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It's Eastward Ho For Uncle Sam


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IT'S EASTWARD HO FOR UNCLE SAM

Ellicott Machine Corp. International built the dredges used to dig the Panama Canal. And for years, it has sold dredging gear in the U.S., Latin America, and the Middle East. Yet the 109-year-old Baltimore company has had little luck cracking the lucrative Indonesian market. European rivals actively backed by their governments have won all the juicy deals, as Jakarta spent lavishly on new harbors and airports.

But that's about to change. Last fall, when the Clinton Administration vowed to rev up the U.S. export machine, Ellicott President Peter A. Bowe decided to try again. And this time, he got some help. The U.S. Export-Import Bank quickly agreed to a $35 million below-market-rate loan for Indonesia's port-development authority to buy Ellicott dredges. In Jakarta, U.S. Ambassador Robert L. Barry lobbied Indonesian officials on the company's behalf. Transportation Secretary Frederico F. Pea and Commerce Secretary Ronald H. Brown sent letters endorsing Ellicott's bid. And now, with several ministries' approvals in hand, Bowe is close to nailing his first Indonesian contract, worth $40 million, in two decades. "We've had tremendous support that wasn't there before," he says.

After years of paying lip service to Asian markets, the U.S. is finally putting some muscle into an "eastward ho" export-promotion drive. The Clintonites are targeting China, India, and the

vibrant economies of Southeast Asia. Ambassadors--and even the President--are acting like sales executives for U.S. business in the region. They're adding commercial staffers at embassies in Asia to help companies make contacts and bid on contracts. And they're launching export-assistance programs that increase coordination among various agencies. "We're seeing a new focus on the region backed by real money and resources," says Robert E. Driscoll, president of the U.S.-ASEAN Council, which promotes trade with Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand, members of the Association of South East Asian Nations.

GROWING GAP. Focusing on non-Japanese Asia is long overdue. The U.S. has been losing ground in the region as its trade deficits with individual Asian countries widen. With European and Japanese markets only now recovering, boosting exports with the rest of Asia is critical to U.S. economic growth. The economies of Malaysia and Singapore, for example, are each barreling ahead at an 8% clip. Business is booming in India and China, as well. As a result, U.S. exports are surging. Since 1990, U.S. overseas sales to ASEAN countries alone have jumped 48%, hitting $28 billion last year (charts).

But skeptics question whether the Clinton Administration can close the still-growing gap with Asians. For one thing, Japan has a huge headstart. Driven by the high yen, Japanese manufacturers have been moving production to Southeast Asia for nearly a decade. Already, they have quietly locked up Asian markets for cars and electronics by building networks of local parts makers throughout the region. The yen's recent surge to new postwar highs against the dollar is spurring a second wave of investment that will further strengthen Japan Inc.'s clout in Asia.

And while Clintonites are long on ideas for boosting exports to Asia, they are short on cash--especially compared with the kind of overseas sales assistance U.S. trading partners are throwing at the region. Much of the new export strategy amounts to more creative ways of using existing resources.

Take the export bank's new $150 million fund to counter "tied" aid offers by foreign competitors. Such aid requires recipients to purchase products from the donor's country. The money can be leveraged up to support more than $600 million in exports, says Kenneth D. Brody, chairman of the bank, which provided $15 billion in financing and insurance for exports by U.S. companies in 1993. "This kitty will be a valuable competitive tool in Asia, where tied aid is used aggressively."

The bank's recent foray into project finance could help American exporters snare a big chunk of the nearly $1 trillion in infrastructure projects that Asian governments have on the drawing board. In a recent deal, fast footwork by the agency insured that a $220 million power project in the Philippines would be built by U.S. companies. When California Energy Co., the project's developer, shopped for equipment last fall, Japanese companies were first in line because of ready government backing. Brody pulled together a team of finance, legal, and engineering staffers who arranged a $165 million loan for Cal Energy in just six months. "For a governmental agency, it's the fastest financing we're aware of," says David L. Sokol, Cal Energy's chairman. Now, Cal Energy has turned to Ormat Inc., based in Sparks, Nev., for the turbine and other power-plant equipment.

With rapid industrialization spawning enormous pollution problems in Asia, the environmental industry is one that stands to benefit from the Administration's Asia focus. Four U.S. agencies, the Commerce Dept., the U.S. Agency for International Development (AID), the Environmental Protection Agency, and the Energy Dept., are pushing sales

of pollution-control equipment and knowhow to the region. U.S. experts in nine Asian countries track environmental business opportunities and pass the word on to more than 1,000 U.S. companies via an electronic database. As a result, California's Advanced Electric Car Technology Co. has formed a joint venture with a Thai company to convert Bangkok's fleet of smoke-belching, three-wheeled "tuk-tuk" taxis to electric power.

Embassies, once indifferent to business, are also helping. Senior officials at the State Dept. and McDonnell Douglas Corp. say that lobbying by U.S. Ambassador to Malaysia John S. Wolf helped the St. Louis aerospace giant win

a $700 million Malaysian order for its F/A-18 fighter planes. Some small companies are also getting attention. When Bert Berkley, chairman of Tension Envelope Corp., a $150 million-a-year Kansas City (Mo.) manufacturer, visited the embassy in March, Wolf and Paul Walters, a senior commercial officer, helped him with labor markets and import licenses. "I expected it to be a courtesy call, but they got right down to business," Berkley says.

NO CONFETTI. In the past, U.S. embassies in Asia have been hamstrung by tight budgets. But this year, the government boosted spending for commercial attaches in ASEAN embassies by 14% and plans to add some 40 commercial staffers throughout Asia next year. "For the first time in the 17 years I have worked here, we've been able to get everything we need," says William Brekke, an embassy commercial staffer in Hong Kong.

Business isn't celebrating just yet. Even with more people, America's major trading partners still boast vastly larger commercial missions in Asia. And all of them outspend the U.S. on export assistance: Japan subsidizes half its exports compared with the mere 2.9% of U.S. overseas sales that get government support, according to U.S. statistics. Japan also gains a critical commercial advantage from its foreign aid spending throughout Asia. Nor is it clear that efforts to foster cooperation among export-related agencies will pay off--or even work. "There's a lot of confusion and turf battles," admits an AID official.

Nevertheless, despite the constraints on federal-government purse strings, Washington seems to be getting down to business in international markets. With such help, more companies like Ellicott Machinery may get a taste of Asia's boom.Amy Borrus in Washington, with Dave Lindorff in Hong Kong


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