I wrote an article back in November about U.S. International Foods LLC, a U.S. Small Business Administration (SBA) success story that was being honored at the 2019 Mid-America Trade Summit, an annual event in Columbia, Missouri where small businesses share best practices and lessons learned in expanding global sales.
As part of our participation in that event, the SBA moderated a listening session with small business honorees who shared challenges and opportunities U.S. small businesses face in the global marketplace. Insight like this helps inform our policymaking and identify priority focus areas to increase support for U.S. small business traders.
One of our listening session participants was Serola Biomechanics of Loves Park, Illinois. Serola designs belts and braces for back and joint support, and pain relief. Serola was facing a unique challenge as the company attempted to re-shore production of one of their newer product lines, initially manufactured in China.
“It was always our goal from the very beginning to have this product made in the U.S.A.,” shared Serola’s President, Tom Person. “We continued research and prototyping to gain process knowledge while attending tradeshows and industry events looking for someone in the U.S. who could provide a turnkey solution for us.”
Unfortunately for Serola, the reshoring decision came just before additional Section 301 tariffs were announced in response to the U.S. Trade Representative’s investigation into China’s unfair trading practices. Serola pushed hard to complete reshoring prior to the tariffs going into effect, but due to factors beyond their control, it didn’t happen. By the time critical tooling equipment was put on a boat, tariff costs had risen from 3% to 25%.
Serola shipped the equipment to a U.S. Foreign Trade Zone (FTZ) waiting for a trade deal and hoping for a reduction in tariffs. When storage costs started piling up, Serola looked for a way to make their case.
“We began calling everyone. And I mean everyone - state level agencies, brokers for shipping companies that were supposed to be the experts,” said Tom Person. “We even contacted our local Congressional representatives, trying to find a way for a small company with good intentions that pre-dated the tariffs to get back to manufacturing here in the United States. But every call and email was met with the same answer, that it just wasn’t possible.”
Meanwhile, Serola was continuing its normal business with much success, making inroads into new markets and getting noticed. Serola Biomechanics received the Illinois Governor’s Award for Continuing Excellence in Exporting in 2019, before also being honored as an Outstanding Exporter at the Mid-America Trade Summit.
At the Mid-America Trade Summit, Serola shared their reshoring trade challenges during the SBA listening session. SBA’s Senior International Trade Specialist, Steve Sullivan, brought the challenge to SBA’s Trade Policy Unit to see if there was anything that could be done. The company was introduced to Sarah Bonner, a Senior International Trade Policy Specialist.
“Sarah truly did an incredible amount of leg work in a short amount of time trying to find a solution, if one even existed,” said Stephen Kadamian, Serola’s Director of Business Development. “It was absolutely amazing the knowledge, expertise and work ethic that was brought to the table by everyone at the SBA.”
Sarah found an exception for certain types of tooling under certain tariff codes that might work and instructed Serola on what was needed to determine if the exception could be met. To add to the pressure, this exception that was found on December 19, 2019, expired on December 28, which was less than 10 days away.
As it turned out, Serola did meet the requirements to use the exception. By relaying the information provided to Serola from the SBA, the company was able to contact the right people and have the tooling removed from the FTZ, effectively completing the importation at the former 3% rate.
Tom recalls, “It was a scramble to get everything done right and some long hours were required by everyone here, but it saved us thousands of dollars in the end. I couldn’t be happier with the result and the work done by those at the SBA.”
The strokes of good luck were just starting. Within that same timeframe, Serola found a manufacturer in the United States capable of manufacturing their new product. It is expected to be on the market starting in August 2020. It is a true success story that speaks to the trade expertise of the SBA. Before Serola came across the contacts at the SBA, they were at a dead end. Now, new American-made products will be brought to market within a year, resulting in increased revenue, job retention and job creation.
This story brings to life how SBA’s Office of International Trade provides U.S. small business expert trade counseling services, in addition to access to financing and grant funding to support global sales. To learn more about SBA financing for global sales growth, reach out to your regional SBA Export Finance Manager. If you have trade barrier concerns you can reach us at firstname.lastname@example.org or visit our website at www.sba.gov/international. We are always available to help. We want to see more success stories like Serola and welcome the opportunity to help you grow your small business!