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into lucrative export leverage

Translating public programs
into lucrative export leverage

Five years later, Ameritherm stands as a case study in how to build an export business by leveraging resources from local, state and federal agencies. By 1994, exports had exploded to 33 percent of total sales; the firm now tallies its backlog for overseas business at roughly $2.5 million.
Along the way, Ameritherm’s management team tasted its share of exotic cuisine in foreign lands. The saga, says President Richard Rosenbloom, began with a vision.
Ameritherm had built a solid domestic business making RF induction heating equipment for industry. Ranked 189th on Inc. magazine’s 1991 list of the country’s fastest-growing private companies, Ameritherm could count itself a success.
But Zinn and Rosenbloom, the company’s co-founders, wanted Ameritherm to be more than just a regional supplier. They set their sights on the international market.
The trick, they knew, was to juggle Ameritherm’s limited resources–less than 20 workers then and scant money to spare–to meet that goal. Overextending meant death: If they stretched the company too far, too fast, they could cripple existing business and derail efforts to open new markets.
“You’re left with the problem of how do you get over there? How do you get around? How do you do that?” Rosenbloom says.
Seminars on the subject abound, the two men discovered as they scoured the state for answers to those questions. A seminar sponsored by SUNY Binghamton in 1990 caught Rosenbloom’s eye, addressing how to start an export business in Asia.
“Of course, you go down there and sit in these meetings and get disappointed,” he says. “Because they don’t really have the answer to what you’re concerned about. I mean, they tell you all the little tricks of the trade and all that good stuff, and I think: “Fine. Now that I know that, where are my dollars and my human resources to go there and take advantage of all this knowledge?”’
At lunch, Rosenbloom struck up a conversation with Bertrand Horwitz, a professor from SUNY Binghamton’s School of Management. Why, asked Horwitz, had Rosenbloom made the long trek from Rochester?
Rosenbloom explained his interest–and limitations–in exporting to Asia.
“His words were something like: “Boy, have I got a deal for you!”’ Rosenbloom recalls.
That deal came in the form of SUNY Binghamton’s Taiwan Market Research Associates. The program–now part of an expanded Global New York program at several SUNY campuses–sends MBA students abroad to scout out market opportunities for small businesses.
For a $500 fee, Ameritherm hooked up with Carlos Gonzalez, a graduate student who took the first plunge for the company in Taiwan five years ago.
Rosenbloom was at first skeptical, says Gonzalez, now an international trade specialist for the state Department of Economic Development in Buffalo.
“Dick said: “Carlos, you can do this, but I really don’t think anything’s going to come of it,”’ he recalls.
Rosenbloom was wrong.
For eight weeks in 1990, Gonzalez toured Taiwan, attending trade shows and meeting with more than 50 distributors and 30 potential customers for Ameritherm’s products.
Soon after that initial trip, the company sold some equipment to a Taiwanese research lab and established ties with a rep in that country.
More importantly, the experience prompted Ameritherm to sign up for the same program the following year. This time, the company sent Gonzalez to South Korea as well as Taiwan, for a nominal $1,500 fee.
Gonzalez hit the ground running. Armed with videos of Ameritherm’s products in action and copies of Zinn’s book on induction heating to give as gifts, Gonzalez contacted all makers of color picture and cathode ray tubes–Ameritherm’s target customers–in those two countries.
Gonzalez notes that Ameritherm, like most small companies, at first was slow to respond to requests. That changed, he adds, as their understanding of the international market grew. Soon he was rousing Zinn and Rosenbloom from their beds with 3 a.m. calls, asking for information needed by potential customers.
Within a month after Gonzalez returned from his trip, engineers from Seoul-based Samsung-Corning Co. Ltd. visited Ameritherm’s Scottsville plant. Soon after, Rosenbloom and Zinn hopped a plane to Taiwan and Korea, firming up relationships with reps there and calling on customers.
The payoff: In 1992, Ameritherm sold $200,000 worth of equipment into those markets, some 5 percent of total sales for the year.
Buoyed by the experience with SUNY Binghamton, the company mined similar programs with SUNY College at Brockport, for business in Czechoslovakia, and SUNY College of Technology at Utica/Rome, which targeted the Mexican market.
Results were mixed, Rosenbloom says. Some business evolved in Czechoslovakia, but Mexico was a bust. A program’s success–or lack thereof–depends on the attitude of the people involved, he maintains.
“You can sit across the desk from someone and know within a very short time whether that’s someone you want to spend time with,” Rosenbloom says.
“(If) you explain your vision and they say: “I can help you get there,’ then that’s the person you work with. If the person says: “Well, you’ve got this problem, that problem, you want to do this, but–,’ forget it. They’re the ones who’ll throw roadblocks in your path, and you’ll spend all your time trying to get through the roadblocks.”
In 1992, Ameritherm was thwarted by another sort of roadblock.
Samsung had purchased a prototype from Ameritherm, with intimations of follow-on orders over the next few years. Instead, Rosenbloom says, the electronics giant showed the prototype to a Korean vendor, which promised to duplicate the product at a lower cost. Unwilling to match that price, Ameritherm was cut out of the game.
What Ameritherm needed, Rosenbloom decided, was a smaller, more efficient product, one made at a competitive price that offered features rivals could not beat.
Limited resources again posed a problem. And again, Ameritherm sought external help to meet its goals.
The company had been working with Joseph Holroyd, who administers the state’s Industrial Effectiveness Program for this region. IEP provides funds to help pay for productivity-improvement programs.
Holroyd also is a specialist for the Industrial Technology Extension Service, acting as a resource for questions related to funding, grants, training, technology and a variety of other areas.
In any given year, Holroyd works with up to 150 companies in the Finger Lakes region. Many times he plays matchmaker: Memos come across his desk about available grants or programs, which he passes along to companies he knows that are looking for help.
So when he got a notice from the state Energy Research and Development Authority two years ago about a grant they were offering, he sent along the notice to 35 companies he thought might be interested.
“Ameritherm was the only one that picked up on it,” he says.
The low response rate is puzzling to Holroyd, who feels that some small companies might be intimidated by the amount of paperwork they think is involved in applying for state funds.
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6> “But Dick’s rather aggressive–he realizes an opportunity and goes after it,” Holroyd says.
Rosenbloom views red tape as part of the process.
“There is paperwork–that’s inevitable,” he says. “But it’s a question of return on investment. If you don’t understand how you’re going to use this to create a return on your investment (of time and money), then forget it.”
When Ameritherm expressed an interest in the NYSERDA grant, Holroyd drove to Scottsville to help hammer out the application. Over the next few days faxes flew as Ameritherm sent drafts to Holroyd, who edited them into shape.
The result: Ameritherm nabbed a $250,000 grant in late 1993 to develop smaller, lighter and more efficient power supplies for induction heating in industry.
With funding from that grant, Ameritherm built its 1-kilowatt and 3-kilowatt microprocessor-controlled induction heating systems, which hit the market last year.
New products already are boosting sales abroad. In 1994, Ameritherm’s exports jumped to $1 million–33 percent of total revenues. This year, the company’s backlog consists of roughly $2.5 million in international sales, with significant add-on potential in Asia and Latin America, Rosenbloom says.
As the firm expands into other Asian countries, Zinn broadens his culinary experience, too. In the past three years, he has traveled nearly 10 times to that region, visiting customers and training Ameritherm’s reps.
While finding reliable reps is a must for overseas success, “you have to have an adventurous spirit, too,” Zinn says.
“And don’t be afraid of your fax or phone bill, because it’ll pay off in the end,” he adds. “Your biggest phone bill is also the time when you’re doing the most business.”
Now, Ameritherm is cracking the Mexican market with the help of another state program. In the second half of 1994, Ameritherm tapped the Global Export Market Service, which offsets the cost of consultants to develop a company’s international trade.
Through GEMS, Ameritherm brought in consultant James Dawson, who in turn scanned two electronic databases to locate a rep in Mexico.
Dawson also tipped Ameritherm to REPCON, a Mexican trade show promoted by the U.S. Commerce Department and designed to let U.S. companies meet with Mexican trade reps, distributors and manufacturers. Ameritherm traveled there with a group subsidized by the state Department of Economic Development. Expenses for the week, including travel costs, totalled less than $6,000.
Now that exports are thriving, Rosenbloom says, the company needs to manage its rapid growth. Last year, Ameritherm’s staff mushroomed to 40 workers, and the plant has tripled its manufacturing space to 18,000 square feet.
Internal expansion also is supported in part by external resources.
A program at the University of Rochester’s William E. Simon Graduate School of Business Administration has supplied interns to develop marketing software for the firm. And the state Regional Economic Development Partnership Program, currently frozen by the Pataki administration, has funded training for ISO 9000 certification and total quality management.
Dawson, who has an engineering background, is involved in this effort, too. With Dawson’s help, Ameritherm is standardizing the engineering design process, allowing the firm to speed up its response time to new orders.
Ameritherm has laid a solid foundation, Rosenbloom says.
“But if you’re going to stay competitive over the long run and continue to grow, you have to have the whole culture of quality,” he adds. “The question is, if you’re growing very rapidly, how do you do that? Your resources are all trying to get stuff out the door. So you’ve got to get some additional support–that’s next on our list.”
Although partnerships with government and academia aid his business, Rosenbloom notes that creating jobs at Ameritherm helps those institutions, too.
“You’re looking for a win-win situation for everybody.”
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