[Senate Hearing 113-530]
[From the U.S. Government Publishing Office]
S. Hrg. 113-530
GROWING SMALL BUSINESS EXPORTS, GROWING U.S. JOBS
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JUNE 18, 2014
__________
Printed for the Committee on Small Business and Entrepreneurship
Available via the World Wide Web: http://www.fdsys.gov
______
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED THIRTEENTH CONGRESS
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MARIA CANTWELL, Washington, Chair
JAMES E. RISCH, Idaho, Ranking Member
CARL LEVIN, Michigan DAVID VITTER, Louisiana
MARY L. LANDRIEU, Louisiana MARCO RUBIO, Florida
MARK L. PRYOR, Arkansas RAND PAUL, Kentucky
BENJAMIN L. CARDIN, Maryland TIM SCOTT, South Carolina
JEANNE SHAHEEN, New Hampshire DEB FISCHER, Nebraska
KAY R. HAGAN, North Carolina MICHAEL B. ENZI, Wyoming
HEIDI HEITKAMP, North Dakota RON JOHNSON, Wisconsin
EDWARD J. MARKEY, Massachusetts
CORY A. BOOKER, New Jersey
Jane Campbell, Democratic Staff Director
Skiffington Holderness, Republican Staff Director
C O N T E N T S
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Opening Statements
Page
Cantwell, Hon.Maria, Chairwoman, and a U.S. Senator from
Washington..................................................... 1
Risch, Hon. James E., Ranking Member, a U.S. Senator from Idaho.. 50
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire.......... 52
Witnesses
Hahn, Eric, Vice President, Organizational Development, General
Plastics Manufacturing Company, Tacoma, WA..................... 3
Tyler, Donald F., Director, Corfin Industries, LLC, Salem, NH.... 9
Campbell, Robert, President and Chief Executive Officer, Alliance
Solutions Group, Inc., Newport News, VA........................ 14
Calhoon, Mark, Senior Managing Director, Business Services
Division, Washington State Department of Commerce, Seattle, WA. 21
Verdon, Jennifer, Manager of International Business, Idaho
Commerce Department, Boise, ID................................. 38
Hendrix, W. Dan, President and Chief Executive Officer, Arkansas
World Trade Center, University of Arkansas, Rogers, AR......... 44
Alphabetical Listing and Appendix Material Submitted
Adkins, David
Letter dated June 17, 2014, to Senators Cantwell and Risch... 73
Beebe, Mike
Letter dated June 6, 2014, to Senators and Congressmembers... 69
Calhoon, Mark
Testimony.................................................... 21
Prepared statement........................................... 23
Campbell, Robert
Testimony.................................................... 14
Prepared statement........................................... 16
Cantwell, Hon. Maria
Opening statement............................................ 1
Dalrymple, Jack
Letter dated June 13, 2014, to Senators and Congressmembers.. 75
Hassan, Margaret Wood
Letter dated April 24, 2013, to Senators and Congressmembers. 61
Letter dated July 1, 2014, to Senators and Congressmembers... 63
Hahn, Eric
Testimony.................................................... 3
Prepared statement........................................... 6
Hendrix, W. Dan
Testimony.................................................... 44
Prepared statement........................................... 46
Inslee, Jay
Letter dated June 13, 2014, to Senators and Congressmembers.. 71
LePage, Paul R.
Letter dated June 30, 2014, to Senators Cantwell and Risch... 65
Pollet, Adam
Letter dated June 23, 2014, to Senators and Congressmembers.. 67
Pryor, Hon. Mark L.
Questions for the record..................................... 60
Risch, Hon. James E.
Opening statement............................................ 50
Shaheen, Hon. Jeanne
Opening statement............................................ 52
Tyler, Donald F.
Testimony.................................................... 9
Prepared statement........................................... 11
Verdon, Jennifer
Testimony.................................................... 38
Prepared statement........................................... 40
GROWING SMALL BUSINESS EXPORTS, GROWING U.S. JOBS
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WEDNESDAY, JUNE 18, 2014
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 3:03 p.m., in
Room 428-A, Russell Senate Office Building, Hon. Maria
Cantwell, Chairwoman of the Committee, presiding.
Present: Senators Cantwell, Shaheen, and Risch.
OPENING STATEMENT OF HON. MARIA CANTWELL, CHAIRWOMAN, AND A
U.S. SENATOR FROM WASHINGTON
Chairwoman Cantwell. The Senate Committee on Small Business
will come to order.
Today, we are having a hearing on ``Growing Small Business
Exports and Growing U.S. Jobs.'' I know my colleague, Senator
Risch, will be joining us, and I am sure other colleagues as
well, but we have been urged to get started and we are going to
do that today.
So, I welcome all the witnesses here. We have a very
distinguished panel and I thank them for making time to be here
on such an important issue. I would like to make sure that
everybody understands that my colleagues who are not here can
still add their comments and statements for the record, which
we will be keeping open.
U.S. exports are an engine of economic growth and job
creation. According to the U.S. Department of Commerce, U.S.
exports have accounted for a third of overall economic growth
in the U.S. in the last five years. Last year, more than 11
million jobs were tied to U.S. exports and one in three jobs in
the State of Washington are related to international trade.
Ninety-five percent of the world's customers are outside of the
United States. As the middle class around the world continues
to grow, expanding from two billion today to nearly five
billion by 2030, exports represent a huge economic opportunity
to create jobs right here at home.
At the same time, less than five percent of our country's
28 million small businesses export, and the U.S. small
businesses that are exporting, 58 percent of them are exporting
to only one country. There is a lot of room for growth and one
way to continue to help the U.S. economy to create U.S. jobs is
to help make sure that these small and medium-size companies
look at export opportunities.
For me, this is one of the highest priorities of this
committee. I know the Ranking Member, Senator Risch, and I have
had a chance to talk about these issues in our respective
states, Washington and Idaho, and hear from small business
people about their interest. That is why we are introducing a
bill to reauthorize the State Trade and Export Promotion
Program, better known as STEP.
The State Trade and Export Promotion (STEP) Program has
been an important tool for small businesses to begin exporting
and to expand to new markets. STEP was first authorized in 2010
as a pilot program through legislation from this committee.
Under the program, the U.S. Small Business Administration works
with states so that they can prioritize help to small and
medium-size companies. The STEP Program helps businesses
identify exporting opportunities and to take action to break
into new markets and expand further into foreign markets.
Based on annual state reported data, STEP has resulted in
$909 million in export sales, representing an average return on
Federal investment of 15-to-one. Those same investments for
STEP in the state of Washington have, on average, had a return
on investment of over 51-to-one. That is how much business has
been generated by just a very, very small amount of investment
to these businesses.
Jeff and Tony Logosz, the founding brothers of Slingshot
Sports, turned the company they started in the Columbia River
Gorge into a global brand for water sports equipment. The
company used export assistance from this program and work with
the Washington State Department of Commerce to gain access to
new global markets. They were able to shift their manufacturing
back from Asia to the United States and create more jobs for
this very rural community.
Another example can be found in a Seattle software company
called HasOffers, which utilized the STEP Program to showcase
its product to mobile application developers. As a result,
HasOffers is now working directly with four of the largest ad
agencies in the U.K. and Europe.
Eric Hahn is also with us today. Eric is the Vice President
of Organizational Development in General Plastics Manufacturing
in Tacoma, Washington. STEP has allowed General Plastics to
gain access to new European partners and will tell us more
about that in his testimony.
Through these programs, they have been able to establish a
physical presence in new markets, meet customers, research
competitors, connect with vendors, develop new relationships,
and these are very important things when it comes to growing a
small business. They will show that you can make a small
investment and turn that into a large business opportunity.
So, this bipartisan legislation builds on the success of
the pilot program and creates a permanent State Trade and
Promotion Program within the SBA to help these small businesses
continue to export.
We have received several letters of support authorizing the
STEP Program, and so I would like to, hearing no objection,
enter them into the record. That is the Arkansas Governor Mike
Beebe, North Dakota's Governor, and a letter from Washington's
Governor Jay Inslee, and a letter from the Council of State
Governments.
Chairwoman Cantwell. In addition to Mr. Hahn today, we are
going to hear from Donald F. Tyler from New Hampshire. Welcome,
Mr. Tyler. He is the Director of Corfin Industries, and Corfin
Industries provides component preparation services to a variety
of industries, including the defense, medical, and
telecommunications industry. Welcome. Using the STEP Program,
he was able to help the company expand into new markets. And
since using STEP, the company has grown its international
revenue from about one percent to 12 percent of its overall
business and hired ten new employees, so we look forward to
hearing more about that.
We also have Bob Campbell, from Virginia. Thank you for
being here. Mr. Campbell is President and CEO of Alliance
Solutions, and is a client of a Virginia Small Business
Development Center. Alliance Solutions, out of Newport News,
provides crisis disaster management services to support public
safety and private sector clients. Mr. Campbell's company has
received assistance through the Virginia Economic Development
STEP Program for resources that were used to help understand
the market in the Middle East and their ways of doing business
and to refine his strategic planning.
Additionally, we have Mark Calhoon, from my home state of
Washington, who is a Senior Director at our Washington State
Department of Commerce, and he is going to talk more directly
about how this program works with various businesses within the
state.
And, we also have Jennifer Verdon from my colleague's State
of Idaho, and she works in a similar capacity with their Idaho
Department of Commerce on these STEP Programs.
Finally, Mr. Dan Hendrix, CEO of Arkansas World Trade
Center at the University of Arkansas, and he will discuss how
Arkansas has utilized the STEP program to promote small
businesses in his State.
So, we are so pleased that you are all here. We are so
excited about where we are, having been through the pilot stage
and the incredible results that have come back. Now, we want to
capitalize on this opportunity and so we look forward to your
testimony. I ask you if you can keep your comments to five
minutes. You can submit something longer in the record. That
will give myself and others who show up a chance to ask you all
questions.
So, I believe we are going to start with you, Mr. Hahn.
Again, welcome. Thank you for being here.
STATEMENT OF ERIC HAHN, VICE PRESIDENT, ORGANIZATIONAL
DEVELOPMENT, GENERAL PLASTICS MANUFACTURING COMPANY, TACOMA, WA
Mr. Hahn. Thank you very much, Chair Cantwell. I really do
appreciate the opportunity to talk with you and the members of
this committee on behalf of the STEP Program.
As was stated earlier, my name is Eric Hahn. I am the Vice
President of Organizational Development at General Plastics
Manufacturing in Tacoma. I am also Chair of our Tacoma-Pierce
County Workforce Development Council and Vice Chair of the
Washington Aerospace and Advanced Manufacturing Workforce
Pipeline Advisory Committee. I said that in one breath.
[Laughter.]
The company, General Plastics, started in 1941, actually, a
couple of days just prior to Pearl Harbor, and started as a
plastics company, obviously, in a whole different vein. It has
grown in the last 73 years to be a leader in the polyurethane
world, and we provide products not only to aerospace, but
defense, nuclear containment, marine, construction, outdoor
signage, and tooling, as well. We also employ about between 170
and 180 people. I say ``between'' because we are fast growing
and a lot of that is because of what we are doing here in this
country, but a good part of that has to do a lot with the STEP
Program and what the opportunity it gave for us to enter new
markets.
As the committee considers creating a permanent STEP
Program, I want to share our experience that we had with it
because I think that it is one that can serve as a model for
other small companies to not only engage in international
opportunity, but to grow beyond just the parameters of their
own backyard.
In recent years, we have been working trying to get into
the European market, to no avail. Admittedly, I do not think we
really understood what the requirements were and how those
differed than the aerospace requirements here in this country.
A lot of that has to do with F/S/T, fire, smoke, and toxicity
requirements that are a little bit different in Europe.
We, through the grant provided by STEP, we were able to go
to the JEC Paris 2013 and 2014 Air Show and also eventually to
the Aircraft Interiors Show in Hamburg. It was at JEC that we
discovered what the requirements were for aerospace products in
that country. We were able to look at what our competitors were
doing. We were able to talk directly with some of the people
that were in the aerospace industry in Europe and they helped
to give us some real insight into what the requirements were
and how we were going to have to change things.
So, immediately when we got home, we started putting our
chemists back to work to really refine our product so it would
meet those standards, and they were successful. In fact, at the
Hamburg Air Show, we introduced those products and had a lot of
interest because of it.
Our goal was really five-fold. First, we were going to
establish a physical presence, which we did.
Second, we were going to meet existing customers, which we
did.
Third, we were going to research our competitor products,
which we did.
And, fourth, connect with local vendors.
And, finally, of course, develop new relationships with
potential customers.
The results were, again, we were able to develop a product
that is compatible with the standards that the European Union
requires. We were able to get two distributors, one from the
U.K. and one from South Africa, and we are in the final
negotiations with one from Spain. We were able to also add
approximately $100,000 in new sales initially. It does not
sound like a lot, but consider the aerospace sale cycle is
anywhere from six months to a year.
Here is the really exciting news. We are now in negotiation
with Airbus Tier 1 and Tier 2 suppliers, and those are
estimated to provide anywhere from $1 to $2 million in
additional sales. It will also mean the employment of ten to 15
new people.
And, by the way, Senator, I want to personally express my
gratitude for all the work that you have done with veterans and
workforce and especially aerospace. We are very happy that you
are our Senator. We have utilized those tax breaks and we are
able to hire a lot of veterans. In fact, we now have in the
last year hired probably an additional 15 to 16 people strictly
that are veterans.
So, all of this is just indicative of the opportunity that
was available through STEP and that we were able to access. Our
Washington people helped us out immensely, as well, to connect
and understand how we were going to be able to access this
program. This program provided opportunity for us, as a small
business, that, quite frankly, I do not think would--we either
would have never thought of accessing or would have been a long
time coming.
In the aftermath, we have now hired an international person
that is a marketing director from a fairly large company that
is really helping us take what opportunity we had from this
program and really develop it so that, in the future, I think,
we may not be a small business after all.
Thank you.
[The prepared statement of Mr. Hahn follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. What a great story. Thank you. I will
look forward to asking you questions.
Mr. Tyler.
STATEMENT OF DONALD F. TYLER, DIRECTOR, CORFIN INDUSTRIES, LLC,
SALEM, NH
Mr. Tyler. Good afternoon and thank you for this
opportunity to testify today. I am Don Tyler, Director of
Corfin Industries, a company that has enjoyed significant
growth in export sales over recent years as a result of our
participation in the STEP Pilot Program.
Corfin's Robotic Hot Solder Dip and other services satisfy
the electronic component preparation needs of high reliability
systems such as missiles, space satellites, and implantable
medical devices. While these industries are well established
outside of the U.S., for the first 20 years in business, Corfin
experienced very little non-domestic business. The only orders
that came to us from outside of the U.S. were from
subcontractors to our existing customers.
Three years ago, cautiously encouraged by those few orders,
we explored paths to actively selling into these markets.
Unfortunately, the costs were high as were the risks. Large
trade shows, which are our best hope for reaching a sizeable
portion of our target audience, are prohibitively expensive to
a small company. We considered collaborating with other U.S.
small businesses with a common goal and willingness to share
expenses, but that required a major commitment of resources to
identify and coordinate with these other businesses and
dismissed as impractical.
Corfin turned to New Hampshire's International Trade
Resource Center and the U.S. Commercial Services local office.
They not only educated us on the skills necessary to break into
markets outside of the U.S., but Corfin received matching funds
through the STEP Pilot Program to realize affordable marketing
opportunities.
Corfin's STEP-funded participation in air shows in the
United Kingdom, France, and Singapore, and Gold Key Service
introductions and translation services through U.S. embassies
in Munich, Rome, and Tokyo have provided the jump start
necessary to gain a foothold in these markets and grow
independently.
The success of our international sales encouraged us to
become charter members of the New Hampshire Aerospace Defense
Export Consortium last year. It was another STEP grant
recipient. The Consortium provides great value in all matters
related to exporting, including speakers on customs issues,
education on changes to ITAR, and marketing opportunities. The
growing membership in this Consortium is a great indicator of
growing global impact of New Hampshire businesses.
Today, Corfin's non-domestic sales is a significant
component of our overall growth. International sales increased
from less than two percent of our overall revenue three years
ago to over 12 percent today, all while expanding our overall
revenue almost 30 percent. The non-domestic growth corresponds
to 22 additional full-time employees. I think information from
earlier this year said ten, which the Chairwoman mentioned, but
it is 22 as of today and still growing, a direct result of the
STEP grant funding.
I am pleased to report that Corfin will be exhibiting at
the Farnborough United Kingdom Air Show next month without the
benefit of STEP funding.
I enthusiastically support the STEP UP for American Small
Business Act for the perpetual opportunities needed by small
American businesses to reach global markets and grow their
American workforces. This is a program that works.
[The prepared statement of Mr. Tyler follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. Thank you, Mr. Tyler, and it is so
great to be corrected from ten jobs to 22. Thank you.
[Laughter.]
Mr. Campbell.
STATEMENT OF ROBERT CAMPBELL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ALLIANCE SOLUTIONS GROUP, INC., NEWPORT NEWS, VA
Mr. Campbell. Chairwoman Cantwell, Ranking Member Risch,
members of the committee, thank you for inviting me to testify
and holding this hearing on the State Trade Export Promotion
Program. As a graduate of the STEP Program in 2013, we have
positively benefitted from the program in successfully entering
the export market and growing our business internationally.
I am Bob Campbell, founder and President of Alliance
Solutions Group, or ASG, a service-disabled veteran-owned small
business out of Newport News, Virginia, with ten satellite
offices around the U.S., including your home State of
Washington. As of February 2014, we have successfully launched
an office in Dubai, the United Arab Emirates, to extend our
services into the Gulf Cooperation Council countries.
ASG prepares communities for various threats through
emergency preparedness activities and environmental health and
safety services. We have conducted environmental health and
safety audits for the United States Air Force worldwide and
have trained thousands of military and public sector responders
on chemical, biological, radiological, nuclear, and hazardous
material response with approximately 2,000 training and
exercise events.
As defense and Federal spending among our customers has
declined and our vision to prepare communities and improve
worker health and safety has increased, we sought access to
markets with expressed and unmet needs, economic capacity, and
adequate infrastructure to support sustained growth of our
business.
Exporting enables us to share our expertise, experience,
and values in a way that provides a value-added benefit in
other nations. Our services promote development, security, and
prosperity, while increasing U.S.-based revenue that we can
invest in our employees and development of innovative products
and services.
In 2010, I made my first attempt at exporting by attending
the Special Operations Forces Expo in Amman, Jordan. My lack of
understanding of the market at that time, the regulatory
environment's presence, lack of persistency and funding limited
my ability to capitalize fully and enter the market.
In 2012, we included international growth in our strategic
plan and began to identify obstacles to entry. The most
significant obstacles to market entry for our business have
been, number one, a lack of local presence; two, navigating the
regulatory environment, both U.S. and foreign, in regards to
export compliance, tax-related, financial, and security issues;
and, number three, limited financial capacity to invest in
exhibitions, marketing, travel, and legal consulting.
Now that we have entered the market, new obstacles are
emerging: First, price disadvantage due to both low labor costs
among competitors and tax treatment disparity between U.S.-
owned and foreign entities when operating internationally; and,
second, the challenge of assessing potential partners with the
right due diligence and engaging in contracts in a way that
adequately protects our interest. The complexity and multitude
of risks involved are daunting for a small business that
requires extensive legal counsel.
Fortunately, we have had help along the way from the
Virginia Small Business Development Center and the Virginia
Economic Development Partnership in the form of training,
resource networking, and grant funding. Through the Virginia
SBDC, we participated in the Passport to Global Markets Program
in 2012, and then promptly enrolled in the STEP Program. The
STEP Program assisted us with approximately $20,000 for a trade
mission to the UAE, market-specific conference and exposition
participation, and development of our Export Compliance
Program. Through STEP, we have been introduced to other
businesses, professional resources, and the U.S. Commercial
Services abroad.
In addition to the STEP Program, we have also benefitted
from the Going Global Defense Initiative, where matching
Federal and State funds from the program enabled our business
to become certified in quality, environmental, and occupational
health and safety management systems, a significant competitive
advantage for our small business like us, as these three
international certifications garner significant credibility in
the global environment.
We continue to reap the benefits, similar to the STEP
Program, through the Virginia Leaders in Export Trade Program.
And, in April of 2014, we were awarded our first
international contract in Kuwait as a result of attending that
2010 expo in Amman, Jordan, as well as support from the STEP
Program.
Reauthorization of this program will help enable more U.S.
businesses to establish the products and services abroad,
creating more jobs, generating more revenue and investment,
promoting economic development abroad, as well as good will.
Thank you again for inviting me to testify and for your
commitment to helping small businesses with international trade
and export.
[The prepared statement of Mr. Campbell follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. Thank you, Mr. Campbell. We will look
forward to asking you some questions, as well.
Mr. Calhoon, thank you for being here.
STATEMENT OF MARK CALHOON, SENIOR MANAGING DIRECTOR, BUSINESS
SERVICES DIVISION, WASHINGTON STATE DEPARTMENT OF COMMERCE,
SEATTLE, WA
Mr. Calhoon. Thank you. Chairwoman Cantwell, Ranking Member
Risch, and members of the committee, thank you for inviting me
to testify on State-level experiences and work with the STEP
Program.
My name is Mark Calhoon and I manage the Washington State
Export Promotion Program. I also serve on the State
International Development Organization Board, SIDO. States play
a key role in helping small businesses start or expand their
international sales. State Export Promotion Programs are
typically an integral part of a Statewide economic development
strategy that delivers a range of support and services to small
businesses in order to drive economic growth and create jobs.
The State of Washington has provided export promotion
assistance to small businesses since the late 1970s. We are a
very trade-oriented State, the fourth-largest State exporter in
the U.S.
We work closely with our Federal partners in Seattle to
coordinate resources and provide the best service to small
businesses. Our office is co-located with the U.S. Export
Assistance Center, Ex-Im Bank, the SBA Export Solutions Group,
and the Export Finance Assistance Center of Washington.
The STEP Program has played a valuable role in helping
small businesses expand export sales, and I will use some
examples of our activities and results in Washington to show
how important STEP is for small businesses. By way of
background, Washington received a total of $3 million STEP
funding to date.
With STEP support, we provided export assistance to 446
small businesses, resulting in an increase of $136 million in
actual export sales and $276 million in forecasted export
sales. The results underscore the critical importance of
Federal funding to Washington's Export Assistance Program for
small businesses. The STEP grants received by our State help
fund successful new initiatives, such as our Export Voucher
Program, export promotion in India for the first time for
Washington State, and participation in a series of targeted
industry trade shows in Europe.
Participation and results from these and other STEP
activities are on target to generate a potential return of more
than $135 for every one dollar of STEP funds, and actual
returns were $45 to one dollar.
HasOffers, which Senator Cantwell mentioned, is a great
technology early-stage company in Seattle that tracks the
effectiveness of the advertising campaigns, and I wanted to
give just a quick update on their export activities as a result
of STEP. In late 2011, they had not engaged in international
sales, but at that point realized their opportunities, being a
web-based service provider. They came to us to talk about how
they could get into the Europe market and we gave them an
export voucher which enabled them to go to a key trade show in
Barcelona called Mobile World Congress and join a group of
other Washington State technology companies in attendance in
February of 2012. That resulted in first-time export sales for
the company, which now represent 40 percent of their overall
business, and allowed them to grow from 50 employees in early
2012 to 190 employees today.
As Congress considers the reauthorization of the STEP
Program, I would like to add my support to some key
recommendations from SIDO. Firstly, that STEP should become a
permanent Federal program.
Second, to ensure collaboration, there should be a member
of the State promotion agencies on the Trade Promotion
Coordination Committee. It will be nearly impossible to develop
a coordinated State-Federal plan without a seat at the table.
Thirdly, we need to develop a working group to coordinate
information sharing and report metrics to make sure Congress
receives information it needs in a timely manner. Return on
investment is a priority for States.
We would like to ensure that the Federal share of funding
in the STEP program stays at 75 percent.
And, lastly, we would like to encourage that you make STEP
reauthorization and agency coordination a priority in the
current trade agenda.
In conclusion, I would like to make sure that we do not
take our focus away from the key objective of STEP, that small
businesses are critical to the economic success of our country,
and increasingly, international markets are vital to the growth
and prosperity of small businesses. Exports create and support
above-family wage jobs here in the U.S. and are a critical
component to the ability of small businesses to compete and
grow in the global economy.
I appreciate the invitation and time with you today and
look forward to your questions. Thank you.
[The prepared statement of Mr. Calhoon follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. Thank you, Mr. Calhoon.
And now, we will hear from Ms. Verdon. Thank you for being
here, as well.
STATEMENT OF JENNIFER VERDON, MANAGER OF INTERNATIONAL
BUSINESS, IDAHO COMMERCE DEPARTMENT, BOISE, ID
Ms. Verdon. Thank you. Thank you, Chairwoman Cantwell and
Ranking Member Risch, for providing me and, with that, the
State of Idaho, the opportunity to testify today on the
benefits of the STEP Program. And, also, I would like to thank
you for your efforts in trying to secure permanent export
funding for the program.
My name is Jennifer Verdon and I am the manager for the
International Business Division at the Idaho Department of
Commerce. My team's main focus is to support Idaho's small and
medium-sized Idaho companies in their export efforts.
For the first time ever, commerce companies, and with that
I mean non-agricultural companies, had the opportunity to
receive export funding through the STEP Program since 2011. The
impact of STEP in Idaho is very significant. Small companies in
Idaho are the backbone of our economy, and according to the
SBA, they create more net jobs than any large or medium-sized
companies. Ninety-six-point-eight percent of all employers in
Idaho are small companies. Two-hundred-and-eighty-thousand jobs
are supported by small businesses in Idaho. To illustrate
further how small our companies are, 75 percent of these small
businesses have less than 20 employees.
On the trade side, exports and imports support 190,000 jobs
in Idaho. Given that 80 percent of the world's purchasing power
lies outside of the United States, it is extremely important
that small businesses diversify their customer base if they
want to stay in business and continue to grow.
Now that I have painted a picture of the small business
environment in Idaho, the question remains, why do we need
funding? Why do we need the STEP Program? The short answer is
that exporting is more costly, it is riskier, and the sales
cycles are much longer, meaning it takes longer to find
partners and to find customers and to close the deal. A lot of
small companies simply cannot take the risk or build the
marketing budget to fund their exports.
The State of Idaho has received STEP funding from SBA for
two years and we have submitted the grant proposal for the
third year. In year one, we received $292,000, and of that, we
used 47 percent for sub-recipient grants. In year two, we
received $405,000, and of that, we used over 89 percent for
sub-recipient grants. Other activities funded through the STEP
include trade shows, Governor-led trade missions, and inbound
buying delegations. All of these are activities that are part
of our usual suite of services, but with the STEP funding, we
are able to provide more opportunities and more activities to
small businesses.
The results of STEP in Idaho are a testament to the success
of the program. In two years of STEP, we have funded 110
companies. Over 18 percent of these companies were new to
exporting, and 72 companies used the grants to break into new
markets. The ROI of year two is 35-to-one, which translates
into $12.7 million of actual export sales.
In my written testimony, you can find two examples of Idaho
companies. Right now, I am going to just talk about one
company, due to time.
Wild Touch Taxidermy is one of many examples that would
have not been able to expand internationally the way they have
if it had not been for the STEP Program. Wild Touch Taxidermy
is a small, family-owned business, and as the name gives away,
they prepare, stuff, mount, and sell animals, all kinds of
animals. Their exporting interest was awakened when my team
arranged for them to meet with Taiwanese buyers. However, in
order for companies to close the deal and find partners, it is
essential for them to travel. This would not be possible for
Wild Touch Taxidermy if it was not for the STEP grant.
Just recently, Wild Touch Taxidermy, their owner, traveled
to China with a Gold Key through the U.S. Commerce Service, and
when he returned, he already had a sale of $30,000. That is an
ROI of 12-to-one in the first week of his return of completing
his project, and he is still negotiating sales.
In closing, I would like to point out that less than one
percent of all U.S. companies are exporters. We cannot not
support exporting. Education and export counseling are
necessary components, but without the funding, a lot of
companies cannot execute.
Thank you again for this opportunity, and thank you again
for promoting permanent export funding.
[The prepared statement of Ms. Verdon follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. Thank you, Ms. Verdon. We appreciate
that.
We will now turn to our last witness before questioning,
Mr. Hendrix. Thank you for being here.
STATEMENT OF W. DAN HENDRIX, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ARKANSAS WORLD TRADE CENTER, UNIVERSITY OF ARKANSAS,
ROGERS, AR
Mr. Hendrix. Thank you very much, Madam Chairwoman, it is a
pleasure to be here, and distinguished members of the
committee. I appreciate the opportunity to testify before this
committee to tell you some real stories about how the STEP
Grant Program has been beneficial to the State of Arkansas.
I am Dan Hendrix and I am President and CEO of the World
Trade Center Arkansas, and we are the designated trade
organization for the State by the Arkansas Economic Development
Commission. And, because of that, we have been the recipient of
the State STEP grant funds for the first two years,
approximately $886,000.
This enables us to help the Arkansas small to medium-size
companies, and I emphasize that, as the other testifiers have,
that it is very important for our small to medium-size
companies to have the benefit of the STEP funds because of the
resources that they do not have for their businesses to expand
in exporting.
Our rate of return for the STEP grant has been
approximately 40 percent. We have assisted over 45 Arkansas
companies, and those companies have reported thus far over $28
million of increased export business over the last two years.
Now, we know that the time frame for trade execution is
sometimes long, so the residual effect of the STEP money that
we have provided these Arkansas companies will be ongoing and
long-lasting, because it takes sometimes 12 to 16 to 18 months
to execute a trade deal and to get revenues flowing. So, it is
important that this program continues, not only the fourth year
but on, and hopefully permanent funding.
Several companies that we have assisted have added jobs,
and many of those have retained jobs, because it is important
not only to add jobs, but also to keep those jobs.
The trade promotion activities, we do outbound trade
missions. We also have inbound trade delegations coming in.
And, this is important because these companies have been able
to benefit from the Gold Key Service through the Department of
Commerce. And, a lot of times, these companies would not have
gone on these trade missions. They would not have attended
these trade fairs or these trade shows without these funds
being available. It is just a simple matter of economics.
And, so, with that, we have helped our Export Assistance
Office in Little Rock to be very--to benefit from the STEP
money, too. So, this money actually has gone back into the
Department of Commerce funds by utilizing the Gold Key Service.
We have also established the Arkansas Chapter of the
Organization for Women in International Trade, which is growing
significantly. Also, the FITT program, which is the Forum for
International Trade Training.
These gentlemen and the lady have also talked about how
important education is, and it is important that we help these
companies to understand what it is to be in the export
marketplace, and that way, this trade training that we offer
through Export University, through the Export Assistance
Office, through SBA, and through Ex-Im Bank is very important.
The impact and value of STEP funding is certainly
measurable. I think all here at this table have certainly
reiterated that it is a measurable opportunity and the
statistics will speak for themselves.
The small to medium-size companies that we have talked
about continue to miss global opportunities, and there are four
things that a STEP grant really helps to do, and four things
that are very important to exporters, and that is evaluating
the market potential, and to evaluate market entry constraints,
evaluate market competitiveness, and to seek distributors and
agents. The STEP grant helps provide opportunities for all of
those.
Again, thank you, and I appreciate this opportunity.
[The prepared statement of Mr. Hendrix follows:]
[GRAPHIC] [TIFF OMITTED]
Chairwoman Cantwell. Thank you very much, Mr. Hendrix, and
that was very well said. I like the way that both you and Ms.
Verdon categorized in very specific terms the risk factors
involved in trade, so thank you. Thank you both for that.
I am going to turn to Ranking Member Risch for a statement,
if he would like to make it----
Senator Risch. Thank you.
Chairwoman Cantwell [continuing]. And then we will start
questions.
OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING MEMBER, A
U.S. SENATOR FROM IDAHO
Senator Risch. Thank you, Madam Chairwoman. I join you in
welcoming all of our guests here today.
This is certainly an important endeavor for the Small
Business Committee. I think that most Americans are aware that
trade business is important. I think probably what they are not
aware of is how difficult it is for small businesses to do
this. If you are a big company, you have an army of lawyers and
consultants and what have you to help you do this, but for a
small business, it is very, very difficult.
I think, secondly, something that most people really do not
realize is how important it is, particularly in targeted
industries, to participate in trade shows and trade conferences
that go on in different parts of the world if you are going to
offer your products and services in that regard. And, again, it
is prohibitive in most situations for small businesses to
participate in that. Yet, we have seen through this pilot
program how the returns have been very substantial for
investments that were made there.
So, I am happy to be a participant with the Chairwoman as
we move forward with trying to get this program on a better
track than it is. I think everybody hears about the toxicity
back here and how nobody is working together. Well, the
Chairwoman and I are both all in on this program, and the only
issue that we are trying to resolve is the funding issue, which
seems to be the one that divides us on everything.
But, nonetheless, having said that, we have a good general
agreement, I believe, on how this should be done, and we have
got our very competent staff working on finding the funds to do
this and I am confident that we are going to be able to do
that.
So, thank you, Madam Chairwoman. Back to you.
Chairwoman Cantwell. Well, thank you. And, again, I want to
thank Senator Risch, because we have been working on this. I
think you and I see eye-to-eye on how important this is, and I
do not know if that is a Northwest perspective, with our two
economies being so focused on trade, but your leadership has
been very helpful on this and I certainly enjoyed going to
Idaho. And, I thought one of your business leaders said it best
when he said, exporting is not for wimps.
[Laughter.]
I think that what he meant was that you need to have a real
stomach to go and approach these market opportunities. So, we
had a lot of good testimony from people from both our states.
Senator Risch. We did, Madam Chairwoman, and again, I am
not familiar with every State, what they do in that regard, but
certainly, Idaho, through the Department of Commerce and the
State of Washington, the things I have heard, they are also all
in on the efforts that we are making here, particularly for the
small businesses, and we thank you, certainly, for those
efforts.
Chairwoman Cantwell. Good. Well, let us turn to some
questions, and I did want to follow up on trying to
characterize the benefits of the program in specific terms.
Obviously, as my colleague just said, we see the benefits of it
very clearly in our States, but maybe not all our colleagues
do. You clearly articulated that there are risk barriers to
trade, Ms. Verdon, and you talked about high costs, high risk,
obviously very small marketing budgets, and the smaller you
are, the less experienced team of people to assess those
opportunities.
So, the first three of you and Mr. Hendrix, I wanted to see
if we could get some comment about whether you were exporting
before using the STEP Program. So, is the STEP Program just
providing that extra incentive that is helping businesses focus
on this? Is that what it does? It just breaks down that risk
barrier?
Mr. Hahn. Senator, I do not know if it is necessarily--I
guess, here is my feeling on it. I think what the STEP Program
does is it allows us to take our dreams and formalize those
into actions. You know, as was stated earlier, we did not have
a lot at our disposal in terms of technical expertise, in terms
of, you know, money to actually go overseas. We were doing very
well at home, and we are actually very satisfied, I mean,
because Boeing being one of our largest customers, we thought--
we were very content.
And, I think when we were approached by this program, that
all of a sudden, I think it just turned a light bulb on, and as
I said earlier, it allowed us to take those dreams--because we
had already always talked about, someday, we were going to go
overseas. Someday, we were going to be this great exporter of
materials. And, as I think this gentleman said earlier, you
know, we were doing some international, but it was coming
through distributors that were based in the United States that
were actually selling to people overseas and they were
utilizing our products in the mix, but we never saw the actual
end customer and we never really engaged in that actual end
customer.
And, so, this program gave us--opened that door. It allowed
us to not only see and talk to that end customer, but to create
a relationship that ultimately culminated in a very strong
sales pipeline.
Chairwoman Cantwell. And, so, you would have just waited
until a later point in time to create an export strategy, or it
just gives you the ability--you had one in mind, but you just
could not--you did not have the resources to execute on it.
Mr. Hahn. We did not have the resources to execute on it.
And, as I said, you know, yes, to answer your question, we
would have probably just waited. We would have looked for
secondary opportunities through companies based in the United
States that were doing business overseas and probably would
have been content with that for a while. But, gladly, or
thankfully, this program came along, and I think not only jump
started our efforts, but I think we are doing great because of
it now.
Chairwoman Cantwell. Good. Mr. Tyler or Mr. Campbell, do
either of you want to add to that?
Mr. Tyler. Certainly, we will agree with it. We had an
export plan that really had no timeline that went with it. We
knew that if we wanted to do something like an air show or a
large trade show, that would be a $14,000 ticket just to get in
the door, and then we would have travel expenses, and then we
would really need to have some representation over there to
follow through, and those are all high-dollar and high-time
involvements. And, we really did not know what we were doing,
so we needed some help from professionals, and, of course, they
needed funding.
I spoke that some of the help that we had from the New
Hampshire International Trade Resource Center is partly also a
result of the STEP funding. So, we were going to get nowhere,
probably, without this. Of course, this brought the cost down
significantly for us to get in the door, and at the time, we
were maybe 60 people when we really started kicking off. We are
about 120 now, and as I have said, about 22 of that is from the
export sales that we do today, and that is something we
normally can afford.
That is why I was happy to say in my testimony that the
things we are doing today are not requiring continued STEP
involvement. So, a success as I see it.
Chairwoman Cantwell. You are a STEP graduate.
Mr. Tyler. There we go.
[Laughter.]
Chairwoman Cantwell. Mr. Campbell.
Mr. Campbell. I echo those comments, but I would also add
that the STEP Program accelerated our path to entering the
global market. I tried it on my own in the past. It took a
little bit of effort to try to get there, and I could tell that
it was going to take a lot longer without some type of help
from professional resources and the networks from our State
VEDP and SBDC, the things that they have put in place for us,
the training, the other resources. So, it is not just about the
money. The money is the means to the end. But, as an
entrepreneur, I like to take that money, invest it into the
business, and see the business grow, and we have already
started to see some return on investment in a short time.
Chairwoman Cantwell. Great. Thank you. Thank you.
Senator Risch.
Senator Risch. I will yield to my distinguished colleague,
Senator Shaheen.
OPENING STATEMENT OF HON. JEANNE SHAHEEN, A U.S. SENATOR FROM
NEW HAMPSHIRE
Senator Shaheen. Thank you very much for holding this
hearing and for the effort to reauthorize the STEP Program.
And, I want to welcome Don Tyler from Corfin Industries in
New Hampshire. I have had the opportunity to visit Corfin and I
have seen the impressive services they provide to so many
industries and really hear firsthand about the difference that
the STEP Program has made for you all.
I think you pointed out that you have been able to add 22
additional employees as a result of the program, which I think
is very impressive, and it speaks to the importance to small
businesses and why we need to provide this assistance for
exporting.
You know, one of my favorite statistics is that 95 percent
of markets are outside of the U.S., but only about one percent
of small and medium-size businesses do business outside of the
U.S. So, that says it all when it comes to why this program is
so important.
Madam Chair, before I ask my questions, I just wanted to
enter into the record a letter that I received from the Program
Manger of the International Trade Resource Center of New
Hampshire which speaks to the importance of the STEP Program
and also the concern about the match percentage, which I know
has been under discussion. But, for small States like New
Hampshire, being able to maintain the 25 percent State match is
really important, because we have fewer resources, fewer
employees who can help our small businesses.
So, I would like to enter this into the record and just
point out that one of the statistics she cites in this letter
is that in 2013, New Hampshire actually had the highest
percentage increase in exporting in the country and how
important the STEP Grant Program was to making that happen.
And, one of the real benefits we were able to accomplish
through the program, which, Don, you may have spoken to in your
testimony before I got here, is the Aerospace and Defense
Export Consortium, because that has provided a real opportunity
for so many businesses in the State.
So, if I could enter that into the record.
Chairwoman Cantwell. Without objection.
Senator Shaheen. Thank you very much.
So, Don, I wonder if you could talk about--you talked about
the number of employees you were able to add as the result of
the exporting that you have done. Can you also talk about how
STEP helped in terms of building relationships with future
customers and how you see that playing a role in your increased
exporting.
Mr. Tyler. Certainly. The previous efforts we had made to
try to get into export, mostly Europe, had been speaking
engagements at technical conferences, and, of course, that is a
once-a-year event and you can persuade somebody that you have
got a great product, but if you do not really have a presence
there, you are quickly forgotten, and I think that was our
biggest issue, is we needed to be there more often. We needed
to have representation.
The goal of--or, the effort of trying to find
representation was a little beyond us. We really did not know
where to start, and again, the International Trade Resource
Center and the Commercial Service, the U.S. Commercial Service
that did the Gold Key Service, that was our primary goal with
those Gold Key Services, was to try to find good reps.
We succeeded in the U.K., Spain, France, and Italy so far,
and we are still looking in Germany. So, by having those folks
there, of course, in the same time zone, so when somebody wants
to pick up the phone in the morning, they are able to talk to
somebody other than waking me up on a mobile phone and I am a
little groggy.
But, they are having that familiarization. They are having
people that come and visit them once a month and talk about new
developments that are happening back at the factory. We take
those reps to our factory so that they keep educated on what we
are doing, as well. And, of course, all that business does come
into New Hampshire. None of the services are actually performed
outside of the State of New Hampshire.
Senator Shaheen. And, can you--you may have said this in
your testimony, but how much have you seen your export growth
expand since getting the STEP grant and really making a full-
blown effort at exporting?
Mr. Tyler. I think we started at about 1.3 percent of our
overall revenue was from outside of the U.S. about three years
ago, and now, we are 12 or 13 percent, and that is growing at a
nice rate. But, what is more important is that is not 12 or 13
percent of the same overall revenue. The overall revenue has
grown 30 percent in that period of time, too, so we are doing
pretty good. But, that is a big part of it right now and I am
confident this time next year I will be bragging about some big
things that are in the works right now.
Senator Shaheen. Good. Well, hopefully, we can get this
reauthorization done and that will help.
Mr. Tyler. Please.
Senator Shaheen. Mr. Calhoon, you mentioned the importance
of cooperation between State and Federal entities in helping
small businesses export. A couple of years ago, my colleague
from New Hampshire, Senator Ayotte, who was at that time on the
Small Business Committee, and I hosted a hearing of the
committee in New Hampshire and we heard from New Hampshire
businesses, and that is one of the things we heard from
officials in our Trade Office in New Hampshire and from some of
the small businesses, that there would be real benefit to
having more cooperation between States and the Federal level in
trade initiatives.
You talked about putting--I think what you said was putting
the State person on some of the Federal committees. Is that
what you are suggesting?
Mr. Calhoon. The solution we came up with in Washington was
in our office in Seattle is to co-locate with the U.S. Export
Assistance Center. We have an Ex-Im Bank representative in
Seattle. We have an SBA Export Solutions Regional Manager, and
then a Washington State Export Assistance Center. So, we are
all co-located.
You know, those companies can speak to this. I think we
overwhelm them with material and they are confused, I think,
oftentimes, about what all these different programs are, what
is the best one for them, where should they fit in, and I think
when we can coordinate all of our efforts and put it together--
we formed a Washington Export Outreach Team last year in our
State and launched our first event on Monday this week, so we
are starting a series of day-long Export 101 programs around
the State that all of the State and Federal agencies are
coordinating on and participating in, again, to try to lessen
the confusion for small businesses on which door is the right
door.
Senator Shaheen. Thank you.
As the result of the hearing that we held in New Hampshire,
we introduced some legislation called the Small Business Export
Growth Act, and one of the things we would create as part of
that legislation is a working group on the Trade Promotion
Coordinating Committee to identify ways that would improve
coordination. We have had some success in New Hampshire with
co-locating, although, because of a loss of State resources,
much of that has disappeared and is being rebuilt now.
But, do you have any thoughts about whether this kind of a
working group might be helpful in recommending more ways to
cooperate? And, if anybody on the panel wants to weigh in on
that, feel free to do so, as well.
Mr. Calhoon. And, one of the SIDO recommendations is
actually to try to add a State-level person onto the Trade
Promotion Coordination Committee, which we think would be vital
to try to get that true Federal-State partnership, that without
a seat at the table, it is hard to get the level of
coordination.
Senator Shaheen. Right.
Mr. Calhoon. So, that would definitely be one
recommendation we would support.
Senator Shaheen. Thank you. Thank you, Madam Chair.
Chairwoman Cantwell. Senator Risch, would you like to ask
questions?
Senator Risch. I will yield back. Thank you very much,
Madam Chair. I think this has been a great hearing and, again,
has underscored for us the importance of this program. I am
looking forward to everyone on the committee working together
to try to make this work.
Chairwoman Cantwell. Great. Thank you.
Well, I have a few more questions from some of the
testimony. My colleague has brought up this issue about State
and Federal match, but also, there is an issue of whether the
grants should be allowed to be spent over a two-year period of
time as opposed to one year, and I do not know if anybody wants
to comment on that. Maybe the people at the--yes, Mr. Hahn.
Mr. Hahn. Yes, Madam Chair. You know, as I spoke earlier,
the aerospace selling cycle is fairly long. I think that having
it spread over two years would be highly beneficial. I mean, it
would--not necessarily that maybe we--maybe it was not
necessarily critical in our case that we had that second
opportunity, because I think that we did have grant money to go
that second year, as well. But, what that demonstrates, I
think, is that, because of the sales cycle, that if you are
able to not only make that initial contact and then sustain
that relationship and build upon that relationship by being
able to attend subsequent shows, I think it would be highly
beneficial.
Chairwoman Cantwell. Mr. Campbell, did you want to add to
that.
Mr. Campbell. Yes, Senator. I also think it would be
beneficial to have a two-year program. In my testimony, I
mentioned two other programs that are also helping our
business. So, we graduated from STEP and then we entered two
other programs within the State of Virginia that have helped
us, not just with funding, but with networking of other
resources, getting us in contact with other entities,
performing some services like getting our ISO certifications.
We are also now registered with a Virginia exhibition booth
that they will have at a major conference in the Middle East
next year and we will be part of that at a fairly discounted
rate. So, it helps us financially, but it also helps us with
credibility that we are going to be showing at a major exhibit
with the State of Virginia and other businesses.
So, a two-year time scale, I think, is beneficial,
especially in these markets where, for instance, we are looking
at Saudi Arabia right now and it takes six months to a year
from the time you make the decision to get started and you make
the application to set up a business there, to the time you may
even hear back from them. That does not include the time it may
take to find the right partners to enter into some agreement
with, which could be a long-term agreement.
And, so, a two-year program certainly would be beneficial
for entering the market, but then we also need to think about
sustaining once the business is there. What are the next
challenges that a business will face?
Chairwoman Cantwell. Okay. Yes, Mr. Hendrix.
Mr. Hendrix. At the end of the grant, a two-year--second
year grant period, we had over 15 Arkansas companies that had--
qualified companies that had applied for STEP grant funding.
And, of course, the money has to be spent and allocated before
that year was up. So, having a possible two-year spread would
enable us to possibly have given some of those 15 companies
some of the funds where we were trying to push and push and get
that money out the door. So, I think that a two-year program
would be beneficial, I think, for us as an administrator of the
funding.
Chairwoman Cantwell. Okay. And, Mr. Calhoon mentioned
metrics. So, how do we get--is that something we have, or that
is at SBA, or we put more teeth into what States have to do, or
how do we get better metrics? I mean, many of you have provided
great metrics, but, obviously, we want to learn from this, and
so what is the recommendation?
Ms. Verdon. I think having a two-year program would be
beneficial on the metrics side. We heard that the sales cycles
are longer for international deals. Right now, we are only
reporting on one year. If we would be collecting results from
STEP year one, we would actually have higher numbers, because
some sales just do not come in in the first year. They take two
years to close that deal.
I think we are doing a great job in collecting the results.
It is a matter of defining what we need to be collecting. If we
want actual sales, no problem. We can collect actual sales.
Estimated sales, we can collect estimated sales, but, there is
a question of how valid estimated sales are. We would rather
collect actual sales.
Chairwoman Cantwell. Well, somebody mentioned--somebody on
this end, I think, mentioned forecasted sales, which I think
what they are basically--most companies have very prudent
booking of sales forecasts. You know, even if they close a big
deal, they will book that over several quarters or several
years just so that they guarantee that it will actually come
in. And, so, I do not know who, if somebody down here mentioned
that or wants to comment on that, but, I think, from an
accounting purpose, someone believed that those were actual
sales, is that correct?
No one remembers who mentioned forecasting? Somebody gave
me a number on actual sales, and then forecasted sales.
Mr. Hahn. Yes, I did, Senator.
Chairwoman Cantwell. Okay.
Mr. Hahn. I am sorry. Yes. No, the forecasting was really
projecting what the potential for this several deals that we
have in the offering now that we are currently negotiating. You
know, the money that comes in is going to be significant. We
just do not know what it is right now because we do not know
what the volumes are going to be. But, that is why I made the
comment that we are looking at an additional $1 to $2 million,
depending upon what kind of volumes they start out with and,
ultimately, you know, if those volumes are sustained.
We have every confidence that, just because of the way
aerospace works, that once you are spec-ed into a product, it
is pretty hard to lose it unless you lose it yourself through
poor quality or performance. So, we anticipate that that $1
million is conservative and that the $2 million is likely or
potentially likely, and then who knows where it will go from
there.
Chairwoman Cantwell. Okay. Great.
Senator Shaheen, do you have any more questions?
Senator Shaheen. I just have one more. One of the things
that has been pointed out to me is that, oftentimes, when we
are exporting, or when you are exporting, you are competing
against other companies that have subsidies from the
governments where they exist, and that one of the things that
STEP does is help to level that playing field in a way that is
really important to our small businesses. And, I just wondered
if anybody had had that experience with companies exporting,
that you know your competition overseas is getting a subsidy in
some way from the country where they operate and what kind of a
challenge it presents.
Mr. Campbell. Well, I do not have a lot of details,
Senator, but I do know that it exists, and I think I mentioned
in my testimony, also, some disparities or differences in tax
regulations of treatment----
Senator Shaheen. Right.
Mr. Campbell [continuing]. For companies like ourselves.
So, that exists, so we have to find other ways to compete and
work around that to compete more on value and the product and
the service that we are providing, knowing that we are going to
be higher priced. The good news for us is that we are in a
market where they love U.S. companies, so that helps a lot.
But, now I need to stand behind that with the quality, the
services that we provide, and show the value that makes up that
difference so that I can compete competitively.
Senator Shaheen. Thank you, and that is one of the real
benefits of STEP, is that it helps you offset some of that.
Thank you, Madam Chair.
Chairwoman Cantwell. Great. Well, I want to thank all our
witnesses. This is a great discussion. We appreciate the hard
work that you are doing in helping our country grow jobs, and
we certainly want to thank the representatives of the various
agencies of the Departments of Commerce at the local level.
Thank you for your work on all of this. We look forward to
moving this legislation and making it an ongoing program so we
can continue to grow exports. But, thank you all very much. We
appreciate it.
We are adjourned.
[Whereupon, at 4:06 p.m., the committee was adjourned.]
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