Public Hearing
before
ASSEMBLY COMMERCE, TOURISM, GAMING AND
MILITARY AND VETERANS' AFFAIRS COMMITTEE
"Testimony on how to increase the export potential of small and medium-sized businesses"
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LOCATION: |
DATE: |
MEMBERS OF COMMITTEE PRESENT:
Assemblyman Joseph Azzolina, Chairman
Assemblyman Nicholas Asselta, Vice-Chairman
Assemblyman George F. Geist
Assemblyman Guy R. Gregg
Assemblyman Kenneth C. LeFevre
Assemblyman Jack Conners
Assemblywoman Mary T. Previte
ALSO PRESENT:
Karlis C. Povisils
Deborah K. Smarth, Office of Legislative Services
Assembly Majority
Committee Aide Committee Aide, Assembly Speaker Jack
Collins, District 3 1
Roger S. Cohen
Lead International Trade Consultant
New Jersey Small Business Development Centers
and
President, Cohen
International
/snip/
ASSEMBLYMAN JOSEPH AZZOLINA (Chairman): I'd like to get started. This is the Commerce Committee, which is Gaming and Military and Veterans' Affairs, and a number of other things we do through a lot of legislation.
I would like to first welcome the Shore Leadership Group, in the back room, I spoke to at 9:00 this morning.
Mr. Speaker, I was here at 9:00 this morning to speak to them. They're in the back. Would you stand up a minute and welcome. (applause)
All right. Well, we all know how important exports are to the State's economy. We also know that over the years we have witnessed the decreasing resources, staff, and budget for the State Trade Division. We need to reexamine our State trade strengths, strategies, especially as they relate to the small and medium-sized business sectors. Hopefully, this year will put us on the right track.
We will open our hearing with remarks from the Speaker of the General Assembly, that dynamic Jack Collins, and then we will hear from the business community and the State Trade Division. I thank everyone for coming here.
Mr. Jack, I know you're in a hurry. Do you mind if I call you Jack or I call you honorable Jack or I call you Mr. Speaker Jack?
A S S E M B L Y S P E A K E R J A C K C O L L I N S: Mr. Chairman, you may call me whatever you want, as long as you send me the coupons each week. (laughter) That great food service you run--
Well, thank you, Mr. Chairman, and members of the Committee. I appreciate the opportunity to be before you today. And let me just say right off, Mr. Chairman, to you and to Deb Smarth of our staff, that I must say that as a 35-year educator, fully believing that education is continual, that what you two have brought into my perspective of business with regard to exports, I very much appreciate. And here we are today, again, with a hearing whereby we are looking at, hopefully, the future of expanding exports from this State.
I couldn't help but think, as I was looking at some of the material that was made available to me with regard to where New Jersey is and its exportation policies and goals, that until recently when I started to pay a little more attention to my retirement portfolio -- that this whole perspective that has been given by so many, so more advanced than I with regard to a world economy and how it affects us in this country -- until I saw some of "my investments" through my retirement portfolio dropping because of problems in Japan or whatever else is going on, I went, wow, this is really something that has an impact on us. It's reaching individual citizens such as I.
Let's expand it to where we are here today, that with 6.95 percent of our current State financial portfolio being involved in exportation. If we could just increase that a little bit -- I mean, the jobs that would be tied to it. And it's interesting, Mr. Chairman, that right now, and I think we're all very pleased with this, the job situation in New Jersey is better than it's been in decades, maybe in the broader picture, with regard to opportunity, better than it's been maybe forever. But we know, unfortunately, that that, too, will change, and where do we look for an expansion of the job market?
I think, and has been suggested by many, as I say, far more advanced than I and with more expertise than I on this, is through a whole export concept of what we're trying to do, and so on, that we are ninth in the country in exporting products. And they are products that are indigenous to New Jersey, particularly pharmaceuticals and some of the other high-tech programs and companies that we have. But we should continue to move forward here.
And I know that through your efforts, Mr. Chairman, and the Committee's efforts, that we will surely look at this, make it a part of New Jersey's economic base, particularly as we look into this upcoming decade. I surely hope, and I will tell you now, that two pieces of legislation, your bill sponsored along with Assemblyman Bateman in the last term, Mr. Chairman, A-1965; and the Geist-LeFevre bill, A-1966, both of which were pocket vetoed by the Governor for whatever reason -- totally her decision -- but I would hope that we will see them again. I assure you that if they get to the floor of the Assembly that they'll be posted and, hopefully, we'll send them once again to the Governor's Office.
And it is that kind of farsightedness that we have to keep on the target line as we go forward. Your efforts and what's been going on with this Committee and the various hearings you've had and, also, Mr. Chairman, if I may, while we've looked at the whole business climate in this state -- very important -- but when we can hone in on the whole concept of exports, what's going on, how we can just continue to expand New Jersey's market is something we all should be striving for.
I know this Committee will, and I thank you very much for the opportunity just to share a few of my very general thoughts of where we should be going in this area. And I wish you well in this hearing and, of course, all the activities that go through this Committee.
ASSEMBLYMAN AZZOLINA: Mr. Speaker, it's a great perspective you have, because the economy is not going to stay the way it is. And we know that future jobs are going to depend on export, and a lot of countries depend on a lot of export. New Jersey sits here with the ports on both the Delaware River and the New York-New Jersey port. It's a big port system, and a lot of merchandise comes in and goes out of these ports, and there's plenty room for more. And manufacturing right in New Jersey -- we have great manufacturing facilities here.
SPEAKER COLLINS: That is absolutely true, and we all manufacture in the U.S.A. We have that little NJ after it -- even makes it better. And people all over the world are looking forward, once they've been exposed to our products, and that's what we want to do. We want to keep this energy up through the Department of Commerce and, of course, through efforts that we can take in the Legislature to let the citizens of the world know what New Jersey can produce: A product that is viable and more than comparable with any that come from anywhere else.
ASSEMBLYMAN AZZOLINA: Well, Mr. Speaker, it is very important to have your support in the laws we're going to be considering. We have to convince the front office that this legislation is very important that we're working on.
SPEAKER COLLINS: Well, absolutely. And one of the ways, I think, we're going to signal the front office is, as we're starting the process-- I believe the $2 million that's been in the budget the last couple of years to support our exportation efforts, whether it was a typo or a misprint or whatever, but they're not in there. I'm very receptive to the restoration of those moneys as we go through the budget process.
ASSEMBLYMAN AZZOLINA: Thank you very much, Mr. Speaker.
SPEAKER COLLINS: Thank you, Mr. Chairman, members of the Committee.
ASSEMBLYMAN AZZOLINA: Thank you.
SPEAKER COLLINS: Thank you.
ASSEMBLYMAN AZZOLINA: We have Mr. Roger Cohen, International Trade Consultant, the New Jersey Small Business Development Center at Rutgers University.
ROGER S. COHEN: Good afternoon, Mr. Chairman, and members of the Committee. My name is Roger Cohen. I'm here today on behalf of the New Jersey Small Business Development Centers. We call it the NJSBDC, which has been hosted by the Rutgers University Graduate School of Management for more than 21 years. For the NJSBDC, I act as the Lead International Trade Consultant, providing counseling and consulting to the SBDC's clients in New Jersey.
The Small Business Development Center network is part of a national partnership among State and Federal governments, the private sector, and colleges and universities. The program is designed to provide the highest quality of business assistance services to established enterprises and promising new start-ups with the objective of increased employment and increased contributions to the State and Federal Treasuries.
The New Jersey Small Business Development Center's network, established in 1977 (sic) under Public Law 96-302, is now composed of a headquarters, located at Rutgers University in Newark, and 10 full-service regional centers located throughout New Jersey. The network also includes 16 affiliate offices located throughout the state.
A variety of educational and business resources are available to counsel and train small business owners to finance, market, and manage their companies. Clients are assisted in exploring their business ideas, developing and assessing their business plans, making cash flow projections and accurate financial statements, and we help them to formulate their marketing strategies. The specialty programs of international trade, government procurement, technology commercialization, E-commerce, manufacturing and information services are coordinated also from the SBDC's headquarters at Rutgers in Newark. And the SBDC's Web site, maintained at the headquarters, attracts over 60,000 prospective and established business owners annually.
The principal portion of the SBDC's overall annual operating budget of $4.5 million is provided by the United States Small Business Administration, the SBA. The New Jersey Small Business Development Centers receives a $500,000 grant from New Jersey's Commerce and Economic Growth Commission to respond to inquiries from start-up and established businesses to help them compete for State contracts.
However, the New Jersey SBDC did not receive money from the State of New Jersey to serve the export interests and needs of small business clients. Those services provided by the SBDC, which we do provide, have been supported solely by the Federal government, the SBA, which identifies specific initiatives for the SBDC's programs.
Since 1979, over 174,000 persons have received direct assistance from the New Jersey Small Business Development Centers in the form of free, confidential, one-to-one counseling and affordable education. In 1999, the SBDC provided one-to-one counseling for 5154 clients, among whom 42 percent were women and 37 percent were minorities. And we trained 11,627 potential and established business owners during 603 workshops and conferences.
In addition, some 500 technology-based entrepreneurs were assisted to commercialize intellectual property and inventions by the SBDC's technology help desk and incubator, primarily through the 800 number, 800-432-1832.
In 1999, the New Jersey SBDC network helped business clients to obtain over $20 million in loans, nearly $11 million in contracts, and $130,000 in grants.
Focusing now on the New Jersey Small Business Development Centers' International Trade Program, let me share with you the following information. In 1999, the NJSBDC's International Trade Program provided one-to-one counseling to some 100 clients. Over 14 workshops were provided to entrepreneurs and businesses, both independently by the SBDC and in conjunction with other organizations such as chambers of commerce, industry groups, and with the Federal Department of Commerce and the SBA.
We also assisted one New Jersey exporter in obtaining the State's first SBA guaranteed export working capital loan for $500,000. That client company expects to utilize that loan facility, which is a revolving line of credit, 12 times or 12 months during the year, allowing them to export $6 million of products from New Jersey.
In 1999 and continuing in 2000, we embarked upon providing a new training program for New Jersey companies to instruct them in how to export their products. In cooperation with the U.S. Department of Commerce and the SBA's Export Assistance Center, we provided a seven-session, 16-week market entry program. And that market entry program is resulting in trade missions to Mexico and Canada.
As we speak today, one of my New Jersey clients, a graduate of the market entry program, is exhibiting, in Guadalajara, Mexico, New Jersey products, which she plans to export there. It's a direct result of this training program and the counseling she's received.
Throughout 1999 and continuing in 2000, the NJSBDC provided bimonthly international trade workshops, focusing each time on a specific topic or country, together with the regional business partnership in Newark.
The mix of clients served by the SBDC's International Trade Program includes all industry and service groups. I am working with clients who are New Jersey manufacturers and suppliers of industrial products, consumer items, foodstuffs, and basic goods. My clients also include advanced technology companies, including software developers, computer service companies, and the new dot-coms. One of my SBDC international trade clients has established, with our support, an international sales operation entirely on the Internet.
I am currently working with a Taiwanese company, an electronics manufacturer, who is considering an investment here in New Jersey. I am meeting with them tomorrow to help them locate an appropriate New Jersey facility and to help them develop their establishment strategy here in the state.
The New Jersey SBDC is well positioned to provide services to these technology companies, both in matters of international and domestic trade. We have in place experts and programs that assist our clients with establishing and growing businesses in the so-called new economy, such as E-commerce firms and advanced biotechnology companies. We can, and do, assist them in developing their marketing plans, locating and working with technology partners, and finding and attracting investment capital.
I came here today from the Venture Fair at the Liberty Science Center, where one of my clients is working to attract investment capital into their company. And I'm going back there right after I finish speaking with you. And also, with the NJSBDC's incubator program, we actually provide some of those companies a physical space in which to operate their businesses.
I mentioned earlier in my comments several of the coordination efforts the New Jersey Small Business Development Center's International Trade Program has made in the last two years. And Deb Smarth asked me, specifically, to comment on that, and so I am. We have successfully delivered programs jointly with the Export Assistance Center of the U.S. Department of Commerce and the SBA. We also hold regular workshops with groups such as the RBP and the Canadian-American Chamber and other chambers of commerce.
And, especially with the U.S. Department of Commerce and the SBA, we have developed an active and successful client referral program. The SBA, Commerce, and the Ex-Im Bank refer clients to the SBDC for international trade counseling in all matters, including business development and financing. That $500,000 guaranteed loan came from such a referral. And the SBDC refers clients to those organizations for support in areas where they excel, such as detailed market data, loan guarantees, and insurance on foreign accounts receivable, which is so very important.
We would welcome a similar relationship with New Jersey's international trade program and began such a discussion with them in December. I'm very ready to help coordinate this activity.
Another area that would benefit from increased coordination is the identification of New Jersey service companies who would assist new-to-export New Jersey firms. These new-to-export companies frequently have quite a difficult time in identifying service companies, such as freight forwarders, customs brokers, and bankers, who are willing and able to work with these small firms because they start off with so many questions, but they start off also with a limited amount of business. I do make an effort to meet those service companies, and I have compiled my own database. However, I would welcome a source of additional service companies to whom I might make qualified referrals.
As you know, the New Jersey Small Business Development Center's entire budget has been flat lined by both the Federal and State government for more than five years, even though demand for services has continued to increase exponentially. We have done more with less and continue to expand services to more people, but we're restricted in how many specialty services we can provide simply by the limitation on resources.
We are well positioned and have identified certain trends that we would like to address if additional resources were made available to us. And I'd like to share with you briefly those trends.
More technology companies want and would be encouraged to export. They need consulting and mentoring services. More foreign companies are interested in establishing New Jersey locations. They need help identifying facilities and also need consulting services to familiarize themselves with local markets and regulatory issues. More American-based Internet firms are looking to expand their operations internationally. They need intensive services to assist with issues such as financing and shipping, and regulatory issues, and especially with intellectual property issues.
If additional resources were made available to the New Jersey Small Business Development Centers, we have lined up partners with whom we can work. These include the EDA, our own network of host institutions, chambers of commerce, and the DEC, the New Jersey District Export Council, of which I am a member.
These partners would cooperate in the expansion and delivery of extended, targeted, and measurable results. The New Jersey Small Business Development Centers utilize a well-developed impact data collection system. Therefore, we are able to quantify the impact of those services which we deliver to the entrepreneurs in New Jersey.
I thank you for the opportunity to provide these comments today, and I've submitted a hard copy earlier should you wish them. I'd be happy to answer any questions which you might have.
ASSEMBLYMAN AZZOLINA: Mr. Cohen, thank you very much for being here today. Now you can get back to the Science Center. I wish I was going with you.
MR. COHEN: Thank you.
ASSEMBLYMAN AZZOLINA: Thank you.
/Testimony from other individuals snipped/
(HEARING CONCLUDED)