Before the National Export Initiative is fully implemented, it is worthwhile to examine the stories of companies that have already been successful at exporting their products, even to China.
SnowPure is a leader in high-technology Electrodeionization (EDI) with it ElectropureTM brand. The original company was founded in 1979 by Harry O’Hare as HOH Water Technology, went “public” in 1987 and was renamed Electropure in Inc. in 1996, also public.) After a management buyout in 2005, it became SnowPure LLC, a privately held company, with Michael Snow, Ph.D. as President. The company broadened its water technologies to include ZapwaterTM, EDI, ExcelllionTM ion-exchange membranes, DC power supplies, flow switches, and instrumentation for high purity systems, and innovative ultraviolet (UV) products. SnowPure does not sell systems and does not sell to end-users. SnowPure’s mission is to provide water purification technology components to system integrators.
SnowPure opened its first sales office in China in 2006, and formed SnowPure International in Hong Kong in 2008. SnowPure released its new Electropure EXC EDI at the Aquatech China show in January 2009. SnowPure’s percentage of sales that are exported is close to 85 percent. Their percentage of exports increased in 2010 compared to 2008 and 2009 because their total revenue increased even though their USA sales decreased.
When asked how SnowPure achieved this success in exporting, Michael Snow said, “It was by being in the right place at the right time with a product that was needed by industry. Companies trust U. S. technology, service, and support. It was done with zero advocacy and zero export financing (not without trying though). The U. S. Department of Commerce has been very
forthcoming with introductions, though little business has come from these. One thing that USDOC and the Secretary of Commerce promote is the Export Import Bank. The ExIm receivables insurance is good so far and is administered privately, but we haven’t had any claims, so I don’t know if it works. They also promote ExIm as export financing but this is a not true for small businesses. It must go through the banks and is so onerous in the administration and reporting that Wells Fargo and California Bank & Trust, for example, have very high minimums for participation; I need $200-300k for working capital for exports, so there is no program for us.”
Michael added that he hasn’t experienced any trade barriers for his products, and they have found exporting easy. He said, “Having export receivables insurance has helped us with allowing credit without the cost and hassle and risk of letters of credit. We do this through ExIm Bank, and it costs about 0.36%.
Paulson Manufacturing has been providing protective equipment for various industries worldwide since 1947. Specializing in face protection, the family owned and operated business delivers quality products and innovation for industrial, fire and rescue, and tactical and ballistic verification testing applications. All of their products are manufactured in America at a five-acre facility in Temecula, California.
Roy Paulson, President, said, “Paulson Manufacturing has seen sales increase up to 25% due to international exports. Not only are we able to capitalize on the export market, we are able to facilitate stronger sales for our OEM customers because of our exclusively designed products, which allow them a stronger international market share as well. With increasing sales, we are able to hire more employees, both temporary and permanent.”
Mr. Paulson added, “As the recession hit worldwide, our sales fell roughly 10% in 2008. We had worked diligently with our international distributors in successfully obtaining orders from military and police agencies; however, these assets were frozen and the orders lay dormant. In these instances, it has been a waiting game; since then, we have seen our export sales increase at about 4% a year.
Paulson added, “In some instances, our experience has proven in order to stay competitive and creative in the overseas market, custom products must be engineered to suit the customers need. Each country has its own standards and specifications. In order to pull our market share, we needed to provide a product that would meet these requirements. One example would be our body shields, used by police and military and our ArcShields, used in electrical safety.
Greece is a great example of a body shield modification. We redesigned our body shield to meet the Greece police specifications, sent the shield for testing, and received our European Certifications that were required. We won the tender with the help of our distributor who worked diligently with the authorities. This hard work from both sides has led to a great success of reoccurring orders.
The Paulson Arc Shield is a safety product used by electricians as required by the NFPA-70E Standard. This unique item did not have an export market because there were no standards in the foreign countries that required the use of our item. With this product, we approached the market from two directions:
1. We initiated and helped to fund a study in Europe that defined the use and application of the ArcShield. This study was the combined effort of a respected University and other agencies vested in worker safety. We continued our efforts by working with the proper committees to define the need and awareness of the electrical safety standards in the United States and to develop new rules in Europe regarding safety rules and Personal Protective Equipment (PPE). This has now resulted in language, standards and test methods that will open the European market to many products from the United States, including our own.
2. The second method was to sell the electrical safety equipment where the individual companies could understand that these products would reduce risk and save money over the long term. One example that can be used is China where there are no rules or safety standards that require the use of our product; however, with sales and education efforts we have developed good repeat business in the Chinese market.”
When asked what changes in trade policies or export regulations would help increase their exports, Paulson said, “The rules and regulations and export control rules were a very big challenge for us. We ran into all of the difficulties with the export control rules that primarily affect products that have dual use application for military or for police. I made a relatively early determination that I wanted to work on changing those rules because the rules are too difficult for American business.”
SPX Global LLC is a leading company in providing solar powered water systems throughout the globe. SPX mobile systems provide a rapidly deployed, fully independent solution to support the basic needs of rural villages, developing communities, and disaster relief operations throughout the globe.
SPX solar powered water filtration systems operate independent of electrical infrastructure and provide an easy to operate and cost effective solution to deliver potable water to those people who do not have clean water or a reliable water infrastructure. SPX ultrafiltration UF) reverse osmosis (RO) and Agriculture water delivery AG) systems are enabling delivery of clean water throughout the globe. In 2009, SPX successfully delivered 325 Solar Powered Ultra Filtration Water systems to Iraq.
Cory Cunningham, President, Sustainable Industries, ran all the operations for the SPX Global LLC in 2010. Sustainable Industries (SI) was formed to sell directly to DoD/federal/state entities under the Service Disabled Veteran rating and export contracts for SPX are a joint effort of SPX/SI. Cunningham said, “Direct procured exports to Iraq were about $250,000 in 2010, and he managed the production and export of approximately $19.8 million in 2010.” This was a significant increase over 2009, when they produced and exported about $15 million. He said that they were able to achieve this success in exporting through his personal relationships developed with Iraqi companies and government officials. The key was that Iraq values first-world (U. S.) manufacturing.
In answer to the question about what changes in trade policies or export regulations would help increase exports, Cunningham listed: “Small business loans that are easier to obtain; Subsidized manufacturing for small business, i.e. helping with rent and payroll to reduce risks for small businesses; Stronger government support of all sized businesses; Focus on clean technology that actually provides sustainable solutions and real job growth; Tighter regulations on ARRA/Buy USA products requiring USA certificate of origin, which would create jobs for U. S. workers vs. in other countries with lower/subsidized labor costs.”
Since 1961, Gamma Scientific Inc. has offered the world’s most comprehensive selection of precision light measurement instruments, such as high-accuracy photometers and spectroradiometers to integrating spheres and NIST-traceable light source. Gamma Scientific also uses its extensive light measurement expertise to manufacture custom light-measurement for unique customer applications such as production control, government testing, and avionics.
Gamma utilizes international sales agencies in Canada, China, Europe, and Japan. Their sales to Asia increased by nine percent, and sales in Europe increased seven percent from 2008 through 2010, which helped to mitigate the decrease in sales in North America during the same period. Their overall sales have increased 500 percent in the last ten years since starting an aggressive plan to expand exports.
Richard Austin, President, said, “We focused on Korea as a country starting in 1998, and it has paid off. We started marketing to China ten years ago, and I have made many personal trips to China to support our Chinese sales agency’s efforts. Our major competitors are in Germany, and they have greater market share. We had to go through a qualification process with customers in China, and we had to give up margins to compete against German products. The strength of the Euro compared to the dollar has helped us be more competitive and increase market share in the last two years.”
Austin was the only one of the presidents interviewed that thought the Korea Free Trade Agreement would be beneficial. Austin said, “Korea has high tariffs on our type of products, and the tariffs would drop with the Korea FTA and help increase our exporting to Korea.”
There are some common factors that played a key roll in these four examples of companies that are successfully exporting their products, even to Asia. They are:
- A specific marketing plan to export their products
- Technology of products that meet needs in other countries
- Personal commitment and involvement by president of company
- Use of sales agencies and distributors
- Taking advantage of connections
These examples show that the most important ways the National Export Initiative plan could help is through enhancing connections through the trade promotion component of trade missions and reverse trade missions and increasing export credit and financing. If the NEI plan fulfills all of the priorities that are identified in it, exports should increase. Only time will tell whether or not the goal of doubling exports in five years can be achieved. We can only hope this goal will be achieved to help American manufacturers succeed and grow.