A federal chairman on the go, Fred P. Hochberg was back on native ground last week in metropolitan New York. At a Times Square hotel, President Barack Obama”™s choice as chairman and president of the Export-Import Bank of the United States kicked off an eight-city seminar tour in which his and other federal agencies will inform small-business owners of export opportunities and strategies.
“One percent of U.S. companies do export, and 95 percent of the world”™s customers live outside of our borders,” Hochberg said before catching a flight to Boston and the next stop on the “Exports Live!” tour. During a break in the domestic tour, the Ex-Im Bank chief this week will travel to Korea, an important emerging market for U.S exporters.
“President Obama has made it clear that one of the ways we”™re going to rebuild the economy is through exporting. The president is committed to small business and exporting. He”™s also committed to business standing on its own two feet,” he said.
The 57-year-old Hochberg brings long experience in running and growing a small business in Westchester County to his job as head of the country”™s official export-credit agency. Raised in Mount Vernon, he is the oldest son of Lillian Vernon, a Jewish refugee from Nazi Germany who founded the mail-order catalog company that later was named the Lillian Vernon Corp.
His mother was pregnant with the future chairman when in 1951 she started her business, designing monogrammed handbags and belts supplied by her father”™s small leather factory on Broadway in Manhattan. Using part of $2,000 in wedding gift money to take out an ad in Seventeen magazine, the 22-year-old expectant mother in 1951 launched the business from their Mount Vernon apartment “so she could do work with small children at home,” her son recalled last week. Quickly successful, the expanding company later occupied headquarters in Mount Vernon, New Rochelle, Rye and White Plains before relocating to Virginia under new ownership a few years ago.
Hochberg was 23 and a recent graduate of Columbia Business School when he joined the family company in 1975. “I took off six weeks and started work,” he said. “I think my mother wondered why I took off six weeks.” He laughed.?As president and chief operating officer, Hochberg took the company public in 1987 and used proceeds from the initial stock offering to build a national distribution center in Virginia Beach, Va., turning the family business into a highly successful direct-marketing corporation. Hochberg said he left the company in 1993. Reportedly he chafed at his mother”™s continued hold on the CEO post.
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He served in the Clinton administration as deputy administrator and then acting administrator of the U.S. Small Business Administration, where he is credited with substantially increasing lending to minority-owned and women-owned small businesses. From 2004 to 2008, he was dean of Milano The New School for Management and Policy in New York.?At the Ex-Im Bank, the graduate of Tarrytown”™s Hackley School heads a fully self-supporting agency that, working primarily with commercial lending partners, provides working-capital loan guarantees and export credit insurance to U.S. exporters and medium- and long-term loan guarantees and direct loans to foreign buyers, primarily in emerging markets.
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In fiscal year 2008, the independent agency authorized $14.4 billion in financing to support an estimated $19.6 billion of U.S. exports worldwide.
Of those transactions, 86 percent directly benefited small-business exporters, according to the agency. The Ex-Im Bank last year authorized $3.2 billion in direct support of small businesses as primary exporters.
As private credit markets have “seized up” in the recession, the Ex-Im Bank has stepped in to fill the gap for exporters and their buyers, Hochberg said. For the federal fiscal year that ended Sept. 30, “We have just completed a record year for the bank,” with 50 percent more financing than in any year in its 75-year history, he said. Small-business loans in 2009 were in excess of $4 billion for the first time.
“If the private markets come back, our financing will probably come down a little bit,” said Hochberg, “which is not a bad thing.” The agency serves to assure the flow of credit to exporters and foreign buyers from private lenders with guarantees backed by the full faith and credit of the federal government, he said.
In the recession, “Exports clearly are down,” said Hochberg. “Imports are down even more, so our trade deficit is shrinking. I think one of the ways we”™re going to rebuild our economy is through exporting. The world has relied on American consumers for a long time.”
In Westchester County, Case Paper Co. Inc., a 65-year-old paper converter and supplier, has used the Ex-Im Bank”™s financing products to tap a new market in Canada, a leading market for federally-backed and New York state exports.
“The Toronto market is huge,” the largest printing market in North America, Case Paper Co. President Robin Schaffer said last week. The Harrison-based company has hired two Canadian salespersons there and has seen immediate results in sales volume
“It”™s already on a monthly basis doubled and it could triple,” Schaffer said.
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In New York state, merchandise exports reached $79.6 billion in 2008, an 11.9 percent increase from 2007, according to the state Department of Economic Development. New York ranks third in the nation in exports, behind Texas and California, and accounts for more than 6 percent of U.S. merchandise exports that totaled $1.3 trillion last year.
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“Now that we”™re in a recession, export markets are more important, not less,” said Sam Natapoff, senior vice president for international economic development at the Empire State Development Corp., an Ex-Im Bank partner.
Yet the state, which has 13 overseas offices linking exporters here and buyers worldwide, has not been able to bring in enough small and medium-sized businesses to tap those export opportunities, he said. “Part of our problem is information. There are a lot of new entrepreneurs who don”™t understand the importance of exporting, the importance of foreign markets”¦Fear of exporting is a considerable obstacle that needs to be overcome,” he said.
Small and mid-sized businesses also must clear financing obstacles. “There are a lot of small businesses who don”™t have the financing to float the amount of exports they”™re sending overseas,” said Natapoff. Despite signs of a loosening of credit among lenders, “Commercial lenders would prefer to lend to larger businesses” and reap larger profits. Especially in the recession, “Small and medium-size businesses get the short end of the stick,” he said.
“New York State is a brand,” Natapoff said. “It is a brand recognized around the world. This is a brand that every firm in the state can take advantage of.”
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Businesses in Westchester and the mid-Hudson region exploring export markets and financing can contact Charles Radier, economic development program specialist at the Empire State Development regional office in New Windsor. The phone number is 845-567-4882; email at cradier@empire.state.ny.us.
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