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With Ex-Im Bank’s help, DemeTech pursues risky export markets

 

Fred P. Hochberg, chairman and president of Ex-Im Bank, toured the Miami Lakes company Monday.

More information

New Ex-Im Bank programs

•  Global Credit Express: Small businesses that export and are credit-worthy can apply for a line of credit of up to $500,000 for up to 12 months with options for renewal. The program finances the business of exporting and the money can be used for short-term working capital rather than to finance specific export transactions. During the pilot stage, the program will be offered by these lenders: Bank of America Merrill Lynch, Silicon Valley Bank, HSBC USA, PNC Bank, MB Financial Bank, UPS Capital Business Credit, Regions Financial Corp. and CFS International Capital Corp.

•  Financing to put U.S. companies on equal footing with foreign competitors: Ex-Im Bank can now provide competitive financing to U.S. companies competing for domestic or international sales against foreign companies that receive official “non-competitive’’ financing. The Obama administration said it took the action to level the playing field for U.S. companies competing against foreign companies that don’t play by global export financing rules.


mwhitefield@MiamiHerald.com

For DemeTech Corp., a Miami Lakes manufacturer, it often seems the tougher the export market, the better the opportunities.

DemeTech is a manufacturer of medical and surgical supplies and specializes in surgical sutures. It exports to 103 countries and its best markets are Iraq and Egypt.

Its client list also includes Libya, Iran, Syria and Saudi Arabia — markets where instability and the risk of not getting paid might keep an exporter awake at night.

But three years ago, DemeTech began working with the Export-Import Bank. It has a $500,000 multi-buyer policy with the bank, meaning the U.S. government guarantees to back commercial bank loans, shifting the risk away from the banks and making them much more likely to finance sales in the parts of the world where DemeTech finds ready markets.

“No bank wanted to touch us until we got the Ex-Im insurance,’’ said Luis Arguello, president and chief executive of the family-run company.

Now, with the ability to finance deals, he said, business has picked up and he has added 45 workers in the past two years. The company now employs 75 and revenue has nearly tripled over the past few years.

“DemeTech is a great company. It’s the essence of what President [Barack] Obama had in mind with his export initiative,’’ said Fred P. Hochberg, chairman and president of the Export-Import Bank who toured the Miami Lakes company on Monday.

Obama’s National Export Initiative has a goal of doubling U.S. exports by the end of 2014. In the first two years of the program, exports were up by nearly 16 percent, said Hochberg.

“This becomes an even more essential goal if we are going to put people back to work,’’ he said. With consumer and government spending and business investment sluggish, export growth is one of the few bright spots.

About 90 percent of DemeTech’s business is export. But without Ex-Im backing, the company probably would deem about a third of its business too risky to undertake, said Luis Arguello Jr., the vice president. “Our products tend to do well in difficult markets.’’

DemeTech specializes in sterile surgical suture kits that contain everything needed to suture a wound. Before Hochberg could begin his tour and enter the sterile environment, he had to don a lab coat and a hair net.

As Hochberg viewed trays of suture kits in a sterilization room where machines sanitize them for 16 hours, he asked, “Where is this equipment from?”

“It’s U.S.A.,’’ replied Arguello Sr.

Later, as he viewed the warehouse where scores of boxes destined for Iraq were waiting to be shipped, Hochberg remarked, “Try to find a commercial bank that will finance sutures to Iraq without us.’’

Over the past three years, Ex-Im Bank financing for smaller exporters like DemeTech has increased by more than 70 percent.

But Friday, Hochberg had very big export deals on his mind. He accompanied the president to the Boeing assembly facility in Everett, Washington. Boeing exported $34 billion worth of products last year.

But the airplane manufacturer is locked in a tight contest with Airbus and Bombardier of Montreal for a lucrative United Airlines contract. The Canadian government plans to offer United financing if it buys the Bombardier CSeries jet.

To make sure an American company, such as Boeing and its 737 Max plane, is not at a disadvantage, Obama used his Boeing visit to announce a new Ex-Im Bank program “to give American companies a fair shot by matching the unfair export financing that their competitors receive from other countries.’’

Before, the bank only offered loan support for exports, but now that financing will be available to a U.S. firm competing for either domestic or international sales against a company that receives “non-competitive official financing.”

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