Small Business

My Company: Your Taxes at Work


By Lisa Bergson I never thought I'd wind up on welfare. But corporate welfare isn't only for giants, like Exxon and Applied Materials, which rely on the government to fund some of their riskier research, among other things. Thanks to an array of federal, state, and county programs, some government largesse trickles down to truly needy companies like mine.

Between 52-year-old MEECO, a Pennsylvania manufacturer of analytical equipment for industry, and its offspring, five-month old Tiger Optics, a developer of electro-optical devices and components, we've benefited significantly from assistance programs now under siege in an ill-conceived, broad-brush attack on so-called corporate welfare. Personally, I credit government programs, grants, and low-interest loans, in part, for strengthening our position in Europe, for various operational changes that have improved quality and made us more profitable, and for our continuing efforts to push the limits of an emerging electro-optic technique called cavity ring-down spectroscopy.

In fact, I almost missed the deadline for this column because it coincides with the completion of our proposal for the National Science Foundation's Phase II program. You're talking $500,000 to continue our work with Princeton University on a sophisticated, next-generation technique in electro-optics. Notably, this same program, which granted us a $100,000 Phase I award to verify the concept at hand, is among those threatened by the Bush Administration's proposed budget cuts.

BOON TO MANKIND. The invention will accurately, simultaneously, and in milliseconds measure an array of pollutants, toxins, diagnostic indicators, or process contaminants -- depending on your application. Would we pursue it without government support? No way. Not after we just spent seven years and millions of dollars self-funding development of the first-generation, laser-based device coming out of Princeton. Now, if I don't use our resources to build out the existing line and start getting some payback, Tiger will go out of business.

Here, you've got something that can greatly improve yields in semiconductor manufacturing, instantly indicate the presence of toxins or pollutants in the environment, and reliably -- and non-invasively -- diagnose breath for disease indicators. Big business won't fund it because it's too early-stage and risky. Small business can't afford the investment. Venture capital can't get the quick, massive returns it requires. Don't even talk about banks. Only government sees the big picture and is willing to invest in ventures with huge potential to serve the public interest, but little payback short-term.

Unfortunately, my companies aren't poster children for these programs. We've yet to show the kind of dramatic improvement needed to justify their existence. It all takes too long. Recently, one of our greatest allies, Anne-Marie Wolters, the Belgium-based Pennsylvania Trade Office representative, had to cut back her efforts on our behalf. A born marketing whiz, who promotes everything from Pennsylvania lumber to my moisture analyzers for gas quality, she's done more for us in Europe's Benelux region (Belgium, Netherlands, and Luxembourg) in the last six months than the two sales companies representing us have accomplished in the past six years.

POLITICS AND PROFITS. Anne-Marie has helped me systematically locate and meet the key potential buyers for MEECO products in the Benelux. None knew of our independent sales reps and, as a result, they've been buying from the competition -- even when they preferred our technology. Bolstered by our research, I met last month with one of the reps, a handsome, impeccably dressed sales manager in his company's large, spanking new building in Holland. He surmised that our margins were "too low to bother putting someone in a car." I notified the other rep, who hasn't booked a sale since he's had the line, that we plan to go direct in the region. Given our small customer base and price inelasticity, Anne-Marie convinced me that's the best way to build business there.

But none of this groundwork translates into the immediate sales she needs to meet Pennsylvania's trade objectives. Set to expire in two years, the state's Export Network program is presently under audit by a Democratic political opponent. While he may chalk it up to a boondoggle for the governor to go on fancy trade missions, the program, one of several initiatives under Pennsylvania's Community & Economic Development Dept., provides a much-needed, free service to help small businesses export around the world.

Now I realize the very notion of business assistance rankles some people. Even my own employees might feel ambivalent. As Tom Mallon, our executive vice-president for sales & marketing, puts it: "As long as these programs are available, we should take advantage of them. But I'd rather see more free enterprise."

STAYING IN EUROPE. I say, show me a truly free economy. From Singapore's managed portfolio of high-growth industries to Korea's intricate links between government and business to Europe's heavily subsidized and barricaded community, I can't think of a developed country that practices anything resembling pure capitalism. In the late '90s, for instance, the European Union instituted product-safety standards unique in the world. Because paying for the product redesign and expensive tests to garner the necessary approvals was more than we could muster, our sales to Europe fell a whopping 80% from '98 to '99.

Enter the Delaware Valley Industrial Resource Center, with a low-interest loan to help pay for certification. Now, over the two years since we reintroduced our newly designed and "sanctified" product line, European sales have rebounded an average of 400%. We're still talking small numbers, but with Europe's huge industrial market and its prestige and influence in our field, it's vital that we be there.

So, go ahead, call it corporate welfare. I prefer to think of our government's selective provision of capital resources and support services as leveling the playing field. Before joining MEECO in 1983, Lisa Bergson worked as a business journalist at BusinessWeek and freelanced for many business publications. She received a Masters in Journalism from New York University and received Columbia University's Walter Bagehot Fellowship for economics and business journalism. You can visit her company's web site at www.meeco.com, or contact her at lbergson@meeco.com.


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