Perfekta Inc. Case Study

Page Two

Now, however, the landscape changes once again as the market for U.S. aircraft manufacturers expands overseas. In response, Perfekta anticipates regaining its previous sales levels as it too begins to compete for a share of the global economic pie.

Nearly half the growth Perfekta expects this year will come from overseas exports, representing approximately 13 percent of the company's sales.

"We are extremely optimistic about our business in light of new markets opening overseas," says Guerra. "We have obtained orders from companies in Indonesia and Japan, both directly and indirectly through Boeing's export projects. Companies in countries that do not have the necessary technical ability or support processes we have turn to Boeing's list of preferred suppliers. In that way, Boeing sets the stage for us to enter into overseas projects. We also have secured work from firms in Israel and Scotland and are bidding on work in Switzerland."

"The companies most likely to succeed in the global marketplace understand that the rules of the game have changed," added Guerra. "Negotiations skills must be razor sharp. Pricing is critical, and there is greater emphasis on just-in-time production. As a small company we have an advantage because we can offer quick turnaround. But just-in-time production requires investments in information systems and equipment, and the smaller production runs reduce our buying power, so holding prices is difficult. Many job shops can't continue because of financial limitations. At Perfekta, we have made the commitment and are trying to compete fiercely against the Japanese and Germans. We believe we are in an excellent position with Boeing to grow our international business, and with financial assistance, can accelerate our overseas growth significantly."

"Right now, we have a small but profound window of opportunity to establish our technical expertise worldwide and to capture market share overseas," says Guerra. "To not support that would be a mistake. We can no longer look for business in our own backyard. We must look beyond our borders if we expect to be viable in the coming years. We no longer compete with companies across town. Instead, we compete with companies across oceans."

###

For additional information, contact Peggy Houlihan, CEE at (202) 296-6107.

The CATO and Competitive Enterprise Institutes made the following assertions that Export-Import Bank of the United States is corporate welfare. Ex-Im Bank's rebuttals prove that EX-IM BANK is definitely NOT

CORPORATE WELFARE.

1.

2.

ASSERTION:

Ex-Im Bank is corporate welfare.

REBUTTAL:

By CATO's own definition, "the use of government authority to confer special
benefits or privileges to specific firms or industries where there is no
corresponding societal benefit" Ex-Im Bank is not corporate welfare.

Ex-Im Bank does not pick "winners" and "losers." It does not target deals to
benefit specific companies or sectors. Ex-Im Bank responds to the needs of
exporters to correct market imperfections found in specific transactions.
The Bank is deal-driven.

Ex-Im Bank finances small, medium and large-sized exporters so long as the
deal meets the Bank's economic, financial, and technical criteria. It finances
all types of U.S. goods and services.

ASSERTION:

Ex-Im Bank provides subsidized loans.

REBUTTAL:

Ex-Im Bank does not provide subsidized loans. It's Direct Loan interest
rate is priced at cost of borrowing +1%. Guaranteed Loans are priced by

the commercial lenders at market levels. Only in the rare circumstance where the
Bank is forced to match a foreign officially subsidized loan (Tied Aid), would
the interest rate be less than the cost of borrowing.

Background: Prior to a partial accord (reached in 1983) with foreign government
export credit agencies (ECAs) to establish market-oriented interest rates, Ex-Im Bank
priced interest rates on direct loans at below its cost-of funding on those
transactions where U.S. exporters faced foreign officially supported competition.
Commercial interest rates in the U.S. in the early 80's had reached a high of
19.25%. International negotiations in interest rates in the Organization for
Economic Cooperation and Development (OECD) proved to be a time-consuming
effort. [Issues included appropriate minimum levels of financial support (interest
rates that are linked to commercial interest rates in the lenders market), the timing
of adjustments to these interest rates (e.g. every six months), and the different