[Senate Hearing 113-530]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 113-530

          GROWING SMALL BUSINESS EXPORTS, GROWING U.S. JOBS

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 18, 2014

                               __________

    Printed for the Committee on Small Business and Entrepreneurship


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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                    ONE HUNDRED THIRTEENTH CONGRESS

                              ----------                              
                   MARIA CANTWELL, Washington, Chair
                 JAMES E. RISCH, Idaho, Ranking Member
CARL LEVIN, Michigan                 DAVID VITTER, Louisiana
MARY L. LANDRIEU, Louisiana          MARCO RUBIO, Florida
MARK L. PRYOR, Arkansas              RAND PAUL, Kentucky
BENJAMIN L. CARDIN, Maryland         TIM SCOTT, South Carolina
JEANNE SHAHEEN, New Hampshire        DEB FISCHER, Nebraska
KAY R. HAGAN, North Carolina         MICHAEL B. ENZI, Wyoming
HEIDI HEITKAMP, North Dakota         RON JOHNSON, Wisconsin
EDWARD J. MARKEY, Massachusetts
CORY A. BOOKER, New Jersey
                Jane Campbell, Democratic Staff Director
           Skiffington Holderness, Republican Staff Director
           
           
                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Cantwell, Hon.Maria, Chairwoman, and a U.S. Senator from 
  Washington.....................................................     1
Risch, Hon. James E., Ranking Member, a U.S. Senator from Idaho..    50
Shaheen, Hon. Jeanne, a U.S. Senator from New Hampshire..........    52

                               Witnesses

Hahn, Eric, Vice President, Organizational Development, General 
  Plastics Manufacturing Company, Tacoma, WA.....................     3
Tyler, Donald F., Director, Corfin Industries, LLC, Salem, NH....     9
Campbell, Robert, President and Chief Executive Officer, Alliance 
  Solutions Group, Inc., Newport News, VA........................    14
Calhoon, Mark, Senior Managing Director, Business Services 
  Division, Washington State Department of Commerce, Seattle, WA.    21
Verdon, Jennifer, Manager of International Business, Idaho 
  Commerce Department, Boise, ID.................................    38
Hendrix, W. Dan, President and Chief Executive Officer, Arkansas 
  World Trade Center, University of Arkansas, Rogers, AR.........    44

          Alphabetical Listing and Appendix Material Submitted

Adkins, David
    Letter dated June 17, 2014, to Senators Cantwell and Risch...    73
Beebe, Mike
    Letter dated June 6, 2014, to Senators and Congressmembers...    69
Calhoon, Mark
    Testimony....................................................    21
    Prepared statement...........................................    23
Campbell, Robert
    Testimony....................................................    14
    Prepared statement...........................................    16
Cantwell, Hon. Maria
    Opening statement............................................     1
Dalrymple, Jack
    Letter dated June 13, 2014, to Senators and Congressmembers..    75
Hassan, Margaret Wood
    Letter dated April 24, 2013, to Senators and Congressmembers.    61
    Letter dated July 1, 2014, to Senators and Congressmembers...    63
Hahn, Eric
    Testimony....................................................     3
    Prepared statement...........................................     6
Hendrix, W. Dan
    Testimony....................................................    44
    Prepared statement...........................................    46
Inslee, Jay
    Letter dated June 13, 2014, to Senators and Congressmembers..    71
LePage, Paul R.
    Letter dated June 30, 2014, to Senators Cantwell and Risch...    65
Pollet, Adam
    Letter dated June 23, 2014, to Senators and Congressmembers..    67
Pryor, Hon. Mark L.
    Questions for the record.....................................    60
Risch, Hon. James E.
    Opening statement............................................    50
Shaheen, Hon. Jeanne
    Opening statement............................................    52
Tyler, Donald F.
    Testimony....................................................     9
    Prepared statement...........................................    11
Verdon, Jennifer
    Testimony....................................................    38
    Prepared statement...........................................    40

 
           GROWING SMALL BUSINESS EXPORTS, GROWING U.S. JOBS

                              ----------                              


                        WEDNESDAY, JUNE 18, 2014

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 3:03 p.m., in 
Room 428-A, Russell Senate Office Building, Hon. Maria 
Cantwell, Chairwoman of the Committee, presiding.
    Present: Senators Cantwell, Shaheen, and Risch.

  OPENING STATEMENT OF HON. MARIA CANTWELL, CHAIRWOMAN, AND A 
                  U.S. SENATOR FROM WASHINGTON

    Chairwoman Cantwell. The Senate Committee on Small Business 
will come to order.
    Today, we are having a hearing on ``Growing Small Business 
Exports and Growing U.S. Jobs.'' I know my colleague, Senator 
Risch, will be joining us, and I am sure other colleagues as 
well, but we have been urged to get started and we are going to 
do that today.
    So, I welcome all the witnesses here. We have a very 
distinguished panel and I thank them for making time to be here 
on such an important issue. I would like to make sure that 
everybody understands that my colleagues who are not here can 
still add their comments and statements for the record, which 
we will be keeping open.
    U.S. exports are an engine of economic growth and job 
creation. According to the U.S. Department of Commerce, U.S. 
exports have accounted for a third of overall economic growth 
in the U.S. in the last five years. Last year, more than 11 
million jobs were tied to U.S. exports and one in three jobs in 
the State of Washington are related to international trade. 
Ninety-five percent of the world's customers are outside of the 
United States. As the middle class around the world continues 
to grow, expanding from two billion today to nearly five 
billion by 2030, exports represent a huge economic opportunity 
to create jobs right here at home.
    At the same time, less than five percent of our country's 
28 million small businesses export, and the U.S. small 
businesses that are exporting, 58 percent of them are exporting 
to only one country. There is a lot of room for growth and one 
way to continue to help the U.S. economy to create U.S. jobs is 
to help make sure that these small and medium-size companies 
look at export opportunities.
    For me, this is one of the highest priorities of this 
committee. I know the Ranking Member, Senator Risch, and I have 
had a chance to talk about these issues in our respective 
states, Washington and Idaho, and hear from small business 
people about their interest. That is why we are introducing a 
bill to reauthorize the State Trade and Export Promotion 
Program, better known as STEP.
    The State Trade and Export Promotion (STEP) Program has 
been an important tool for small businesses to begin exporting 
and to expand to new markets. STEP was first authorized in 2010 
as a pilot program through legislation from this committee. 
Under the program, the U.S. Small Business Administration works 
with states so that they can prioritize help to small and 
medium-size companies. The STEP Program helps businesses 
identify exporting opportunities and to take action to break 
into new markets and expand further into foreign markets.
    Based on annual state reported data, STEP has resulted in 
$909 million in export sales, representing an average return on 
Federal investment of 15-to-one. Those same investments for 
STEP in the state of Washington have, on average, had a return 
on investment of over 51-to-one. That is how much business has 
been generated by just a very, very small amount of investment 
to these businesses.
    Jeff and Tony Logosz, the founding brothers of Slingshot 
Sports, turned the company they started in the Columbia River 
Gorge into a global brand for water sports equipment. The 
company used export assistance from this program and work with 
the Washington State Department of Commerce to gain access to 
new global markets. They were able to shift their manufacturing 
back from Asia to the United States and create more jobs for 
this very rural community.
    Another example can be found in a Seattle software company 
called HasOffers, which utilized the STEP Program to showcase 
its product to mobile application developers. As a result, 
HasOffers is now working directly with four of the largest ad 
agencies in the U.K. and Europe.
    Eric Hahn is also with us today. Eric is the Vice President 
of Organizational Development in General Plastics Manufacturing 
in Tacoma, Washington. STEP has allowed General Plastics to 
gain access to new European partners and will tell us more 
about that in his testimony.
    Through these programs, they have been able to establish a 
physical presence in new markets, meet customers, research 
competitors, connect with vendors, develop new relationships, 
and these are very important things when it comes to growing a 
small business. They will show that you can make a small 
investment and turn that into a large business opportunity.
    So, this bipartisan legislation builds on the success of 
the pilot program and creates a permanent State Trade and 
Promotion Program within the SBA to help these small businesses 
continue to export.
    We have received several letters of support authorizing the 
STEP Program, and so I would like to, hearing no objection, 
enter them into the record. That is the Arkansas Governor Mike 
Beebe, North Dakota's Governor, and a letter from Washington's 
Governor Jay Inslee, and a letter from the Council of State 
Governments.
    Chairwoman Cantwell. In addition to Mr. Hahn today, we are 
going to hear from Donald F. Tyler from New Hampshire. Welcome, 
Mr. Tyler. He is the Director of Corfin Industries, and Corfin 
Industries provides component preparation services to a variety 
of industries, including the defense, medical, and 
telecommunications industry. Welcome. Using the STEP Program, 
he was able to help the company expand into new markets. And 
since using STEP, the company has grown its international 
revenue from about one percent to 12 percent of its overall 
business and hired ten new employees, so we look forward to 
hearing more about that.
    We also have Bob Campbell, from Virginia. Thank you for 
being here. Mr. Campbell is President and CEO of Alliance 
Solutions, and is a client of a Virginia Small Business 
Development Center. Alliance Solutions, out of Newport News, 
provides crisis disaster management services to support public 
safety and private sector clients. Mr. Campbell's company has 
received assistance through the Virginia Economic Development 
STEP Program for resources that were used to help understand 
the market in the Middle East and their ways of doing business 
and to refine his strategic planning.
    Additionally, we have Mark Calhoon, from my home state of 
Washington, who is a Senior Director at our Washington State 
Department of Commerce, and he is going to talk more directly 
about how this program works with various businesses within the 
state.
    And, we also have Jennifer Verdon from my colleague's State 
of Idaho, and she works in a similar capacity with their Idaho 
Department of Commerce on these STEP Programs.
    Finally, Mr. Dan Hendrix, CEO of Arkansas World Trade 
Center at the University of Arkansas, and he will discuss how 
Arkansas has utilized the STEP program to promote small 
businesses in his State.
    So, we are so pleased that you are all here. We are so 
excited about where we are, having been through the pilot stage 
and the incredible results that have come back. Now, we want to 
capitalize on this opportunity and so we look forward to your 
testimony. I ask you if you can keep your comments to five 
minutes. You can submit something longer in the record. That 
will give myself and others who show up a chance to ask you all 
questions.
    So, I believe we are going to start with you, Mr. Hahn. 
Again, welcome. Thank you for being here.

    STATEMENT OF ERIC HAHN, VICE PRESIDENT, ORGANIZATIONAL 
DEVELOPMENT, GENERAL PLASTICS MANUFACTURING COMPANY, TACOMA, WA

    Mr. Hahn. Thank you very much, Chair Cantwell. I really do 
appreciate the opportunity to talk with you and the members of 
this committee on behalf of the STEP Program.
    As was stated earlier, my name is Eric Hahn. I am the Vice 
President of Organizational Development at General Plastics 
Manufacturing in Tacoma. I am also Chair of our Tacoma-Pierce 
County Workforce Development Council and Vice Chair of the 
Washington Aerospace and Advanced Manufacturing Workforce 
Pipeline Advisory Committee. I said that in one breath.
    [Laughter.]
    The company, General Plastics, started in 1941, actually, a 
couple of days just prior to Pearl Harbor, and started as a 
plastics company, obviously, in a whole different vein. It has 
grown in the last 73 years to be a leader in the polyurethane 
world, and we provide products not only to aerospace, but 
defense, nuclear containment, marine, construction, outdoor 
signage, and tooling, as well. We also employ about between 170 
and 180 people. I say ``between'' because we are fast growing 
and a lot of that is because of what we are doing here in this 
country, but a good part of that has to do a lot with the STEP 
Program and what the opportunity it gave for us to enter new 
markets.
    As the committee considers creating a permanent STEP 
Program, I want to share our experience that we had with it 
because I think that it is one that can serve as a model for 
other small companies to not only engage in international 
opportunity, but to grow beyond just the parameters of their 
own backyard.
    In recent years, we have been working trying to get into 
the European market, to no avail. Admittedly, I do not think we 
really understood what the requirements were and how those 
differed than the aerospace requirements here in this country. 
A lot of that has to do with F/S/T, fire, smoke, and toxicity 
requirements that are a little bit different in Europe.
    We, through the grant provided by STEP, we were able to go 
to the JEC Paris 2013 and 2014 Air Show and also eventually to 
the Aircraft Interiors Show in Hamburg. It was at JEC that we 
discovered what the requirements were for aerospace products in 
that country. We were able to look at what our competitors were 
doing. We were able to talk directly with some of the people 
that were in the aerospace industry in Europe and they helped 
to give us some real insight into what the requirements were 
and how we were going to have to change things.
    So, immediately when we got home, we started putting our 
chemists back to work to really refine our product so it would 
meet those standards, and they were successful. In fact, at the 
Hamburg Air Show, we introduced those products and had a lot of 
interest because of it.
    Our goal was really five-fold. First, we were going to 
establish a physical presence, which we did.
    Second, we were going to meet existing customers, which we 
did.
    Third, we were going to research our competitor products, 
which we did.
    And, fourth, connect with local vendors.
    And, finally, of course, develop new relationships with 
potential customers.
    The results were, again, we were able to develop a product 
that is compatible with the standards that the European Union 
requires. We were able to get two distributors, one from the 
U.K. and one from South Africa, and we are in the final 
negotiations with one from Spain. We were able to also add 
approximately $100,000 in new sales initially. It does not 
sound like a lot, but consider the aerospace sale cycle is 
anywhere from six months to a year.
    Here is the really exciting news. We are now in negotiation 
with Airbus Tier 1 and Tier 2 suppliers, and those are 
estimated to provide anywhere from $1 to $2 million in 
additional sales. It will also mean the employment of ten to 15 
new people.
    And, by the way, Senator, I want to personally express my 
gratitude for all the work that you have done with veterans and 
workforce and especially aerospace. We are very happy that you 
are our Senator. We have utilized those tax breaks and we are 
able to hire a lot of veterans. In fact, we now have in the 
last year hired probably an additional 15 to 16 people strictly 
that are veterans.
    So, all of this is just indicative of the opportunity that 
was available through STEP and that we were able to access. Our 
Washington people helped us out immensely, as well, to connect 
and understand how we were going to be able to access this 
program. This program provided opportunity for us, as a small 
business, that, quite frankly, I do not think would--we either 
would have never thought of accessing or would have been a long 
time coming.
    In the aftermath, we have now hired an international person 
that is a marketing director from a fairly large company that 
is really helping us take what opportunity we had from this 
program and really develop it so that, in the future, I think, 
we may not be a small business after all.
    Thank you.
    [The prepared statement of Mr. Hahn follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. What a great story. Thank you. I will 
look forward to asking you questions.
    Mr. Tyler.

STATEMENT OF DONALD F. TYLER, DIRECTOR, CORFIN INDUSTRIES, LLC, 
                           SALEM, NH

    Mr. Tyler. Good afternoon and thank you for this 
opportunity to testify today. I am Don Tyler, Director of 
Corfin Industries, a company that has enjoyed significant 
growth in export sales over recent years as a result of our 
participation in the STEP Pilot Program.
    Corfin's Robotic Hot Solder Dip and other services satisfy 
the electronic component preparation needs of high reliability 
systems such as missiles, space satellites, and implantable 
medical devices. While these industries are well established 
outside of the U.S., for the first 20 years in business, Corfin 
experienced very little non-domestic business. The only orders 
that came to us from outside of the U.S. were from 
subcontractors to our existing customers.
    Three years ago, cautiously encouraged by those few orders, 
we explored paths to actively selling into these markets. 
Unfortunately, the costs were high as were the risks. Large 
trade shows, which are our best hope for reaching a sizeable 
portion of our target audience, are prohibitively expensive to 
a small company. We considered collaborating with other U.S. 
small businesses with a common goal and willingness to share 
expenses, but that required a major commitment of resources to 
identify and coordinate with these other businesses and 
dismissed as impractical.
    Corfin turned to New Hampshire's International Trade 
Resource Center and the U.S. Commercial Services local office. 
They not only educated us on the skills necessary to break into 
markets outside of the U.S., but Corfin received matching funds 
through the STEP Pilot Program to realize affordable marketing 
opportunities.
    Corfin's STEP-funded participation in air shows in the 
United Kingdom, France, and Singapore, and Gold Key Service 
introductions and translation services through U.S. embassies 
in Munich, Rome, and Tokyo have provided the jump start 
necessary to gain a foothold in these markets and grow 
independently.
    The success of our international sales encouraged us to 
become charter members of the New Hampshire Aerospace Defense 
Export Consortium last year. It was another STEP grant 
recipient. The Consortium provides great value in all matters 
related to exporting, including speakers on customs issues, 
education on changes to ITAR, and marketing opportunities. The 
growing membership in this Consortium is a great indicator of 
growing global impact of New Hampshire businesses.
    Today, Corfin's non-domestic sales is a significant 
component of our overall growth. International sales increased 
from less than two percent of our overall revenue three years 
ago to over 12 percent today, all while expanding our overall 
revenue almost 30 percent. The non-domestic growth corresponds 
to 22 additional full-time employees. I think information from 
earlier this year said ten, which the Chairwoman mentioned, but 
it is 22 as of today and still growing, a direct result of the 
STEP grant funding.
    I am pleased to report that Corfin will be exhibiting at 
the Farnborough United Kingdom Air Show next month without the 
benefit of STEP funding.
    I enthusiastically support the STEP UP for American Small 
Business Act for the perpetual opportunities needed by small 
American businesses to reach global markets and grow their 
American workforces. This is a program that works.
    [The prepared statement of Mr. Tyler follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. Thank you, Mr. Tyler, and it is so 
great to be corrected from ten jobs to 22. Thank you.
    [Laughter.]
    Mr. Campbell.

  STATEMENT OF ROBERT CAMPBELL, PRESIDENT AND CHIEF EXECUTIVE 
   OFFICER, ALLIANCE SOLUTIONS GROUP, INC., NEWPORT NEWS, VA

    Mr. Campbell. Chairwoman Cantwell, Ranking Member Risch, 
members of the committee, thank you for inviting me to testify 
and holding this hearing on the State Trade Export Promotion 
Program. As a graduate of the STEP Program in 2013, we have 
positively benefitted from the program in successfully entering 
the export market and growing our business internationally.
    I am Bob Campbell, founder and President of Alliance 
Solutions Group, or ASG, a service-disabled veteran-owned small 
business out of Newport News, Virginia, with ten satellite 
offices around the U.S., including your home State of 
Washington. As of February 2014, we have successfully launched 
an office in Dubai, the United Arab Emirates, to extend our 
services into the Gulf Cooperation Council countries.
    ASG prepares communities for various threats through 
emergency preparedness activities and environmental health and 
safety services. We have conducted environmental health and 
safety audits for the United States Air Force worldwide and 
have trained thousands of military and public sector responders 
on chemical, biological, radiological, nuclear, and hazardous 
material response with approximately 2,000 training and 
exercise events.
    As defense and Federal spending among our customers has 
declined and our vision to prepare communities and improve 
worker health and safety has increased, we sought access to 
markets with expressed and unmet needs, economic capacity, and 
adequate infrastructure to support sustained growth of our 
business.
    Exporting enables us to share our expertise, experience, 
and values in a way that provides a value-added benefit in 
other nations. Our services promote development, security, and 
prosperity, while increasing U.S.-based revenue that we can 
invest in our employees and development of innovative products 
and services.
    In 2010, I made my first attempt at exporting by attending 
the Special Operations Forces Expo in Amman, Jordan. My lack of 
understanding of the market at that time, the regulatory 
environment's presence, lack of persistency and funding limited 
my ability to capitalize fully and enter the market.
    In 2012, we included international growth in our strategic 
plan and began to identify obstacles to entry. The most 
significant obstacles to market entry for our business have 
been, number one, a lack of local presence; two, navigating the 
regulatory environment, both U.S. and foreign, in regards to 
export compliance, tax-related, financial, and security issues; 
and, number three, limited financial capacity to invest in 
exhibitions, marketing, travel, and legal consulting.
    Now that we have entered the market, new obstacles are 
emerging: First, price disadvantage due to both low labor costs 
among competitors and tax treatment disparity between U.S.-
owned and foreign entities when operating internationally; and, 
second, the challenge of assessing potential partners with the 
right due diligence and engaging in contracts in a way that 
adequately protects our interest. The complexity and multitude 
of risks involved are daunting for a small business that 
requires extensive legal counsel.
    Fortunately, we have had help along the way from the 
Virginia Small Business Development Center and the Virginia 
Economic Development Partnership in the form of training, 
resource networking, and grant funding. Through the Virginia 
SBDC, we participated in the Passport to Global Markets Program 
in 2012, and then promptly enrolled in the STEP Program. The 
STEP Program assisted us with approximately $20,000 for a trade 
mission to the UAE, market-specific conference and exposition 
participation, and development of our Export Compliance 
Program. Through STEP, we have been introduced to other 
businesses, professional resources, and the U.S. Commercial 
Services abroad.
    In addition to the STEP Program, we have also benefitted 
from the Going Global Defense Initiative, where matching 
Federal and State funds from the program enabled our business 
to become certified in quality, environmental, and occupational 
health and safety management systems, a significant competitive 
advantage for our small business like us, as these three 
international certifications garner significant credibility in 
the global environment.
    We continue to reap the benefits, similar to the STEP 
Program, through the Virginia Leaders in Export Trade Program.
    And, in April of 2014, we were awarded our first 
international contract in Kuwait as a result of attending that 
2010 expo in Amman, Jordan, as well as support from the STEP 
Program.
    Reauthorization of this program will help enable more U.S. 
businesses to establish the products and services abroad, 
creating more jobs, generating more revenue and investment, 
promoting economic development abroad, as well as good will.
    Thank you again for inviting me to testify and for your 
commitment to helping small businesses with international trade 
and export.
    [The prepared statement of Mr. Campbell follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. Thank you, Mr. Campbell. We will look 
forward to asking you some questions, as well.
    Mr. Calhoon, thank you for being here.

 STATEMENT OF MARK CALHOON, SENIOR MANAGING DIRECTOR, BUSINESS 
  SERVICES DIVISION, WASHINGTON STATE DEPARTMENT OF COMMERCE, 
                          SEATTLE, WA

    Mr. Calhoon. Thank you. Chairwoman Cantwell, Ranking Member 
Risch, and members of the committee, thank you for inviting me 
to testify on State-level experiences and work with the STEP 
Program.
    My name is Mark Calhoon and I manage the Washington State 
Export Promotion Program. I also serve on the State 
International Development Organization Board, SIDO. States play 
a key role in helping small businesses start or expand their 
international sales. State Export Promotion Programs are 
typically an integral part of a Statewide economic development 
strategy that delivers a range of support and services to small 
businesses in order to drive economic growth and create jobs.
    The State of Washington has provided export promotion 
assistance to small businesses since the late 1970s. We are a 
very trade-oriented State, the fourth-largest State exporter in 
the U.S.
    We work closely with our Federal partners in Seattle to 
coordinate resources and provide the best service to small 
businesses. Our office is co-located with the U.S. Export 
Assistance Center, Ex-Im Bank, the SBA Export Solutions Group, 
and the Export Finance Assistance Center of Washington.
    The STEP Program has played a valuable role in helping 
small businesses expand export sales, and I will use some 
examples of our activities and results in Washington to show 
how important STEP is for small businesses. By way of 
background, Washington received a total of $3 million STEP 
funding to date.
    With STEP support, we provided export assistance to 446 
small businesses, resulting in an increase of $136 million in 
actual export sales and $276 million in forecasted export 
sales. The results underscore the critical importance of 
Federal funding to Washington's Export Assistance Program for 
small businesses. The STEP grants received by our State help 
fund successful new initiatives, such as our Export Voucher 
Program, export promotion in India for the first time for 
Washington State, and participation in a series of targeted 
industry trade shows in Europe.
    Participation and results from these and other STEP 
activities are on target to generate a potential return of more 
than $135 for every one dollar of STEP funds, and actual 
returns were $45 to one dollar.
    HasOffers, which Senator Cantwell mentioned, is a great 
technology early-stage company in Seattle that tracks the 
effectiveness of the advertising campaigns, and I wanted to 
give just a quick update on their export activities as a result 
of STEP. In late 2011, they had not engaged in international 
sales, but at that point realized their opportunities, being a 
web-based service provider. They came to us to talk about how 
they could get into the Europe market and we gave them an 
export voucher which enabled them to go to a key trade show in 
Barcelona called Mobile World Congress and join a group of 
other Washington State technology companies in attendance in 
February of 2012. That resulted in first-time export sales for 
the company, which now represent 40 percent of their overall 
business, and allowed them to grow from 50 employees in early 
2012 to 190 employees today.
    As Congress considers the reauthorization of the STEP 
Program, I would like to add my support to some key 
recommendations from SIDO. Firstly, that STEP should become a 
permanent Federal program.
    Second, to ensure collaboration, there should be a member 
of the State promotion agencies on the Trade Promotion 
Coordination Committee. It will be nearly impossible to develop 
a coordinated State-Federal plan without a seat at the table.
    Thirdly, we need to develop a working group to coordinate 
information sharing and report metrics to make sure Congress 
receives information it needs in a timely manner. Return on 
investment is a priority for States.
    We would like to ensure that the Federal share of funding 
in the STEP program stays at 75 percent.
    And, lastly, we would like to encourage that you make STEP 
reauthorization and agency coordination a priority in the 
current trade agenda.
    In conclusion, I would like to make sure that we do not 
take our focus away from the key objective of STEP, that small 
businesses are critical to the economic success of our country, 
and increasingly, international markets are vital to the growth 
and prosperity of small businesses. Exports create and support 
above-family wage jobs here in the U.S. and are a critical 
component to the ability of small businesses to compete and 
grow in the global economy.
    I appreciate the invitation and time with you today and 
look forward to your questions. Thank you.
    [The prepared statement of Mr. Calhoon follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. Thank you, Mr. Calhoon.
    And now, we will hear from Ms. Verdon. Thank you for being 
here, as well.

    STATEMENT OF JENNIFER VERDON, MANAGER OF INTERNATIONAL 
         BUSINESS, IDAHO COMMERCE DEPARTMENT, BOISE, ID

    Ms. Verdon. Thank you. Thank you, Chairwoman Cantwell and 
Ranking Member Risch, for providing me and, with that, the 
State of Idaho, the opportunity to testify today on the 
benefits of the STEP Program. And, also, I would like to thank 
you for your efforts in trying to secure permanent export 
funding for the program.
    My name is Jennifer Verdon and I am the manager for the 
International Business Division at the Idaho Department of 
Commerce. My team's main focus is to support Idaho's small and 
medium-sized Idaho companies in their export efforts.
    For the first time ever, commerce companies, and with that 
I mean non-agricultural companies, had the opportunity to 
receive export funding through the STEP Program since 2011. The 
impact of STEP in Idaho is very significant. Small companies in 
Idaho are the backbone of our economy, and according to the 
SBA, they create more net jobs than any large or medium-sized 
companies. Ninety-six-point-eight percent of all employers in 
Idaho are small companies. Two-hundred-and-eighty-thousand jobs 
are supported by small businesses in Idaho. To illustrate 
further how small our companies are, 75 percent of these small 
businesses have less than 20 employees.
    On the trade side, exports and imports support 190,000 jobs 
in Idaho. Given that 80 percent of the world's purchasing power 
lies outside of the United States, it is extremely important 
that small businesses diversify their customer base if they 
want to stay in business and continue to grow.
    Now that I have painted a picture of the small business 
environment in Idaho, the question remains, why do we need 
funding? Why do we need the STEP Program? The short answer is 
that exporting is more costly, it is riskier, and the sales 
cycles are much longer, meaning it takes longer to find 
partners and to find customers and to close the deal. A lot of 
small companies simply cannot take the risk or build the 
marketing budget to fund their exports.
    The State of Idaho has received STEP funding from SBA for 
two years and we have submitted the grant proposal for the 
third year. In year one, we received $292,000, and of that, we 
used 47 percent for sub-recipient grants. In year two, we 
received $405,000, and of that, we used over 89 percent for 
sub-recipient grants. Other activities funded through the STEP 
include trade shows, Governor-led trade missions, and inbound 
buying delegations. All of these are activities that are part 
of our usual suite of services, but with the STEP funding, we 
are able to provide more opportunities and more activities to 
small businesses.
    The results of STEP in Idaho are a testament to the success 
of the program. In two years of STEP, we have funded 110 
companies. Over 18 percent of these companies were new to 
exporting, and 72 companies used the grants to break into new 
markets. The ROI of year two is 35-to-one, which translates 
into $12.7 million of actual export sales.
    In my written testimony, you can find two examples of Idaho 
companies. Right now, I am going to just talk about one 
company, due to time.
    Wild Touch Taxidermy is one of many examples that would 
have not been able to expand internationally the way they have 
if it had not been for the STEP Program. Wild Touch Taxidermy 
is a small, family-owned business, and as the name gives away, 
they prepare, stuff, mount, and sell animals, all kinds of 
animals. Their exporting interest was awakened when my team 
arranged for them to meet with Taiwanese buyers. However, in 
order for companies to close the deal and find partners, it is 
essential for them to travel. This would not be possible for 
Wild Touch Taxidermy if it was not for the STEP grant.
    Just recently, Wild Touch Taxidermy, their owner, traveled 
to China with a Gold Key through the U.S. Commerce Service, and 
when he returned, he already had a sale of $30,000. That is an 
ROI of 12-to-one in the first week of his return of completing 
his project, and he is still negotiating sales.
    In closing, I would like to point out that less than one 
percent of all U.S. companies are exporters. We cannot not 
support exporting. Education and export counseling are 
necessary components, but without the funding, a lot of 
companies cannot execute.
    Thank you again for this opportunity, and thank you again 
for promoting permanent export funding.
    [The prepared statement of Ms. Verdon follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. Thank you, Ms. Verdon. We appreciate 
that.
    We will now turn to our last witness before questioning, 
Mr. Hendrix. Thank you for being here.

  STATEMENT OF W. DAN HENDRIX, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, ARKANSAS WORLD TRADE CENTER, UNIVERSITY OF ARKANSAS, 
                           ROGERS, AR

    Mr. Hendrix. Thank you very much, Madam Chairwoman, it is a 
pleasure to be here, and distinguished members of the 
committee. I appreciate the opportunity to testify before this 
committee to tell you some real stories about how the STEP 
Grant Program has been beneficial to the State of Arkansas.
    I am Dan Hendrix and I am President and CEO of the World 
Trade Center Arkansas, and we are the designated trade 
organization for the State by the Arkansas Economic Development 
Commission. And, because of that, we have been the recipient of 
the State STEP grant funds for the first two years, 
approximately $886,000.
    This enables us to help the Arkansas small to medium-size 
companies, and I emphasize that, as the other testifiers have, 
that it is very important for our small to medium-size 
companies to have the benefit of the STEP funds because of the 
resources that they do not have for their businesses to expand 
in exporting.
    Our rate of return for the STEP grant has been 
approximately 40 percent. We have assisted over 45 Arkansas 
companies, and those companies have reported thus far over $28 
million of increased export business over the last two years.
    Now, we know that the time frame for trade execution is 
sometimes long, so the residual effect of the STEP money that 
we have provided these Arkansas companies will be ongoing and 
long-lasting, because it takes sometimes 12 to 16 to 18 months 
to execute a trade deal and to get revenues flowing. So, it is 
important that this program continues, not only the fourth year 
but on, and hopefully permanent funding.
    Several companies that we have assisted have added jobs, 
and many of those have retained jobs, because it is important 
not only to add jobs, but also to keep those jobs.
    The trade promotion activities, we do outbound trade 
missions. We also have inbound trade delegations coming in. 
And, this is important because these companies have been able 
to benefit from the Gold Key Service through the Department of 
Commerce. And, a lot of times, these companies would not have 
gone on these trade missions. They would not have attended 
these trade fairs or these trade shows without these funds 
being available. It is just a simple matter of economics.
    And, so, with that, we have helped our Export Assistance 
Office in Little Rock to be very--to benefit from the STEP 
money, too. So, this money actually has gone back into the 
Department of Commerce funds by utilizing the Gold Key Service.
    We have also established the Arkansas Chapter of the 
Organization for Women in International Trade, which is growing 
significantly. Also, the FITT program, which is the Forum for 
International Trade Training.
    These gentlemen and the lady have also talked about how 
important education is, and it is important that we help these 
companies to understand what it is to be in the export 
marketplace, and that way, this trade training that we offer 
through Export University, through the Export Assistance 
Office, through SBA, and through Ex-Im Bank is very important.
    The impact and value of STEP funding is certainly 
measurable. I think all here at this table have certainly 
reiterated that it is a measurable opportunity and the 
statistics will speak for themselves.
    The small to medium-size companies that we have talked 
about continue to miss global opportunities, and there are four 
things that a STEP grant really helps to do, and four things 
that are very important to exporters, and that is evaluating 
the market potential, and to evaluate market entry constraints, 
evaluate market competitiveness, and to seek distributors and 
agents. The STEP grant helps provide opportunities for all of 
those.
    Again, thank you, and I appreciate this opportunity.
    [The prepared statement of Mr. Hendrix follows:]
    
    [GRAPHIC] [TIFF OMITTED] 
    
    Chairwoman Cantwell. Thank you very much, Mr. Hendrix, and 
that was very well said. I like the way that both you and Ms. 
Verdon categorized in very specific terms the risk factors 
involved in trade, so thank you. Thank you both for that.
    I am going to turn to Ranking Member Risch for a statement, 
if he would like to make it----
    Senator Risch. Thank you.
    Chairwoman Cantwell [continuing]. And then we will start 
questions.

  OPENING STATEMENT OF HON. JAMES E. RISCH, RANKING MEMBER, A 
                    U.S. SENATOR FROM IDAHO

    Senator Risch. Thank you, Madam Chairwoman. I join you in 
welcoming all of our guests here today.
    This is certainly an important endeavor for the Small 
Business Committee. I think that most Americans are aware that 
trade business is important. I think probably what they are not 
aware of is how difficult it is for small businesses to do 
this. If you are a big company, you have an army of lawyers and 
consultants and what have you to help you do this, but for a 
small business, it is very, very difficult.
    I think, secondly, something that most people really do not 
realize is how important it is, particularly in targeted 
industries, to participate in trade shows and trade conferences 
that go on in different parts of the world if you are going to 
offer your products and services in that regard. And, again, it 
is prohibitive in most situations for small businesses to 
participate in that. Yet, we have seen through this pilot 
program how the returns have been very substantial for 
investments that were made there.
    So, I am happy to be a participant with the Chairwoman as 
we move forward with trying to get this program on a better 
track than it is. I think everybody hears about the toxicity 
back here and how nobody is working together. Well, the 
Chairwoman and I are both all in on this program, and the only 
issue that we are trying to resolve is the funding issue, which 
seems to be the one that divides us on everything.
    But, nonetheless, having said that, we have a good general 
agreement, I believe, on how this should be done, and we have 
got our very competent staff working on finding the funds to do 
this and I am confident that we are going to be able to do 
that.
    So, thank you, Madam Chairwoman. Back to you.
    Chairwoman Cantwell. Well, thank you. And, again, I want to 
thank Senator Risch, because we have been working on this. I 
think you and I see eye-to-eye on how important this is, and I 
do not know if that is a Northwest perspective, with our two 
economies being so focused on trade, but your leadership has 
been very helpful on this and I certainly enjoyed going to 
Idaho. And, I thought one of your business leaders said it best 
when he said, exporting is not for wimps.
    [Laughter.]
    I think that what he meant was that you need to have a real 
stomach to go and approach these market opportunities. So, we 
had a lot of good testimony from people from both our states.
    Senator Risch. We did, Madam Chairwoman, and again, I am 
not familiar with every State, what they do in that regard, but 
certainly, Idaho, through the Department of Commerce and the 
State of Washington, the things I have heard, they are also all 
in on the efforts that we are making here, particularly for the 
small businesses, and we thank you, certainly, for those 
efforts.
    Chairwoman Cantwell. Good. Well, let us turn to some 
questions, and I did want to follow up on trying to 
characterize the benefits of the program in specific terms. 
Obviously, as my colleague just said, we see the benefits of it 
very clearly in our States, but maybe not all our colleagues 
do. You clearly articulated that there are risk barriers to 
trade, Ms. Verdon, and you talked about high costs, high risk, 
obviously very small marketing budgets, and the smaller you 
are, the less experienced team of people to assess those 
opportunities.
    So, the first three of you and Mr. Hendrix, I wanted to see 
if we could get some comment about whether you were exporting 
before using the STEP Program. So, is the STEP Program just 
providing that extra incentive that is helping businesses focus 
on this? Is that what it does? It just breaks down that risk 
barrier?
    Mr. Hahn. Senator, I do not know if it is necessarily--I 
guess, here is my feeling on it. I think what the STEP Program 
does is it allows us to take our dreams and formalize those 
into actions. You know, as was stated earlier, we did not have 
a lot at our disposal in terms of technical expertise, in terms 
of, you know, money to actually go overseas. We were doing very 
well at home, and we are actually very satisfied, I mean, 
because Boeing being one of our largest customers, we thought--
we were very content.
    And, I think when we were approached by this program, that 
all of a sudden, I think it just turned a light bulb on, and as 
I said earlier, it allowed us to take those dreams--because we 
had already always talked about, someday, we were going to go 
overseas. Someday, we were going to be this great exporter of 
materials. And, as I think this gentleman said earlier, you 
know, we were doing some international, but it was coming 
through distributors that were based in the United States that 
were actually selling to people overseas and they were 
utilizing our products in the mix, but we never saw the actual 
end customer and we never really engaged in that actual end 
customer.
    And, so, this program gave us--opened that door. It allowed 
us to not only see and talk to that end customer, but to create 
a relationship that ultimately culminated in a very strong 
sales pipeline.
    Chairwoman Cantwell. And, so, you would have just waited 
until a later point in time to create an export strategy, or it 
just gives you the ability--you had one in mind, but you just 
could not--you did not have the resources to execute on it.
    Mr. Hahn. We did not have the resources to execute on it. 
And, as I said, you know, yes, to answer your question, we 
would have probably just waited. We would have looked for 
secondary opportunities through companies based in the United 
States that were doing business overseas and probably would 
have been content with that for a while. But, gladly, or 
thankfully, this program came along, and I think not only jump 
started our efforts, but I think we are doing great because of 
it now.
    Chairwoman Cantwell. Good. Mr. Tyler or Mr. Campbell, do 
either of you want to add to that?
    Mr. Tyler. Certainly, we will agree with it. We had an 
export plan that really had no timeline that went with it. We 
knew that if we wanted to do something like an air show or a 
large trade show, that would be a $14,000 ticket just to get in 
the door, and then we would have travel expenses, and then we 
would really need to have some representation over there to 
follow through, and those are all high-dollar and high-time 
involvements. And, we really did not know what we were doing, 
so we needed some help from professionals, and, of course, they 
needed funding.
    I spoke that some of the help that we had from the New 
Hampshire International Trade Resource Center is partly also a 
result of the STEP funding. So, we were going to get nowhere, 
probably, without this. Of course, this brought the cost down 
significantly for us to get in the door, and at the time, we 
were maybe 60 people when we really started kicking off. We are 
about 120 now, and as I have said, about 22 of that is from the 
export sales that we do today, and that is something we 
normally can afford.
    That is why I was happy to say in my testimony that the 
things we are doing today are not requiring continued STEP 
involvement. So, a success as I see it.
    Chairwoman Cantwell. You are a STEP graduate.
    Mr. Tyler. There we go.
    [Laughter.]
    Chairwoman Cantwell. Mr. Campbell.
    Mr. Campbell. I echo those comments, but I would also add 
that the STEP Program accelerated our path to entering the 
global market. I tried it on my own in the past. It took a 
little bit of effort to try to get there, and I could tell that 
it was going to take a lot longer without some type of help 
from professional resources and the networks from our State 
VEDP and SBDC, the things that they have put in place for us, 
the training, the other resources. So, it is not just about the 
money. The money is the means to the end. But, as an 
entrepreneur, I like to take that money, invest it into the 
business, and see the business grow, and we have already 
started to see some return on investment in a short time.
    Chairwoman Cantwell. Great. Thank you. Thank you.
    Senator Risch.
    Senator Risch. I will yield to my distinguished colleague, 
Senator Shaheen.

 OPENING STATEMENT OF HON. JEANNE SHAHEEN, A U.S. SENATOR FROM 
                         NEW HAMPSHIRE

    Senator Shaheen. Thank you very much for holding this 
hearing and for the effort to reauthorize the STEP Program.
    And, I want to welcome Don Tyler from Corfin Industries in 
New Hampshire. I have had the opportunity to visit Corfin and I 
have seen the impressive services they provide to so many 
industries and really hear firsthand about the difference that 
the STEP Program has made for you all.
    I think you pointed out that you have been able to add 22 
additional employees as a result of the program, which I think 
is very impressive, and it speaks to the importance to small 
businesses and why we need to provide this assistance for 
exporting.
    You know, one of my favorite statistics is that 95 percent 
of markets are outside of the U.S., but only about one percent 
of small and medium-size businesses do business outside of the 
U.S. So, that says it all when it comes to why this program is 
so important.
    Madam Chair, before I ask my questions, I just wanted to 
enter into the record a letter that I received from the Program 
Manger of the International Trade Resource Center of New 
Hampshire which speaks to the importance of the STEP Program 
and also the concern about the match percentage, which I know 
has been under discussion. But, for small States like New 
Hampshire, being able to maintain the 25 percent State match is 
really important, because we have fewer resources, fewer 
employees who can help our small businesses.
    So, I would like to enter this into the record and just 
point out that one of the statistics she cites in this letter 
is that in 2013, New Hampshire actually had the highest 
percentage increase in exporting in the country and how 
important the STEP Grant Program was to making that happen. 
And, one of the real benefits we were able to accomplish 
through the program, which, Don, you may have spoken to in your 
testimony before I got here, is the Aerospace and Defense 
Export Consortium, because that has provided a real opportunity 
for so many businesses in the State.
    So, if I could enter that into the record.
    Chairwoman Cantwell. Without objection.
    Senator Shaheen. Thank you very much.
    So, Don, I wonder if you could talk about--you talked about 
the number of employees you were able to add as the result of 
the exporting that you have done. Can you also talk about how 
STEP helped in terms of building relationships with future 
customers and how you see that playing a role in your increased 
exporting.
    Mr. Tyler. Certainly. The previous efforts we had made to 
try to get into export, mostly Europe, had been speaking 
engagements at technical conferences, and, of course, that is a 
once-a-year event and you can persuade somebody that you have 
got a great product, but if you do not really have a presence 
there, you are quickly forgotten, and I think that was our 
biggest issue, is we needed to be there more often. We needed 
to have representation.
    The goal of--or, the effort of trying to find 
representation was a little beyond us. We really did not know 
where to start, and again, the International Trade Resource 
Center and the Commercial Service, the U.S. Commercial Service 
that did the Gold Key Service, that was our primary goal with 
those Gold Key Services, was to try to find good reps.
    We succeeded in the U.K., Spain, France, and Italy so far, 
and we are still looking in Germany. So, by having those folks 
there, of course, in the same time zone, so when somebody wants 
to pick up the phone in the morning, they are able to talk to 
somebody other than waking me up on a mobile phone and I am a 
little groggy.
    But, they are having that familiarization. They are having 
people that come and visit them once a month and talk about new 
developments that are happening back at the factory. We take 
those reps to our factory so that they keep educated on what we 
are doing, as well. And, of course, all that business does come 
into New Hampshire. None of the services are actually performed 
outside of the State of New Hampshire.
    Senator Shaheen. And, can you--you may have said this in 
your testimony, but how much have you seen your export growth 
expand since getting the STEP grant and really making a full-
blown effort at exporting?
    Mr. Tyler. I think we started at about 1.3 percent of our 
overall revenue was from outside of the U.S. about three years 
ago, and now, we are 12 or 13 percent, and that is growing at a 
nice rate. But, what is more important is that is not 12 or 13 
percent of the same overall revenue. The overall revenue has 
grown 30 percent in that period of time, too, so we are doing 
pretty good. But, that is a big part of it right now and I am 
confident this time next year I will be bragging about some big 
things that are in the works right now.
    Senator Shaheen. Good. Well, hopefully, we can get this 
reauthorization done and that will help.
    Mr. Tyler. Please.
    Senator Shaheen. Mr. Calhoon, you mentioned the importance 
of cooperation between State and Federal entities in helping 
small businesses export. A couple of years ago, my colleague 
from New Hampshire, Senator Ayotte, who was at that time on the 
Small Business Committee, and I hosted a hearing of the 
committee in New Hampshire and we heard from New Hampshire 
businesses, and that is one of the things we heard from 
officials in our Trade Office in New Hampshire and from some of 
the small businesses, that there would be real benefit to 
having more cooperation between States and the Federal level in 
trade initiatives.
    You talked about putting--I think what you said was putting 
the State person on some of the Federal committees. Is that 
what you are suggesting?
    Mr. Calhoon. The solution we came up with in Washington was 
in our office in Seattle is to co-locate with the U.S. Export 
Assistance Center. We have an Ex-Im Bank representative in 
Seattle. We have an SBA Export Solutions Regional Manager, and 
then a Washington State Export Assistance Center. So, we are 
all co-located.
    You know, those companies can speak to this. I think we 
overwhelm them with material and they are confused, I think, 
oftentimes, about what all these different programs are, what 
is the best one for them, where should they fit in, and I think 
when we can coordinate all of our efforts and put it together--
we formed a Washington Export Outreach Team last year in our 
State and launched our first event on Monday this week, so we 
are starting a series of day-long Export 101 programs around 
the State that all of the State and Federal agencies are 
coordinating on and participating in, again, to try to lessen 
the confusion for small businesses on which door is the right 
door.
    Senator Shaheen. Thank you.
    As the result of the hearing that we held in New Hampshire, 
we introduced some legislation called the Small Business Export 
Growth Act, and one of the things we would create as part of 
that legislation is a working group on the Trade Promotion 
Coordinating Committee to identify ways that would improve 
coordination. We have had some success in New Hampshire with 
co-locating, although, because of a loss of State resources, 
much of that has disappeared and is being rebuilt now.
    But, do you have any thoughts about whether this kind of a 
working group might be helpful in recommending more ways to 
cooperate? And, if anybody on the panel wants to weigh in on 
that, feel free to do so, as well.
    Mr. Calhoon. And, one of the SIDO recommendations is 
actually to try to add a State-level person onto the Trade 
Promotion Coordination Committee, which we think would be vital 
to try to get that true Federal-State partnership, that without 
a seat at the table, it is hard to get the level of 
coordination.
    Senator Shaheen. Right.
    Mr. Calhoon. So, that would definitely be one 
recommendation we would support.
    Senator Shaheen. Thank you. Thank you, Madam Chair.
    Chairwoman Cantwell. Senator Risch, would you like to ask 
questions?
    Senator Risch. I will yield back. Thank you very much, 
Madam Chair. I think this has been a great hearing and, again, 
has underscored for us the importance of this program. I am 
looking forward to everyone on the committee working together 
to try to make this work.
    Chairwoman Cantwell. Great. Thank you.
    Well, I have a few more questions from some of the 
testimony. My colleague has brought up this issue about State 
and Federal match, but also, there is an issue of whether the 
grants should be allowed to be spent over a two-year period of 
time as opposed to one year, and I do not know if anybody wants 
to comment on that. Maybe the people at the--yes, Mr. Hahn.
    Mr. Hahn. Yes, Madam Chair. You know, as I spoke earlier, 
the aerospace selling cycle is fairly long. I think that having 
it spread over two years would be highly beneficial. I mean, it 
would--not necessarily that maybe we--maybe it was not 
necessarily critical in our case that we had that second 
opportunity, because I think that we did have grant money to go 
that second year, as well. But, what that demonstrates, I 
think, is that, because of the sales cycle, that if you are 
able to not only make that initial contact and then sustain 
that relationship and build upon that relationship by being 
able to attend subsequent shows, I think it would be highly 
beneficial.
    Chairwoman Cantwell. Mr. Campbell, did you want to add to 
that.
    Mr. Campbell. Yes, Senator. I also think it would be 
beneficial to have a two-year program. In my testimony, I 
mentioned two other programs that are also helping our 
business. So, we graduated from STEP and then we entered two 
other programs within the State of Virginia that have helped 
us, not just with funding, but with networking of other 
resources, getting us in contact with other entities, 
performing some services like getting our ISO certifications.
    We are also now registered with a Virginia exhibition booth 
that they will have at a major conference in the Middle East 
next year and we will be part of that at a fairly discounted 
rate. So, it helps us financially, but it also helps us with 
credibility that we are going to be showing at a major exhibit 
with the State of Virginia and other businesses.
    So, a two-year time scale, I think, is beneficial, 
especially in these markets where, for instance, we are looking 
at Saudi Arabia right now and it takes six months to a year 
from the time you make the decision to get started and you make 
the application to set up a business there, to the time you may 
even hear back from them. That does not include the time it may 
take to find the right partners to enter into some agreement 
with, which could be a long-term agreement.
    And, so, a two-year program certainly would be beneficial 
for entering the market, but then we also need to think about 
sustaining once the business is there. What are the next 
challenges that a business will face?
    Chairwoman Cantwell. Okay. Yes, Mr. Hendrix.
    Mr. Hendrix. At the end of the grant, a two-year--second 
year grant period, we had over 15 Arkansas companies that had--
qualified companies that had applied for STEP grant funding. 
And, of course, the money has to be spent and allocated before 
that year was up. So, having a possible two-year spread would 
enable us to possibly have given some of those 15 companies 
some of the funds where we were trying to push and push and get 
that money out the door. So, I think that a two-year program 
would be beneficial, I think, for us as an administrator of the 
funding.
    Chairwoman Cantwell. Okay. And, Mr. Calhoon mentioned 
metrics. So, how do we get--is that something we have, or that 
is at SBA, or we put more teeth into what States have to do, or 
how do we get better metrics? I mean, many of you have provided 
great metrics, but, obviously, we want to learn from this, and 
so what is the recommendation?
    Ms. Verdon. I think having a two-year program would be 
beneficial on the metrics side. We heard that the sales cycles 
are longer for international deals. Right now, we are only 
reporting on one year. If we would be collecting results from 
STEP year one, we would actually have higher numbers, because 
some sales just do not come in in the first year. They take two 
years to close that deal.
    I think we are doing a great job in collecting the results. 
It is a matter of defining what we need to be collecting. If we 
want actual sales, no problem. We can collect actual sales. 
Estimated sales, we can collect estimated sales, but, there is 
a question of how valid estimated sales are. We would rather 
collect actual sales.
    Chairwoman Cantwell. Well, somebody mentioned--somebody on 
this end, I think, mentioned forecasted sales, which I think 
what they are basically--most companies have very prudent 
booking of sales forecasts. You know, even if they close a big 
deal, they will book that over several quarters or several 
years just so that they guarantee that it will actually come 
in. And, so, I do not know who, if somebody down here mentioned 
that or wants to comment on that, but, I think, from an 
accounting purpose, someone believed that those were actual 
sales, is that correct?
    No one remembers who mentioned forecasting? Somebody gave 
me a number on actual sales, and then forecasted sales.
    Mr. Hahn. Yes, I did, Senator.
    Chairwoman Cantwell. Okay.
    Mr. Hahn. I am sorry. Yes. No, the forecasting was really 
projecting what the potential for this several deals that we 
have in the offering now that we are currently negotiating. You 
know, the money that comes in is going to be significant. We 
just do not know what it is right now because we do not know 
what the volumes are going to be. But, that is why I made the 
comment that we are looking at an additional $1 to $2 million, 
depending upon what kind of volumes they start out with and, 
ultimately, you know, if those volumes are sustained.
    We have every confidence that, just because of the way 
aerospace works, that once you are spec-ed into a product, it 
is pretty hard to lose it unless you lose it yourself through 
poor quality or performance. So, we anticipate that that $1 
million is conservative and that the $2 million is likely or 
potentially likely, and then who knows where it will go from 
there.
    Chairwoman Cantwell. Okay. Great.
    Senator Shaheen, do you have any more questions?
    Senator Shaheen. I just have one more. One of the things 
that has been pointed out to me is that, oftentimes, when we 
are exporting, or when you are exporting, you are competing 
against other companies that have subsidies from the 
governments where they exist, and that one of the things that 
STEP does is help to level that playing field in a way that is 
really important to our small businesses. And, I just wondered 
if anybody had had that experience with companies exporting, 
that you know your competition overseas is getting a subsidy in 
some way from the country where they operate and what kind of a 
challenge it presents.
    Mr. Campbell. Well, I do not have a lot of details, 
Senator, but I do know that it exists, and I think I mentioned 
in my testimony, also, some disparities or differences in tax 
regulations of treatment----
    Senator Shaheen. Right.
    Mr. Campbell [continuing]. For companies like ourselves. 
So, that exists, so we have to find other ways to compete and 
work around that to compete more on value and the product and 
the service that we are providing, knowing that we are going to 
be higher priced. The good news for us is that we are in a 
market where they love U.S. companies, so that helps a lot. 
But, now I need to stand behind that with the quality, the 
services that we provide, and show the value that makes up that 
difference so that I can compete competitively.
    Senator Shaheen. Thank you, and that is one of the real 
benefits of STEP, is that it helps you offset some of that.
    Thank you, Madam Chair.
    Chairwoman Cantwell. Great. Well, I want to thank all our 
witnesses. This is a great discussion. We appreciate the hard 
work that you are doing in helping our country grow jobs, and 
we certainly want to thank the representatives of the various 
agencies of the Departments of Commerce at the local level. 
Thank you for your work on all of this. We look forward to 
moving this legislation and making it an ongoing program so we 
can continue to grow exports. But, thank you all very much. We 
appreciate it.
    We are adjourned.
    [Whereupon, at 4:06 p.m., the committee was adjourned.]
    
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