For Immediate Release
June 18, 2014
Small Businesses to Committee: Exports Fuel Job Growth
Small businesses and states testify on key SBA tool that supports $900M in small business exports
Cantwell, Risch working together to reauthorize program, set to expire Sept. 30
WASHINGTON, D.C. – The Senate Committee on Small Business and Entrepreneurship heard strong support Wednesday from companies and trade experts for reauthorization of a key tool in helping U.S. small businesses increase exports and stay competitive in a global economy.
The hearing, entitled “Growing Small Business Exports, Growing U.S. Jobs,” focused on the U.S. Small Business Administration’s State Trade and Export Promotion (STEP) program. STEP was created in 2010 to help small businesses by awarding competitive grants to states to help small businesses begin or expand exports of their product or services. STEP generated a 15:1 return-on-investment and has supported more than $900 million in small business exports.
U.S. Senators Maria Cantwell (D-WA), committee chairwoman, and Jim Risch (R-ID), the ranking member, have both made small business exports a bipartisan priority for the committee.
“One way to continue to help the U.S. economy and create U.S. jobs is to help small and medium sized companies look at export opportunities,” Cantwell said. “As the middle class around the world continues to grow, it is going to expand from 2 billion today to nearly 5 billion by 2030, so exports represent a huge economic opportunity to create jobs right here at home.” Video of her remarks is available here.
“Most Americans are aware that trade business is important,” Risch said. “I think what they’re not aware of is how difficult it is for small businesses to do this. If you’re a big company, you have an army of lawyers and consultants to help you do this. If you’re a small business, it’s very difficult.”
Exports drove about one-third of economic growth during the last five years and account for about 14 percent of the economy. But less than 5 percent of 28 million small businesses in the United States currently export products or services, leaving untapped potential. About 95 percent of the world’s consumers live outside of the United States. About 11.3 million jobs in the United States were supported by exports in 2013.
But small businesses face higher risks than larger companies because exporting products is costly. Many small businesses can’t afford the travel expenses, consulting, or longer sales cycles.
“The STEP program greatly contributed to my company’s success,” said Eric Hahn, vice president of at General Plastics, a manufacturer in Tacoma, Washington. “It allows us to take our dreams and formalize those into actions. We didn’t have a lot of that at our disposal in terms of expertise or money to go overseas.” Video of his testimony is available here.
General Plastics was founded in 1941 and is a supplier of specialized plastics and polyurethane foam to the aerospace, defense, marine, and construction industry. The company generated $100,000 in new sales from attending international trade shows with STEP grants, and now is negotiating with aerospace suppliers and a major European marine company that could generate sales of $1 million-plus over next three years and result in hiring 10-15 new employees, Hahn said.
STEP was enacted in the Small Business Jobs Act of 2010, and helps small businesses address the risks that are less of a factor for larger companies. STEP grants produced a return on investment of 11:1 in their first year and supported more than $330 million in actual and projected state-reported export sales. In its second year, STEP had a return of investment of more than 19:1 and supported $575 million in state-reported export sales. Authorization for STEP expires at the end of the current fiscal year and the Obama administration has not requested additional funding for the program for the next fiscal year.
Both Idaho and Washington were among the top 10 states in the country for return on investment in the STEP program. Cantwell and Risch are working on a bill to extend the STEP program with improvements based on lessons learned from participating companies. STEP is set to expire Sept. 30.
“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,” said Mark Calhoon, who oversees STEP grants for the Washington state Department of Commerce. “Exports create and support above average 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.” Video of his remarks is available here.
Since STEP began in 2011, SBA has awarded Washington state $3 million. In total, more than 446 Washington state small businesses have received some assistance from STEP. Calhoon said that STEP grants resulted in a $136 million increase in export sales and a $276 million increase in forecasted export sales. Those sales represent $16.5 million in actual and projected tax revenues and support 2,230 jobs.
“Small businesses are the backbone of our economy,” said Jennifer Verdon, manager of the International Business Division of the Idaho state Department of Commerce.
More than 280,000 jobs in Idaho are supported by small businesses and 75 percent of the small businesses in Idaho have less than 20 employees, Verdon said. Idaho received $292,000 and $405,000 in the first two years of the STEP program, and has awarded 110 small companies. Furthermore, 72 companies used the grants to enter into new markets. In the second year, STEP grants have helped companies produce $12.7 million in export sales, a return on investment of 35:1.
The committee also heard from Don Tyler, Director of Corfin Industries in Salem, New Hampshire. Using STEP, Corfin was able to attend international trade missions in England, Germany, Italy, Singapore, and Japan, which helped the company grow its international revenue from one percent to 12 percent and hire 22 new employees; and Robert Campbell, President and CEO of Alliance Solutions Group in Newport News, Virginia. Alliance Solutions Group, which provides crisis and disaster services, used part of its STEP grant to go on a trade mission to the United Arab Emirates, which allowed the company to understand the market, the culture of doing business there, and refine the company’s strategic planning.