With 95 percent of consumers located outside the United States, exporting offers opportunities for U.S. manufacturers seeking to find new markets and grow their revenues.
As U.S. exports continue increasing—topping $3 trillion for the second year in a row—the Export-Import Bank of the United States (EXIM) can equip businesses of all sizes with the trade finance tools they need to take advantage of that vast prospective market.
May is World Trade Month, providing the chance to underscore not only the importance of global trade to the U.S. economy, but explain the value of trade to U.S. companies that want to grow their business and increase their profitability.
Recent numbers from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, both agencies of the U.S. Department of Commerce, illustrate the possibilities. In 2023, exports of goods and services increased by $35 billion, or 1.2 percent, to $3.05 trillion. That total includes $2.05 trillion in exports of goods and $1 trillion in exports of services.
“Everybody is buying American these days when they can. Selling a U.S.-made product is extremely important to our customers,” says Kathie Leonard, president and CEO of Auburn Manufacturing Inc. of Mechanic Falls, ME, which has been an EXIM customer since 2019. Exports account for about 25 percent of Auburn’s sales, and the company ships to more than 30 countries worldwide.
Jeco Plastic Products has been exporting plastic pallets for more than 25 years. Photo courtesy Jeco Plastic Products LLC
Getting Started
While the prospect of selling internationally may sound daunting, businesses don’t need to do it alone. There are government resources available to help at every step along the way. Here are answers to common questions about how to get started.
How can a business protect against nonpayment by a customer in another country?
Export credit insurance is an insurance policy, like a policy for a house or car. In this case, it provides coverage on the accounts receivable generated from international sales. What if a buyer doesn’t pay on time, or at all? What are the unique risks in specific countries? These are exactly the concerns export credit insurance is designed to address to help companies manage the risk involved with selling abroad.
Exports account for about 25 percent of Auburn Manufacturing’s sales, and the company ships to more than 30 countries worldwide. Photo courtesy Auburn Manufacturing Inc.
How can a business offer favorable credit terms to its international customers?
Although businesses may require customers to pay cash in advance, they often realize that practice can cost them business in the global marketplace. Export credit insurance gives them the power to extend credit terms, which can be a competitive advantage in winning new customers and increasing sales to existing customers. An added benefit is that lenders will often accept insured foreign receivables as collateral, which expands a company’s borrowing base and strengthens its cash management.
How can a business access cash up front to fulfill orders or pay for operations?
A working capital loan guarantee offers exactly what it sounds like—a guarantee to lenders so they will be more willing to lend money to purchase or manufacture goods and services destined for export. Lenders are more likely to include foreign receivables and inventory in the borrowing base when those receivables are insured. The collateral for the loan is the export-related inventory itself (including work in progress) as well as the foreign accounts receivable generated from the sale of the products.
Auburn Manufacturing makes advanced textiles for extreme-heat environments. Photo courtesy Auburn Manufacturing Inc.
How can EXIM provide financing for export-oriented domestic manufacturing projects?
EXIM now offers a domestic financing tool designed to strengthen supply chains and reshore American jobs by encouraging manufacturing in the United States that is tied to exporting. The Make More in America Initiative (MMIA) works by making EXIM’s existing medium- and long-term loans, loan guarantees, and insurance available for export-oriented domestic manufacturing projects.
“Supporting companies looking to expand their domestic manufacturing capabilities is not only a critical step to ensure they can grow through exporting, but also strengthens our supply chains and brings good-paying jobs back home,” says EXIM president and chair Reta Jo Lewis.
Under the MMIA initiative, EXIM approved financing for Aquatech International, a small business headquartered in Canonsburg, PA. A longtime EXIM customer, Aquatech has used export credit insurance and working capital loan guarantees to support exports to more than 60 countries on six continents. The new financing will support the expansion of its applied testing and development laboratories to support lithium extraction and processing as part of electric vehicle supply chains.
“The world is a big place,” says Venkee Sharma, Aquatech chairman and CEO. “If you don’t export, I don’t see how as a company you’re going to scale as a business, how you’re going to be able to support your major customers because most of them will be around the world, and how you’re going to integrate and ultimately compete in the world. I think it’s an extremely important facet to any organization, and it’s not just a large organization.”
A longtime EXIM customer, Aquatech has used export credit insurance and working capital loan guarantees to support exports to more than 60 countries. Photo courtesy Aquatech International
How can going global become an investment in growth for small businesses?
Nearly 90 percent of the total number of EXIM’s transactions directly benefit small businesses. In fiscal year 2023, that amounted to slightly more than $2 billion.
One of those small businesses is Jeco Plastic Products LLC, a global leader in manufacturing custom plastic pallets, which have been sold on every continent and even traveled into space. Headquartered in Plainfield, IN, it has been exporting for more than 25 years and using EXIM’s export credit insurance since 1998.
From the beginning, Jeco’s owner and CEO Craig Carson recognized that shrinking domestic markets meant exporting was crucial to ensuring growth. With EXIM’s support in assessing the credit risk of international buyers, Jeco was able to offer favorable open account payment terms to its customers, which proved to be instrumental in the company’s expansion and paved the way for double-digit sales growth.
Exports now comprise about 65 percent of Jeco’s sales volume. Many of its international customers use those components in products that ultimately return to the U.S. market.
That partnership with EXIM gives small businesses the confidence they need to plan and invest in their operations, Carson said.
“What it does protect you from are things that are beyond your control,” he says. “And that list is quite long when you’re small, whether that be credit worthiness of the end-user, some supply chain disruption, or something that suddenly constrains availability of working capital, which in turn also constrains your ability to grow. And that’s where EXIM fits into that.”
See more stories here about how other U.S. manufacturers, like Jeco Plastic Products, have grown their business by expanding into global markets. To find out how EXIM can help U.S. businesses compete worldwide, talk directly with a trade finance specialist. Visit www.exim.gov or call 800-565-3946.
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For more information on EXIM and exporting, read these articles:
Failure to Renew EXIM Bank Charter Leads to Loss of US Manufacturing Jobs
Resiliency in the Electronics Manufacturing Supply Chain Requires a Team Approach
US Competitiveness Unlocks Reshoring Opportunities
