Air Tractor, which manufactures crop dusters and other agricultural aircraft in rural Olney, Tex., has been able to duck much of the current economic turbulence because it sells its specialized planes around the globe.
While selling in foreign markets has risks, small businesses like Air Tractor have been able to establish footholds abroad by relying on the Export-Import Bank of the United States to ensure they are paid for the goods and services they sell outside the United States.
“Without the Ex-Im Bank’s guarantee, there would be a significant difference in the deals we can make,” said David A. Ickert, the company’s vice president for finance. “We have been surviving and thriving because of exports.”
Air Tractor has been exporting its planes for agricultural seeding, fertilizing and spraying since 1995, when it sold its first two aircraft in Spain. Since then, overseas sales have been a boon to a company that employs 200 people in a town with 3,400 residents.
The company has tapped into the little-known services that the federal government provides to American exporters by compiling research and information about markets in foreign countries and by helping companies with financing. The Export-Import Bank, which is the official American export credit agency, guarantees loans and provides insurance and direct loans. The Commerce Department and all 50 states also offer help.
The bank, which has seven regional offices to help small businesses export their goods and services, authorized $4.36 billion in 2,540 transactions to support small business exports in fiscal year 2009. And the bank, which turned 75 this year, is ready to do more, said Diane Farrell, a member of the bank’s board.
“We have the capacity to do direct lending, and in these changing times, we will be looking to do more of it,” she said.
Congress is urging the federal government to take a larger role in helping small businesses with exports. The Senate Committee on Small Business and Entrepreneurship this month approved legislation to bolster small business trade opportunities, and asked the Small Business Administration to appoint an official to focus on international trade programs. Federal lawmakers have also asked Ronald Kirk, the United States trade representative, to appoint a top-level official to open overseas markets to more American small businesses.
Less than 1 percent of the nation’s nearly 26 million small businesses are exporters, said Mary L. Landrieu, the Louisiana Democrat who heads the Senate small business committee. Those 240,000 businesses, she said, account for only 29 percent of the United States’ export volume, a number that that has decreased in the last 10 years, according to a letter Senator Landrieu and the committee’s ranking Republican, Senator Olympia J. Snowe of Maine, wrote to Mr. Kirk this year.
Even so, some small businesses said that in the current economic slump — federal statistics show overall exports by the United States fell 11.2 percent from October 2008 to October 2009 — their sales abroad remained strong and that they had been able to add jobs. Mr. Ickert of Air Tractor said the company had hired 30 people in the last year.
Engineered Systems and Equipment, a manufacturer of animal feed processing equipment in Caney, Kan., has more than doubled its work force recently, said its owner, Josef W. Barbi. He said the 26-year-old company now had 50 employees, an increase from the 20 in the last 18 months. “We are one of the few companies in our area who are still hiring,” Mr. Barbi said. Caney is in an economically depressed part of southeastern Kansas.
Last year, the Export-Import Bank insured a $500,000 deal for Engineered Systems to sell specialized pellet systems to a Honduran company, Proteina, which makes animal feed.
That was one of about $7 million in export deals in the last couple of years that Engineered Systems has made in Latin America. Backing from the Export-Import Bank has been crucial, he said, allowing his company to compete with European rivals.
While American exporters like Air Tractor are small enterprises, the business they do abroad can be large. Another Export-Import Bank client, Weldy-Lamont Associates, an engineering firm in Mount Prospect, Ill., relied on the bank’s financial support to win a $350 million rural electrification contract from the government of Ghana, said Patrick Hennelly, the company’s president.
The firm, with only 13 employees, used to design projects like paper mills in the Midwest, but has branched out to win contracts in Thailand, China and Yemen, Mr. Hennelly said.
Aided by an Export-Import Bank loan, Weldy-Lamont has taken a five-year electrification project in Ghana where, Mr. Hennelly said, “we’re putting in the wooden poles and stringing the wires to electrify villages across the whole country.”
The international projects are particularly timely, he said, because “the current economic crisis has stopped a couple of U.S. projects,” for his firm including coal and natural gas plants, from going forward.
Foreign projects can also lead to increased business orders inside the United States, said Kusum Kavia, co-owner and vice president of Combustion Associates, of Corona, Calif. Backed by Export-Import Bank insurance, her company won a multimillion-dollar contract to provide electric power generation systems to Benin. Ghana and Benin are in West Africa.
Parts for Benin’s 80-megawatt power plant power, Ms. Kavia said, come from suppliers in various regions of the United States. The gear boxes, for example, are made in Texas and the gear switchers in Pennsylvania. The generators are made in Ohio.
The portion of the Export-Import Bank’s financing for small business has increased in recent years, with prodding from Congress. In 2002, federal lawmakers told the bank to double small-business financing, from 10 to 20 percent, of the bank’s overall authorizations. The bank has met the goal every year since 2006.
Still, some lawmakers have said that the bank has cumbersome regulations and has not done enough to help small American businesses compete with heavily subsidized foreign competitors.
A 2006 report by the Government Accountability Office criticized the bank’s data and systems for tracking financing for small businesses. The bank has introduced Ex-Im Online, an automated transaction processing system to help small businesses and financial institutions speed through its paperwork. The same site, www.exim.gov, also has a small business portal for first-time applicants.
Small businesses can increase their chances of cracking the export market by doing their homework first, said Alan D. Andrews, vice president of PNC Bank’s global trade and equipment finance group, which works with the Export-Import Bank. That includes checking online state resources, too; each has an export assistance center, he said.
Companies can also turn to the United States Commercial Service (part of the Commerce Department’s International Trade Administration), which has market research and information about legal and other issues for each country. Its site is www.export.gov.
By ELIZABETH OLSON New York Times
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