No oversight in overseas push

N.J. companies expand export operations to grow in spite of withering domestic economy

//June 21, 2010//

No oversight in overseas push

N.J. companies expand export operations to grow in spite of withering domestic economy

//June 21, 2010//

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When the going gets tough, the tough get going — overseas, that is.

The shrinking domestic economy has highlighted the way exports can help spur a company’s growth, providing a cushion in tough times, according to some experts.

Frank Crowley, Ekman Group division president, says exports make up about 90 percent of the company’s activity. [Christina Mazza]

Doing business overseas can be daunting, they admit, but state and federal agencies can be tapped for valuable help.

“Unfortunately, many small and medium-sized businesses aren’t aware of the opportunities that exporting present,” said Caren S. Franzini, CEO of the New Jersey Economic Development Authority. “So we’re holding conferences and working with partners like the Export-Import Bank of the United States and the federal Small Business Administration to make companies aware of what’s involved in exporting.”

The Recovered Materials Division, part of the privately held Swiss firm Ekman Group, is one company already aware of the advantages of exporting. In early June, the Brick-based broker of recycled paper and plastics was named a Top 100 shipping exporter by the national Journal of Commerce magazine, which is based in Newark.

Three other New Jersey-based companies made the Top 100 list: Springfield’s Genesis Resource Enterprises; BASF, in Florham Park; and Morristown-based Honeywell International Inc.

The Ekman unit has about 38 employees in New Jersey and another 14 across the United States, according to Frank Crowley, division president.

“America generates a lot of paper, cardboard and plastic waste,” Crowley said. “We arrange to have recycled material packed in 40-foot containers and shipped to Europe, South America and Asia, where it will be made into new products like boxes, writing paper and newsprint.”

The company functions primarily as a broker, buying recycled material from municipalities and other processors, then contracting out its trucking, shipping and other transportation and delivery activities. This way, the company doesn’t have to commit considerable chunks of cash for heavy equipment and other capital expenses, Crowley said. That’s an important consideration in the high-volume, low-margin recycling brokerage industry.

“We move a bit more than 1 million tons a year of recovered material,” he added, noting that exports make up about 90 percent of the company’s activity. “Today, the growth is taking place overseas. Paper use in the U.S. is down as more billing and payment activity moves to the Internet. But in China and other locations, there’s an increasing need for shipping cartons and other paper goods.”

Environmental considerations also drive his export activities, Crowley said.

“There are basically no new paper mills being constructed in the U.S.,” he said. “But developing areas like South America and China [itself an export powerhouse] are building new paper mills, and are purchasing recycled pulp and other products.”

TN4_box_062110Unlike some smaller or less-experienced exporters, Crowley’s company doesn’t need to tap state or federal agencies to identify target markets and customers. But it does use U.S. Department of Commerce data to track shipping trends, and the firm also works with the Export-Import Bank to buy accounts receivable insurance as a way to safeguard its collections.
“You have to go where you see growth,” Crowley said. “For us, that’s in the export market.”

For some companies, exports are a good cushion against a downturn in the local economy.

“Exports account for up to 30 percent of our business,” said Veronica Pellot-Marrero, business and finance manager of Spectra Colors Corp. “It’s a way to diversify our business.”

The 28-employee Kearny firm makes dye for inkjet printers, foods, drugs and other uses, and is increasing its shipments to growing markets in Asia and South America.

“The Newark office of the U.S. Department of Commerce helped us find overseas partners and navigate through legal and other regulations,” she said. “And the Ex-Im Bank insures our receivables so we know we’ll be paid.”

Worldwide Supply LLC, a Franklin, Sussex County, buyer and seller of used data and telecommunication network routers, switches and other equipment, also sees exports as a way to beef up its sales.

“We have a sales representative who works the Mexico, South and Central American market,” said Worldwide co-owner Jay VanOrden. In March 2009, he said, he met with Joel Reynoso, executive director of the U.S. Department of Commerce’s northern New Jersey export assistance center, “who helped us to expand by identifying additional specific export markets and companies we could target.”

The Department of Commerce “serves as a matchmaker and offers other services through our Newark and Trenton offices,” Reynoso said. “We can help exporters find the right local distribution agent or other partner, conduct due diligence, and obtain financing and insurance. We can also line them up with other specialized agencies.”

New Jersey’s exporting companies are as varied as the state’s businesses, he added.

“Our biggest exporters include chemical companies, but we also have medical equipment and manufacturing firms that are heavy-duty exporters,” he said. “For many companies, assurance of getting paid is a big concern, and we help link them to the Ex-Im Bank and other agencies that can help them.”

The European market is still attractive despite the budget turmoil among some European Union members, Reynoso said.

“Long term, there are still plenty of opportunities there and in other areas, like Asia,” he said. “The timing is good too, since President [Barack] Obama is encouraging companies to look to exports as a way to strengthen their own finances while helping to shore up the U.S. economy.”

VanOrden said there’s a lot of activity in the South and Central American markets as companies rush to expand fiber optic and Internet “backbones” through the region.

“They’re looking for competitive pricing and quality,” he added. “We buy used Cisco routers and other name-brand equipment that meets their needs. Right now, there’s not much in the way of competition in these markets, so it’s a nice niche and accounts for about 20 percent of our sales. It’s a growing region and we expect to continue to service it.”

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