More than three years ago, an Illinois company’s idea of exporting used farm machinery to Eastern Europe was just that, an idea. Armed with a vision, Arcola-based Equipment Direct-USA, LLC (ED-USA) contacted the International Trade Center in the College of Business for some advice and assistance.
“Our company was profitable prior to exporting,” says Curt Miller, international manager for ED-USA. “And exporting has enhanced our profitability.”
The International Trade Center offers both new and well-established businesses the opportunity to expand their profits by exporting. One of six such centers in the state, ITC focuses on export assistance and does very little work with businesses interested in importing goods. Half of ITC’s funding comes from the federal Small Business Administration, which funnels the funding for ITC through the state’s small business department, a unit of the Department of Commerce and Economic Opportunity. The rest of the funding comes from the College of Business.
“I handle general international trade questions, covering east-central Illinois from Danville to Kankakee,” says Tess Morrison, ITC director. Morrison, who previously worked with international banks, concentrates on export financing and covers the entire state for export financing.
Know Your Client
With Morrison’s guidance, ED-USA began by researching their potential customers: farmers in young economies such as Ukraine, Russia, and Bulgaria. Then, explains Miller, “we learned about the soil types and characteristics, the rainfall, the temperatures, the FAO (crop maturities), and specific local conditions that affect the equipment and seeds farmers would need.”
Morrison put Miller in touch with another ITC client with contacts in Eastern Europe who could help Miller hire representatives to talk with farmers. Armed with the detailed research about soils and crops, the new ED-USA staff discuss various brands and machinery sizes with the farmers, explaining the advantages and differences. “Next we develop a complete system that is compatible with their farming operations,” says Miller. As a last step, the company explores finance resources with their clients and presents them with several payment options, including financing under EXIM Bank programs.
Part of a Statewide System of Trade Centers
Other universities and colleges in Illinois – such as Southern Illinois University in Edwardsville, College of DuPage, Black Hawk College, and Bradley University – have an ITC. When Morrison hears from a business that she is not able to help, she refers the client to another ITC. Two NAFTA specialists, one located in Bradley and the other at NORBIC, a non-profit located in Chicago, concentrate on exporting to Canada and Mexico
The Champaign-based ITC offers an exporting seminar each spring, but Morrison also provides one-to-one support to companies as needed. Each year, she works with approximately 75 businesses on their exporting plans. “About 50 of them are challenging and require more research, but the other 25 are comparatively simple,” Morrison says. She draws on campus resources such as the African Studies program and Eastern European Studies program for information and insights.
Another key ITC collaborator is the Center for International Business Education and Research (CIBER) in the College of Business. Funded by the US Department of Education, Illinois CIBER is the only such program in the state and one of 29 programs around the country. CIBER initiatives focus on academic programs and projects. An outreach function is to “to get the word out to regional businesses about international opportunities,” comments Morrison.
A Win-Win-Win Situation
ED-USA’s Miller says that the company “has definitely benefited from exporting. We’ve experienced a steep learning curve and associated start-up costs. With the risk and financial commitment involved, exporting is certainly not something that a company should embark upon without a lot of thought.”
He points out that after the firm acquired the skills necessary for cross-cultural negotiations and sales, staff also had to master the intricacies of global shipping. “Shipments that are the most time sensitive for the farm client are invariably the ones that are misdirected by the steam ship companies,” he says. “We have had clients who missed the entire season of intended use for the item purchased from us. It is not a pleasant experience.”
The export market increases the value of the used equipment local farmers trade to ED-USA’s five dealerships when purchasing newer equipment. “Our good used equipment is considered very high-tech and high quality to the producers in Eastern Europe,” notes Miller.
“Illinois farmers are seeing increased values on their trade-ins,” says Morrison. “Farmers in Eastern Europe are benefiting from the machinery ED-USA is exporting. And ED-USA has a new business that is thriving. It is a winning situation for all the participants.”
So far, ED-USA has exported agricultural equipment to Ukraine and Russia, as well as Puerto Rico. And they are not stopping there. Says Miller “Our plans are to expand into Central Europe, Kazakhstan, and Afghanistan in addition to other countries in Asia, Africa, Central and South America.”