Environmentally friendly coffee? That’s about to get a whole lot easier thanks to North Carolina innovators.
About two decades ago, the Monroe-based Maverick Enterprises opened up shop, initially selling biodegradable coffee bags. The firm’s products have proven hugely popular, both here at home and internationally.
Maverick Enterprises is now looking to expand its product line and putting the final touches on a biodegradable version of a miniature coffee pouch, like those used in Keurig insta-coffee machines.
This kind of innovation is commonplace in North Carolina. And it would not be possible without a little-known federal institution called the Export-Import Bank. The bank’s mission is to provide finance guarantees to facilitate foreign trade. Hundreds of small businesses throughout North Carolina, including Maverick Enterprises, have relied on the Ex-Im Bank to sell their goods abroad.
Unfortunately, this bank is now under threat. Unless Congress acts to reauthorize it, the Ex-Im Bank will be closing its doors for good at the end of this month. It’s now up to North Carolina’s lawmakers to support an agency that has helped local companies grow exponentially.
President Franklin Roosevelt started the Ex-Im Bank in 1934 as a way to encourage exports during the Depression years. Today, the bank offers direct loans and loan guarantees to foreign buyers interested in U.S. goods. It also provides export insurance for U.S. companies selling abroad, reimbursing the company as much as 95 percent if a buyer doesn’t pay. And it provides working capital loan guarantees,which help finance the production of export goods.
In the decades since its creation, the Ex-Im Bank has generated widespread bi-partisan support, with both Democratic and Republican presidents extolling its virtues and renewing its charter.
For good reason. Last year alone, the Ex-Im Bank supported $37 billion in exports from companies employing more than 200,000 workers. When you count the ripple effects of those jobs, the total number benefiting from the activity of the Ex-Im Bank extends to more than a million.
In North Carolina alone, the Ex-Im Bank has helped 188 companies export $2.6 billion worth of goods over the past seven years, supporting more than 16,000 jobs.
While some big companies get help from Ex-Im, 80 percent of the bank’s customers are small businesses trying to break into or expand foreign markets.
These are companies like Dry Corp and Dry Case, sister firms in Wilmington that employ about 20 people. With the help of the Ex-Im Bank, they were able to offer more flexible payment options for overseas buyers rather than requiring cash on the barrel head. Exports now account for nearly $1 of every $5 of their sales.
Or take Raleigh-based AFEX, which employs nearly 50 people to make fire suppression systems. It does 65 percent of its business abroad, thanks in large part to the Ex-Im Bank. “It gives us a competitive advantage in terms of being able to offer our products on a credit basis,” company officer Mark Cavallaro told The News & Observer.
They’re businesses like Conover-based Tradewinds International, a small lumber distributor that relies on the Ex-Im Bank for a share of its exports. With the decline of the state’s furniture industry, exports now account for 95 percent of the company’s business.
Despite these obvious benefits, the bank is under serious attack by some in Congress – including the House Majority Leader and the chairman of the House Financial Services Committee. They have wrongly lumped the bank in with other government “corporate welfare” programs and want to shutter it.
They couldn’t be farther off in their characterizations of the bank. It doesn’t provide costly tax loopholes or hand out taxpayer cash. The vast majority of its beneficiaries are small companies. And it doesn’t cost the government anything, since it relies on fees paid by businesses to cover its expenses. In fact, the bank has netted $2 billion for the treasury over the past five years.
What’s more, it’s proven to be a low-risk operation, with a loan default rate of less than one quarter of 1 percent.
Almost every major United States trading partner provides similar help to encourage exports by domestic firms. There are at least 59 such national foreign export credit agencies around the world. Without the Ex-Im bank, U.S. companies would end up at a competitive disadvantage.
So Congress should do what it has done for 80 years and reauthorize the Ex-Im Bank. If it doesn’t, small business owners may find themselves closing shop. With a sluggish recovery at home and the importance of exports to our economy increasing day by day, it simply doesn’t make sense to tilt the playing field against our own businesses in the global marketplace.
Harvey Schmitt is President and CEO of the Greater Raleigh Chamber of Commerce. Made up of 2,400 member firms, the Greater Raleigh Chamber is one of the largest business membership organizations in North Carolina.