SEBA recommends that small exporters look into the financing programs available through the Ex-Im Bank. In recent years, the bank has actively offered renewable energy companies access to pre-export financing through attractive working capital loan guarantees and short- and medium-term financing through export credit insurance.
About 80 percent of U.S. environmental and renewable energy companies are small and midsized businesses, but these are the companies driving the industry's growth, said Linda Conlin, president of the World Trade Center of Greater Philadelphia, who until the end of April served as the Ex-Im Bank's vice chair and head of the bank's environmental exports initiative.
The Ex-Im Bank allows small environmental and renewable energy companies to access competitive working capital financing and offer 'open account' terms to international buyers, instead of using more cumbersome and costly traditional financing methods, such as cash in advance, letters of credit and local bank financing, she explained.
Ex-Im Bank has supported hundreds of individual clean energy technology projects worth more than $3 billion since the Environmental Exports Program began in 1994. In 2008, by congressional mandate, the program became part of the Office of Renewable Energy and Environmental Programs. In fiscal year 2008, the bank authorized $226.9 million in financing to support an export value of $434.2 million in environmentally beneficial goods and services, said Craig O'Connor, the office's program director.
Ex-Im Bank's 'Fast Track' program helps small and midsized exporters to obtain larger working capital loans in less time, O'Connor said.    Experienced lenders that qualify for the program can provide up to $25 million per borrower in the bank's guaranteed working capital financing subject to a total aggregate limit of $300 million per lender.
In addition to Southwest Windpower, the bank has provided support to Powerlight, UniSolar, Evergreen Solar, GT Solar, SolarWorld, among others, in the past five years.
Earlier this year, Ex-Im Bank approved $61 million in long-term financing to support exports of photovoltaic solar modules by Camarillo, Calif.-based SolarWorld to Gochang Solar Park Co. Ltd. in South Korea. The exports were used in five solar power-generation projects with a collective output of 15 megawatts.
'We have a large and growing pipeline of projects in renewable energy,' O'Connor said. 'We generate our own work because when we speak at major conferences or complete new deals, we inevitably get more calls from companies seeking to discuss other projects. Once people know what we can do, they're amazed.'
Both Kruse and Bracher affirmed to American Shipper that efficient transportation services providers are essential to successful exporting.    Southwest Windpower uses FedEx as its primary global carrier, while Aermotor uses Houston-based freight forwarder North Star Shipping.
There are also a number of Internet-based tools available to small exporters that help promote overseas sales opportunities and explain what documentation is required to ship to specific countries.
The Washington-based American Council On Renewable Energy (ACORE) in March started a Web site to help U.S. companies connect with Chinese companies and institutions that are working to expand and finance renewable energy development projects in China. The Web site provides English language news updates on activities in solar, wind and renewable energy policy and other initiatives underway in China, including information on regulations for doing business in China, downloadable market analyses and reports, and contact information on key industry and government officials.
'This has tremendous business implications for U.S. companies who are financing or building renewable energy products and services,' said ACORE President Michael Eckhart, in a statement. 'Not only will our industry be called upon to meet President Obama's call for doubling renewable energy production at home, but we also have an opportunity to strengthen our business ties globally through collaborating with other nations to help them meet their objectives for cleaner and more efficient energy production.'
However, exporting still requires small companies to remain engaged in the process and attend to the numerous details.
'Even with all these tools, exporting is still not easy,' Kruse warned. 'How fast your product gets to a customer in some countries may be up to the customs officer on duty that day your shipment arrives.'
He added: 'We began exporting in the late 1980s when communication was done by letters and faxes. Today, with e-mail and excellent information at the click on a Web site, exporting has never been easier. Everyone should get into exporting and the best way to begin is with government agencies that are there to help with the process.'