The Obama Administration tried for years to shake the notion that it was anti-business by promoting initiatives and programs to inspire significantly more exporting activity out of U.S. businesses, large and small. Many followed that gentle nudge. But in a global economy that is reeling from oil price problems and foreign exchange volatility, smaller companies that put too many eggs in the exporting basket may be flirting with liquidity disaster.
“It won’t affect the big, international companies that already have facilities around the globe too much, but smaller U.S. manufacturers that have increased their global presence and are heavily leveraged, those companies can get hurt,” said Martin Zorn, president/CEO of data research firm Kamakura Co. Zorn believes three significant problems await such firms in the new year: the lack of demand for the bevy of products related to the oil and petroleum industry due to pricing problems, the fact that collectors converting foreign currencies into U.S. dollars for customer payments are coming up with less than they had planned and the potential difficulty for companies facing debt maturities to borrow as cheaply in the new era of rising Federal Reserve rates.
Customers that fall into one or more categories bear closer monitoring by credit managers in the near term. “I think the biggest thing I look at right now and will be interesting to see are industries sensitive to foreign exchange or those highly leveraged companies facing some disruption to the credit markets.”
- Brian Shappell, CBA, CICP, NACM managing editor and government affairs liaison