Small Businesses Turn to International Investors and Partners in Light of American Recession

As the recession was taking a toll on their small manufacturing business three years ago, Deborah Smook and Eli Uriel heard about a major opportunity - thousands of miles away.

An Israeli defense contractor was looking for a U.S. manufacturer to produce a highly specialized assembly system.

Competing against much bigger bidders, Smook and Uriel's ten-person company, TurboFil Packaging Machines, scored the million dollar-plus contract in 2009 and last year secured the financing needed to close the deal.

Today, TurboFil, in Mount Vernon, N.Y., derives a major portion of its revenues from exports, selling to customers in the Philippines, Sri Lanka, Peru and Guatemala.

"We are a small company competing with giants from all over the world," Smook said last week as she accepted the Small Business Exporter of the Year award from the New York District of the Small Business Administration.

Once considered a no-man's land, overseas markets are becoming an important target for a growing number of New York small businesses as they seek to replace revenues lost during the economic downturn.

Last year, exports from New York State rose 15%, reaching $67.7 billion, as local businesses shipped chemicals, electronics and other goods and services to customers in Canada, the U.K., Hong Kong and around the world.

While many New York City entrepreneurs might think they don't have the chops to compete in the global arena, more than half of New York's exporters are small businesses.

"You don't have to be a big fancy company, you just have to be a solid company," said Toni Corsini, regional manager of the in the export solutions group at the Office of International Trade in Manhattan, as she recently addressed a group of New York small business owners at an event sponsored by the SBA.

New York fashion designer Nanette Lepore, who produces the majority of her styles in the Garment District, has been exporting for two decades.

Lately the designer has seen growing demand from China as customers there have sought products made in New York City. Lepore is now in talks to open stores in Beijing, Hong Kong and Shanghai.

"There is a market in China for our business," said Nanette Lepore president Robert Savage.

More small local companies are expected to think along those lines, thanks to an ambitious effort on the part of the federal government to double U.S. exports over the next five years.

To help small businesses compete overseas, the Small Business Jobs Act, passed last year, significantly increased the maximum loan amounts for SBA export loans, which are guaranteed by the government. It also provided additional funds for export counseling.

Corsini said she's been approached by at least two large New York lenders who have indicated an interest in boosting their small-business export lending.

Small companies still face plenty of roadblocks, including understanding overseas markets, contending with foreign laws and business practices and deciphering U.S. export regulations.

But some are finding that with the proper guidance those obstacles can be overcome.

"If a company is successful in the U.S. market, there is a good chance those products and services will sell in markets globally," Corsini said. "No company is too small to go global."

Jerson Diaz, president of Pisos Contracting, a commercial floor contractor in Hunts Point, Bronx, said he started to think about exporting last year after he heard about the SBA's new loan programs.

Like other construction businesses, Pisos was hurt by the economic downturn and Diaz was eager to find new markets.

He's currently bidding on a contract to supply 75,000 square feet of porcelain tile to a private company in the Dominican Republic, and he will soon bid on another project in Panama. He expects exports to account for 25% of his sales within two years.

Diaz acknowledged that he has a big advantage in having been born in the Dominican Republic. "I have contacts there," he said. "I know the language and the culture."

If he's successful, exporting will provide an additional benefit of immediate cash. While Pisos extends credit to domestic customers and often waits months to be paid, it will require 50% cash payments upfront from its foreign customers.

"These deals will supply me with much needed cash flow," Diaz said.

Smook and Uriel, who founded TurboFil in 1999, started exporting four years ago. A cosmetic manufacturer in the Philippines contacted them after seeing their Internet ads.

"The Internet has made the world accessible," Smook said.

Even so, Smook was nervous about dealing with foreign customers and sought help from a U.S. Export Assistance Center in White Plains, a one-stop export counseling and financing program run by the federal government. Similar services are provided at two Export Assistance Centers in Manhattan.

Trade experts referred the couple to a lawyer specializing in international commerce who reviewed their contract. Advisers at the export center also helped them locate and screen prospective trade partners.

"We got help. That was key," Smook said. "Without them I don't think we could have gotten the deal done."

Foreign sales built from there. Aided by the weak dollar, 15% of TurboFil's sales were coming from overseas customers within two years.

Scoring the contract with the Israeli defense contractor is expected to open more doors. "This project makes a huge difference. It gave us a great deal of credibility," Smook said. "We hope it opens more opportunities with Israel - and other countries."

Turbofil Packaging Machines, LLC

30 Beach St.

Mount Vernon, NY 10550

914-239-3878

http://turbofil.rtrk.com/?scid=3442715&rl_alt=http://www.turbofil.com/home

Deborah Smook

Turbofil Packaging Machines

debbie@turbofil.com

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