Hartford Business Journal

www.HartfordBusiness.com October 5, 2015 • Hartford Business Journal 9 "When GE's talking about it, that's sort of the very big-ticket items," Evans said. "But you have to understand something about big- ticket items — big-ticket items are made up of a lot of small-ticket items." She estimated about 1,000 companies in Connecticut supply big manufacturers like GE. "A good portion of those could lose that potential for supplying for those export items because they're no longer going to be in any kind of proximity to the final assembly," she said, adding she wasn't implying other big manufacturers would move offshore. "This affects everybody, it's not just GE." That includes firms that rely on EX-IM for things like export-credit insurance, which is used by the majority of smaller companies Evans works with in Connecticut. The insurance allows Connecticut com- panies to sell products abroad on more of an open-account basis, knowing that if a customer doesn't pay, insurance will reimburse the com- pany for much of its cost, she said. Companies that have to go to the private market for insur- ance will pay more, which hurts their competi- tiveness, Evans said. Businesses that insure their accounts receivable through EX-IM are reimbursed 85 to 95 percent of their invoice amount if the foreign buyer doesn't pay. That insurance is important to Beauty Enterprises Inc. in Hartford, a wholesale dis- tributor of health and beauty aids, including cosmetics and hair-care and skin-care products geared for the African American, multicultural consumer. The company, with about 30 percent of its business overseas, uses the bank's insur- ance to secure accounts receivable on some of its overseas accounts, said Larry Sussman, vice president of finance, who said the insurance is a means of getting new business. With EX-IM not doing any new business, "It certainly curtails any potential existing custom- er to increase insurance for now until our policy expires, which is in March, and it precludes new customers who would want to get credit with us through EX-IM Bank to obtain it," Sussman said. The company has had to make three claims over the years, two for deals in Ghana, one in South Africa, he said, noting that while there's a 95 percent reimbursement, there's also a large deductible. If the bank isn't reauthorized, "it's going to reduce the amount of shipments we can make to particular customers and that's why we're going to be looking in the secondary markets" for insurance, he said. Richard Laurenzi, president of Prospect Machine Products Inc. in Prospect, which makes metal stampings for markets that include automotive, medical device, sealing technologies and bearings, also uses the insur- ance for products shipped outside the U.S. "We're using it every month because of our shipments to Mexico, Brazil and Italy," he said. Laurenzi is quoting a company in the Czech Republic, but its decision is further out, so he hasn't been compelled yet to find other sources of export insurance. EX-IM has grandfathered his company's existing accounts in, "but we would not be able to open a new account with them for the prod- uct insurance," he said. So to get insurance for a new customer likely means entertaining bids from private providers, he said. Capital crunch Working capital loan guarantees also are popular EX-IM products, Evans said. A small manufacturer in Connecticut, for example, might get a foreign order that requires the company to buy raw materials or equipment to fulfill the order. When the compa- ny goes to its own bank, EX-IM will guarantee the loan needed for those purchases, she said. "The banks are much more willing to lend when they have the federal government guar- anteeing the repayment," Evans said. EX-IM provides a 90 percent loan-backing guarantee. "What is difficult is that we're out here competing in the international economy and we need to give our companies every tool that's possible to make sure that they can compete," Evans said. In many cases, Connecticut companies' competition isn't in another state, she said. "It's in Germany or Japan, or someplace overseas where those tools are provided to them and we need to make sure that we're giving our companies every tool possible for them to grow their business," Evans said. Congressional opponents to the bank's reau- thorization have called EX-IM corporate wel- fare, citing its use by large companies like GE and Boeing, which also has said it could move work offshore without EX-IM's reauthorization. U.S. Rep. John B. Larson, (D-Conn.) sup- ports bank reauthorization. "I applaud Speaker [John] Boehner for con- sidering all options when it comes to renewing the Export-Import Bank," Larson said in a writ- ten statement to the Hartford Business Jour- nal. "He, like so many of our members on both sides of the aisles, understands what the Ex-Im Bank means to so many of our manufacturers and businesses to have a level playing field. Whether on the highway bill or as a standalone bill, we must take it up this year. Ex-Im bank is one issue that has broad bipartisan support. With the news of Speaker Boehner's resigna- tion, I hope his successor will see the impor- tance of reauthorizing Ex-Im swiftly." Several Republicans said on Sept. 25 that Boehner will likely work to pass a transporta- tion bill before Oct. 29 that includes an extension of EX-IM, according to a Washington Post story. The Senate passed a six-year bill in July that attached a bank reauthorization, the Post said. EX-IM said in a report last year that 62 per- cent of the Connecticut companies it helped from 2009 to 2014 were small businesses. In its fiscal 2014 annual report, EX-IM said it supported $27.5 billion worth of U.S. exports and 164,000 export-related American jobs, add- ing that over the past six years, the bank has supported more than 1.3 million jobs in com- munities across the country. It put its active default rate as of Sept. 30, 2014, at 0.175 percent. n RECYCLING & RUBBISH REMOVAL Paines_Logo_2x3 12/16/10 10:58 AM Page 1 BECAUSE SERVICE MATTERS PAINES_logo_BSM.indd 1 4/26/13 2:35 PM Paine's continues to pave the way for innovative and clean energy consumption with their new fleet of compressed natural gas vehicles. With the help of capital financing through Simsbury Bank, it was made possible. As a charter customer since 1995, Paine's and Simsbury Bank have worked together to improve our communities by pioneering customer-friendly solutions. Paine's is leading the to a greater tomorrow and we've got their back. SimsburyBank.com "Because of the competitive rate Simsbury Bank offered, we were able to finance our new trucks and still have capital left over to cover driver training and education, retrofits for our garages and initial maintenance costs." – Mike Paine An APS drilling test facility rig. P H O T O | C O N T R I B U T E D

• Cover