Jason Speer spent months developing a business deal that was shaping up nicely.
Speer is the president of Quality Float Works, Inc., a manufacturer of metal float balls, valves and assemblies that level liquid controls for a variety of industrial applications. He had reached an agreement with a residential real estate developer in Saudi Arabia to supply shut-off switches for water tanks installed in the new homes of a development outside of Riyadh.
Speer had traveled from Schaumburg, Ill., about 25 miles northwest of Chicago, to Saudi Arabia three times to negotiate the multi-phase deal. He is awaiting a letter of credit from the Saudi real estate developer’s bank to his bank with an accompanying purchase order.
Right now, one obstacle stands in the way. Speer needs a working capital guarantee from the U.S. Export-Import Bank to finance the raw materials required to manufacture the switches. With Ex-Im Bank’s lending authorization set to expire on September 30 if Congress fails to extend its charter, the contract with his Saudi client hangs in the balance.
“Private lenders won’t touch (loans) for the type of materials we need, and it’s very hard for small and medium size businesses to raise capital upfront,” Speer said. “During our planning, never once did we think the Bank would lose its authorization. We might be forced to scramble to try to find other options, without which we won’t be able to fulfill this order.”
If the deal collapses, Quality Float Works stands to lose $15 million in revenue and will hold off hiring the six new employees needed to service the Saudi contract, Speer said. Ex-Im’s predicament is troubling for a small business increasingly dependent on exports. While exports accounted for just 3% of Quality Float Works’ sales in 2001, today they make up 35% of the firm’s sales, with customers in nearly three dozen countries. The number of employees at the company has doubled to 24 in that time.
The pending deal with the Saudi developer is the first instance in which Quality Float Works has applied for an Ex-Im loan guarantee, and it hopes it won’t be the last. Speer, a committed small business advocate who has testified before Congress in support of free trade agreements, says his message to members of Congress is simple: “The Ex-Im Bank can make or break the ability of small and medium size businesses to export, and, by extension, their ability to create jobs and grow the economy.”
“Exporters for Ex-Im” is a blog series focused on the importance of the Export-Import Bank to manufacturers. To learn more or to tell Congress you support reauthorization of the Export-Import Bank, visit http://www.nam.org/Issues/Trade/Ex-Im-Bank.aspx.