Uncle Sam will help you fight off imports.
Two European competitors had infiltrated Zuber's prime territory. The companies, one from Spain and the other from Italy, made sausage equipment similar to Zuber's and took several bids away from the home team.
Zuber knew it had to do something, and fast, or it would be staring at a balance sheet heading the wrong way for a long time. Realistically, it had some advantages: As a small company, Zuber could move quickly. On the other hand, it didn't have the deep pockets of its competitors.
Zuber needed an equalizer, and it found one in a little-known Department of Commerce program called TAAC, an acronym for Trade Adjustment Assistance Centers. The program was designed specifically for companies that had suffered at the hands of foreign competitors. More to the point, it provided DOC funds to help companies get back on track.
Zuber contacted the Trade Adjustment Assistance Center in Chicago, one of 12 scattered across the United States, and discovered a world of financial and marketing help.
Armed with matching federal funds, Zuber produced a marketing survey and began selling in Latin America, a vista it never would have explored without the TAAC. To date, Zuber has increased sales and is making a faster comeback than it planned.
The same thing happened to several New York State wineries a few years ago. New York has a booming wine business in its Finger Lakes region, with Taylor, Great Western, Gold Seal, Bully Hill, Wagner, and the Canandaigua Wine Company located in the middle of the state. When business flagged during the late '80s because of imports, some of the wineries contacted the TAAC in Binghamton, N.Y. As with Zuber, the wineries received federal funding for competitiveness studies that helped fend off the competition.
Quali Tech, an animal nutrition company in Chaska, Minn., found itself in the same predicament as Zuber and the wineries when offshore competitors cut into its sales. It turned to the Midwest TAAC to help develop a marketing plan. The center found ways to diversify Quali Tech's product lineup, especially in proprietary feed and food markets. Quali Tech has since turned around its sagging profit line. Arming against foreign invaders
Sounds too good to be true? Maybe, but be assured the TAAC program is real, and has helped hundreds of companies compete against foreign invaders. The program was written into existence under the Trade Act of 1974 and was reinstated when the Trade Act was re-authorized in 1986.
Under the law, if you are an American manufacturer of any size, and you can prove your sales have been adversely affected by foreign competition, you qualify for matching funds from the Department of Commerce.
So why haven't more food companies heard about it? The directors of the trade assistance centers call it the best-kept secret within the Department of Commerce.
"For a long time, there was a purposeful effort to keep TAACs quiet," explained Bill Gates, director of the Mid-Atlantic TAAC in Blue Bell, Pa. "Both the Reagan and Bush administrations had an ideological problem with TAACs. They considered the program industrial policy, and their firm belief was that the federal government should not be in a position to assist any one industry."
When the TAAC program came up for re-authorization in 1986, President Reagan marked it for termination. Congress managed to save it for another seven years.
There was some concern last summer that the program would not make it into the 1994 budget. "For some reason, the Clinton administration listed the program for elimination," said Gates. "But I've seen it before. Congress knows the value of the program.
"Personally, I don't understand why the TAACs were posed for elimination," said Gates. "One, it's the only federal-level program that assists the whole firm. It doesn't just offer loans, like the Small Business Administration or technology transfer. TAACs are to trade assistance what a general practitioner is to medicine. It deals with the health of the whole patient."
Congress agreed with Gates. In September, it voted to re-authorize the TAAC program. The annual budget was set at $13 to $15 million per year until 1998. DOC pays most, or at least half, of the cost of a marketing plan out of that budget.
Creating a game plan
Here's how it works. A company in trouble goes to the TAAC in its area (see list). First, it is qualified to see if TAAC assistance is available. Howard Yefsky is the president of Applied Strategies, a consulting firm and non-profit administrator of the Midwest TAAC.
"We check four criteria. The petitioning company must be domestic, must have a decline in employment, must have a decline in sales, and imports must have contributed to both the loss of sales and jobs," said Yefsky.
It's easier than it seems. The TAAC does all the preparation work. It prepares all the evidence necessary for DOC approval, a process that usually takes about 60 days once the papers are submitted. "It's not hard to prove imports have affected sales," said Yefsky. "DOC normally approves the application."
Once DOC gives its blessing, a TAAC team develops a situational analysis of the company. The analysis is a snapshot of a firm's products and potential. The cost to the company is $2,000 to $6,000, while the TAAC absorbs 75 percent of the cost.
"Most of the deficiencies we find are in the marketing area," said Bill Gates. "Small companies are built on one or two niche products, and over time, they don't have the right customers for their technical capabilities. It gets worse because they don't know who their potential customers are. Then foreign competition comes in and changes their world."
It's important to know that the analysts at each TAAC are not government employees. They are private sector experts who were courted by DOC because of their time in the trenches. What emerges from their technical analysis is a clear, unbiased picture of the struggling company.
A TAAC in action
At the Mid-Atlantic TAAC, for instance, Gates' analysts took apart a $1.3 million company (which Gates preferred to keep confidential) whose sales had declined 28 percent and whose employment had shrunk 38% because of a foreign competitor. His team found that the company's field sales force had become ineffective, and its penetration had diminished. The new business plan called for expanding and strengthening the sales force, entering new markets.
An outside firm was called in to "mentor" the sales force. Training sessions were held. Media promotion was beefed up. Target market research was performed.
In the 18 months Mid-Atlantic worked with the company, sales increased 54% to $2.4 million. The average number of quotations and responses to customer inquires rose 66%. And the best part of all--Mid-Atlantic paid 57% of the $50,000 cost of the project.
After performing the diagnostic survey, a TAAC helps the company develop a written business plan. The plan details what will be undertaken once the plan is approved. As with the diagnostic survey, the TAAC absorbs 75% of the cost.
After the TAAC finishes its evaluation, it sends the report to the DOC for official approval. Typically, DOC has an answer within 10 days.
Finally, when the DOC approves the business plan, the TAAC negotiates funding to implement the business plan. Costs are shared on a sliding scale, with DOC usually picking up 50% to 75% of the tab on the first $50,000. For projects in the $120,000 to $150,000 range, the DOC will contribute about 25%.
Most of the companies working with the TAACs fall in the $2 to $60 million range. Yefsky said his average client has sales of about $14 million, but the size varies. Bill Gates said his TAAC has worked with companies with as few as one employee and as many as 1,500. Sales have ranged from $500,000 to $200 million.
Implementing the business plan is the responsibility of the company. The TAAC will help or monitor, depending on what the company wants and needs. Most of all, the TAAC is there to help the company gain sales and employment, and acts accordingly.
The type of work the TAAC will do depends on the company. Bruce Krebs, operational director of the Midwest TAAC and treasurer of Applied Strategies, said the companies he's helped typically need assistance with industrial engineering and time studies, MIS, and even TQM. "The project comes down to whatever is needed," he said.
Interestingly, export markets are not a priority. That Zuber found Latin America as a market was sheer coincidence, said Krebs. Gates also agreed that the purpose of the TAACs is not to try to strike back abroad.
The purpose of the TAACs is to create jobs in the United States, or at least protect them. The Midwest TAAC reported that in 1988, it had helped 400 firms add 3,000 jobs. These firms had lost 5,800 jobs before coming to the TAAC.
Great Lakes IAAC
(Indiana, Michigan, Ohio) School of Business Administration University of Michigan 506 E. Liberty St. 3rd Floor, Carver Building Ann Arbor, MI 48104-2210 (313) 998-6213
(Illinois, Iowa, Minnesota, Wisconsin) Applied Strategies 150 N. Wacker Drive, Suite 2240 Chicago, IL 60606 (312) 368-4600
(Arkansas, Kansas, Missouri) University of Missouri at Columbia University Place, Suite 1700 Columbia, MO 65211 (314) 882-6162
(Delaware, MaD/land, Pennsylvania, Virginia, Washington, D.C., West Virginia) 486 Norristown Road, Suite 130 Blue Bell, PA 19422-2353 (215) 825-7819
New England TAAC
(Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont) 120 Boylston St. Boston, MA 02116 (617) 542-2395
New Jersey TAAC
(New Jersey) New Jersey Economic Development Authority Capital Place One-CN990 200 South Warren St. Trenton, NJ 08625 (609) 292-0360
New York State TAAC
(New York state) 117 Hawley St., Suite 102 Binghamton, NY 13901 (607) 771-0875
New York State TAAC Metro Office 1501 Broadway, Suite 308 New York, NY 10036 (212) 921-1662
New York State TAAC Buffalo Office 1807 Elmwood Ave. Suites 287-289 Buffalo, NY 14207 (716) 877-8396
Northwest TAAC Bank of California Center 900 4th Ave., Suite 2430 Seattle, WA 98164 (206) 622-2730
Rocky Mountain TAAC
(Colorado, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Utah, Wyoming) 53,53 Manhattan Circle, Suite 200 Boulder, CO 80303 (303) 499-8222
(Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee)
Georgia Tech Research Institute O'Keefe Building 151 6th St., Room 224 Atlanta, GA 30332 (404) 894 -6106
Southwest TAAC (Louisiana, Oklahoma, Texas) 301 S. Frio St.. Suite 227 San Antonio. TX 78207-4414 (220) 220-1240
(Arizona, California, Hawaii) University of Southern California 3716 S. Hope St. Suite 200 Los Angeles. 90007 (213) 743-8427
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|Title Annotation:||Trade Adjustment Assistance Centers|
|Date:||Jan 1, 1994|
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