The Challenge
Hoffman International has been exporting for more than 45 years. For much of that time, a letter of credit was the standard method of payment by foreign buyers. Then, in the 1980s and 1990’s, the market for construction equipment became highly competitive and buyers in Europe began demanding 30, 60 or 90 day credit terms. Hoffman offered open credit terms, but it was a source of concern. What would happen if a foreign buyer could not or would not pay? How would Hoffman collect and what leverage did they have over a company located in a foreign country?
The Solution
“The desire to expand sales and still be able to sleep at night brought us to EXIM Bank [Export-Import Bank of the U.S.],” says Ms. Tumanyan. “We were a small company with big ambitions, and export credit insurance was just the right tool for us. First, we had peace of mind, because we knew our foreign receivables were protected against loss; and second, came the desire to explore more transactions on a larger scale. It was a 180 degree change for us and the beginning of our expansion.”
2008 – 2012 the Lean Years
Domestic markets in the U.S. suffered during economic downturns in 1990 and again in 2000. For Hoffman Equipment, however, international markets were strong during these periods and the company continued to grow. Then came 2008. Hoffman maintained steady revenue generation during the first few years of the financial crisis, but by 2011, export revenues had slowed and the company was forced to reduce staff by over a third. Working with EXIM Bank in 2012, Hoffman Equipment fulfilled an order for hundreds of pieces of construction equipment for a new customer in a new market in Sub-Saharan Africa. As a result of this contract, Hoffman hired back staff, returning to pre-2008 levels, and worked with many subcontractors who were also able to sustain and add jobs.
The Future
Ms. Tumanyan speaks with pride about a sign that has been hanging outside of Hoffman Equipment for some time. “Wanted, Experienced Mechanics!” Many small companies are like family, and Hoffman is no different. Providing sustainable jobs is of paramount importance to Hoffman employees as is giving back to the community, whether it is providing a convoy of trucks to help relief efforts at Ground Zero or helping developing countries build the infrastructure that can lead to economic opportunity for their citizens. Hoffman exports to over 20 countries and exporting represents between 20 percent and 50 percent of their annual revenue with the cumulative value of transactions exceeding $100 million. The future is bright for Hoffman Equipment, and exporting is an integral part of that vision.
Advice for other Small Businesses
When asked what advice Ms. Tumanyan would give other small businesses she gives the following call to action:
- “The majority of our customers reside outside of the U.S. and are not in leading industrialized nations. Consider building relationships with companies in these countries, it’s a great opportunity for everybody.
- EXIM Bank is a great partner to American exporters in their quest to increase sales, gain market share and create jobs. Read the EXIM website [www.exim.gov], get familiar with their products and locate the local EXIM authorized representative for an evaluation of your products, customer base and countries of final destination. Locate an EXIM Bank broker.
- Build a strong international business, expand into new markets and new customer bases, and get export credit insurance policy from EXIM Bank. This is the recipe for success!”
Learn More
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