U.S. Energy Technologies

Problem:

A small manufacturer would have to deplete its working capital to pay for raw materials purchased from abroad, leaving it short of cash for research and expansion.

Solution:

First International Bank provided fast and convenient import financing, freeing up the manufacturer's working capital for other needs.

Import Financing Means Bright Future for Electric Manufacturer

FULLERTON, CA - Many small manufacturers face the problem that confronted U.S. Energy Technologies, Inc. To produce its inventory, U.S. Energy needs components and raw materials. But until it sells its finished products, the company lacks the cash to pay for supplies. This is a common predicament for manufacturers, especially those that import parts from foreign companies that Letters of Credit for shipment. That's why First International Bank has developed its "U.S. Import Financing" program.

Here's how the program served the needs of U.S. Energy Technologies.

U.S. Energy, established in 1992, develops, manufactures and distributes consumer plug-in lights and commercial emergency exit-sign lights. After years of steady orders and profits, the company was poised for growth. The company's general manager, Sue Kim, said the company had spent a great deal of time researching and developing new products intended to carve out a market niche and keep U.S. Energy ahead of its competitors.

Indeed, U.S. Energy's R&D efforts have succeeded. Not long ago, for example, the company developed an energy-efficient exit sign that caught the attention of electric companies. The new light uses just 1 watt of electricity, compared with the 40 watts of conventional exit signs. Thanks to the savings made possible by these lights, some electric utilities have offered incentives to their customers to use them.

But to fill its rising orders for these lights, U.S. Energy needed an infusion of capital to pay for electronic components from a foreign supplier. That's where a program pioneered by First International Bank came in. First International Bank provided import financing over two months, allowing U.S. Energy to buy from their foreign suppliers.

For U.S. Energy, the import-financing program has proved truly indispensable. "We've been financing our imports internally," Sue Kim said, "but we knew continuing to operate this way could only take us so far. We needed help from outside to keep up with the rapid growth we've been experiencing and expect."

First International Bank recognized that U.S. Energy was an ideal client for its program - a medium sized manufacturer committed to growth and innovation.

"The management of U.S. Energy Technologies is progressive and knowledgeable," said Robert Monyak, vice president for international banking at First International Bank. "We had the instant impression that they were committed to their business for the long term."

"What we saw at U.S. Energy," Mr. Monyak explained, "was a manufacturing company experiencing the working-capital shortages that are typical of modest size firms entering a period of accelerated growth."

"With our U.S. Import Financing program, we'll provide a Letter of Credit to a U.S. company's overseas supplier while giving the importer 90 to 360 days to repay us. This way, the company can import the necessary materials, incorporate them into the manufacturing process and sell their product before repayment."

"We were able to deliver a financing solution at an optimal point - when they needed financing but hadn't already taken on too much debt from a lender's perspective."

For fast-growing young companies like U.S. Energy, and for many small and medium size manufacturers, the lack of cash flow is an all-too-common problem.

"Before, we were using all of our money in advance to purchase the raw materials to meet our orders and were very short on working capital," Ms. Kim said. "Now, we are able to use funds from First International Bank and still have money on hand to work with. As a result, our sales have increased more than 50 percent, and the company has hired four new employees."

The financial assistance from First International Bank, Ms. Kim noted, was delivered swiftly and efficiently. The paperwork was minimal. And when U.S. Energy Technologies needed answers, the bank provided them -- without delay.

And the relationship with First International Bank will not end there.

"Once we begin to help a company with import financing," Mr. Monyak said, "we talk with management to see if there are any other financing products we offer that can be of help. We want our clients to look upon us as a lending partner that can create solutions to meet all their financing needs."