Helping small and medium-sized companies export products and services is a key aspect of the Obama administration’s plan to keep the U.S. jobs engine humming, the president’s top trade official said in Atlanta.
Attacking unemployment means supporting the kinds of companies that already employ most Americans, particularly those with fewer than 500 workers, Ron Kirk, the U.S. trade representative, told an audience March 25 at the Metro Atlanta Chamber.
More than 95 percent of the world’s consumers live outside the U.S., yet many small companies shy away from potentially lucrative overseas markets because they lack capital, confidence or both, he said at a breakfast event hosted by the chamber and attended by Atlanta Mayor Kasim Reed.
By educating businesses on the value of trade and providing financing and other resources, the administration hopes to “demystify” the export process as it works on trade deals to open more markets for American products, Mr. Kirk said.
The focus on smaller firms isn’t a bias against corporate giants, the former Dallas mayor said. It’s a realization that small firms don’t have the luxury of companies like Google Inc., which can hire lawyers to spar with the Chinese government and survive.
“We’re not beating up on the Deltas and the Boeings, but the Boeings and the Caterpillars, they have sales reps” all over the world, Mr. Kirk said.
A startup created by Georgia Institute of Technology students, for example, wouldn’t have that luxury. That’s where agencies like the U.S. Commerce Department, which provides companies with market research and introductions, can help.
Only 1 percent of them small businesses sell overseas. Of those that are exporting, more than half sell only to one market. Even helping those firms expand to one new country could make a significant dent in the unemployment rate, Mr. Kirk said.
In Georgia, some 189,000 jobs are already supported by exports of $29 billion, he added.
Georgia-based exporters that attended the speech were glad to hear about the government’s plans to help companies, particularly in providing capital. The Export-Import Bank of the United States provides loans to buyers of U.S. exports and guarantees the American seller will get paid.
Mr. Kirk acknowledged that the loan approval process at Ex-Im can take too long for small companies, adding that sometimes smaller firms get lost in the shuffle as Ex-Im uses its resources on larger projects where they will have the most impact.
“We hear this everywhere we go,” Mr. Kirk said in response to a question about export financing for small businesses, adding that the bank is “attacking” the approvals issue.
A congressional mandate requires that 20 percent of Ex-Im’s projects focus on small and medium-sized companies, so “you ought to smile” every time a Boeing deal goes through, because there will be more pressure on Ex-Im to provide loans to smaller players, Mr. Kirk said.
For Don Williams, president and CEO of Princeton Healthcare Inc., that was good news. Mr. Williams’ firm exports medical devices and provides consulting services for hospital systems and clinics abroad. It has about 20 employees. Ex-Im guarantees offer an important hedge against risk in emerging markets, but the bank often acts too slowly, Mr. Williams said.
As his company has developed over the past decade, Mr. Williams has avoided dealing exclusively with Ex-Im, instead working with international investors and banks to finance projects. Mr. Obama’s export initiatives are helping Princeton Healthcare make inroads overseas, but financing is still a challenge, he said.
“We have the innovation, we have the technology, we have the heart to go into these countries, but we’ve got to get support and we’ve got to get turnover faster,” Mr. Williams told GlobalAtlanta after the speech.
For now, export financing isn’t as vital for Cadillac Jack, a Gwinnett County-based company that develops games and machines for the gambling industry. That will change as the company expands globally, selling machines to distributors instead of leasing them, said Gene Chayevsky, chairman and CEO.
Cadillac Jack, which recently expanded its Gwinnett headquarters, also has a Mexico office. Its games are developed in Gwinnett and sold in the U.S., Mexico, Laos and Cambodia. The company is eyeing expansion in Macau, the Philippines and eventually Australia.
Mr. Chayevsky, an investment banker by training who has worked around the world, said most small businesses don’t know about the services that the U.S. government offers overseas.
“I have experience working in lots of different foreign markets, and one of the first things I always do is go see the local embassy and the local commercial attache to introduce them to whatever I’m doing, to make sure that I’m aware of all their resources,” he told GlobalAtlanta.
Since its main exports are the games themselves, Mr. Chayevsky was happy to hear Mr. Kirk’s remarks on government efforts to protect intellectual property.
The Chinese government operates on 92 percent pirated software, down from 98 percent thanks to pressure from the U.S. government, Mr. Kirk said.
Copyright violations, along with a sense that some countries weren’t playing by the rules, led to an anti-trade climate across the U.S. when Mr. Obama took office, Mr. Kirk said, noting that the president’s methodical approach to ensuring that trade benefits American workers has led some to say that he opposes free trade.
“Some people unwisely made the judgment that President Obama wasn’t as committed to free trade as some other administrations, but there’s nothing further from the truth,” Mr. Kirk said.
The president sees pending deals with the Colombia, Panama and South Korea as “critically important” for creating American jobs and furthering his effort to double U.S. exports by 2014.
Mr. Kirk led negotiations to revise the Korea trade deal in December. The pact is expected to be the first of the outstanding deals to go up for a vote in Congress. Mr. Kirk didn’t hint when that might happen.
“Every state in America will win when we pass this,” he said, calling the Korea agreement a “$10 billion export opportunity” covering nearly most industries. He noted that the number probably underestimates the impact on the services sector, which is booming in Korea.
The U.S. also is in negotiations on the Trans-Pacific Partnership, a proposed nine-country trade bloc encompassing many dynamic economies in Asia, which will be the axis of growth over the next half-century, Mr. Kirk said.
The trade representative repeatedly stressed the importance of education for America’s competitiveness and praised Atlanta for its vitality and strong leaders, including mayors like the late Maynard Jackson and Mr. Reed.
Mr. Reed, who has been a champion of the air cargo industry, said promoting Atlanta exports is a part of his mission, since many companies aren’t aware of the opportunities overseas.
“You have a lot of business owners that know in theory that growing their markets and having an international market would be good. I think the ambassador did a very good job of showing the emotional part that makes that harder,” Mr. Reed told GlobalAtlanta.
“Very good businesses, when you’re talking about doing an international deal, they don’t know about that. And businesses are already on small margins right now. When you start talking about doing business in Bahrain, or doing business in South Korea, that sounds hard.”
The mayor expressed satisfaction that Atlanta-based United Parcel Service Inc. is helping the U.S. government take the mystery out of exporting.
For more on how the government can help companies export, visit www.export.gov.