An electronics manufacturer in Singapore last year wanted 25,000 wire forms to be used in one of its products, and it needed them fast. Marlin Steel Wire Products, a small manufacturer on Baltimore’s south side of Baltimore, was a front runner for the $8,000 order.
It was a nice deal, but came with one hitch: “It’s a company you never heard of, or I never heard of. They wanted me to extend them credit,” Marlin President Drew Greenblatt said. “The deal was teetering on whether or not I was going to extend credit.”
The banks in Baltimore weren’t willing to go in on the deal by themselves. Covering the sale to an unknown was much too risky in an era when banking is under close government scrutiny. It was up to the Export-Import Bank of the United States to save the deal. Marlin paid a 5 percent premium to the Ex-Im Bank, which would cover 95 percent of Marlin’s loss if the Singapore company didn’t pay.
“I had a bunch of guys work all weekend to hit the deadline,” Greenblatt said.
Such assistance is a big reason that Greenblatt is an Ex-Im Bank advocate.
Congress is considering whether to renew the bank’s charter. Renewal stalled this year after the Ex-Im Bank became embroiled in a still-pending federal lawsuit brought by U.S. air carriers complaining that Ex-Im Bank had put them at a competitive disadvantage when it underwrote a sale by Boeing to Air India.
When Greenblatt bought Marlin Wire in 1998, its principal product was baskets used to store and transport bagels. That business vanished when bakeries started buying cheaper baskets from China.
“China started delivering steel baskets for less than I could buy the steel,” Greenblatt said. “We were in an untenable position, and we had to migrate. It’s a metaphor for what’s going on in American manufacturing. You can’t survive in the world of mass-produced commodities. You have to add new innovations to be viable.”
Marlin Wire now sells wire baskets to China. Over the past five years, the company has invested heavily in automation and prides itself on the speed and quality of production, Greenblatt said. Instead of bagels, Marlin’s wire baskets are custom designed to hold parts for washing or chemical treatment. Its automated press punches out sheet metal boxes to house computer servers.
Marlin Wire had $5 million in sales in 2011, with customers in 36 countries. Greenblatt conservatively estimates 25 percent of his business is outside the U.S. If you were to count the products he ships to U.S. third parties that package them for export, Marlin Wire’s export volume would be closer to 50 percent.
The Ex-Im Bank is under a charter extension that expires May 31. Frank Vargo, the National Association of Manufacturers’ vice president for international affairs, said he is confident the charter will be extended, and the bank will get a new charter this year.
“There’s still a cadre of people who feel that this is government intervention in the market, and maybe others can do it, but our country shouldn’t,” Vargo said. “That’s a very principled, theoretical position, but our member companies don’t live in that world. We have to live in the real world where the Chinese are probably doubling the amount of export financing they’re providing.”
But timing is critical. A new charter would add $30 billion to the bank’s credit cap. The bank already is within a few billion of its current $100 billion cap. If it reaches the limit, bank officials warn it will have to start rationing credit, and that could stunt the growth of small companies such as Marlin Wire.