Recovery Act of 2009 offers new credit opportunities for package printers

By Tom Polischuk

Aquaflex gets help, gets order

The Export-Import Bank of the United States (www.exim.gov) is the official export credit agency of the U.S., with a mission to assist in financing U.S. exports. It recently announced that Aquaflex (www.aquaflex.com), a division of FL. Smithe Machine Co., Inc., won an order for printing machinery from a customer in Mexico with the help of financing facilitated under a new Ex-Im Bank Medium-term Delegated Authority program.

According to the Ex-Im Bank, this program allows approved lenders to increase use of the bank’s medium-term guarantees to support commercial loans for foreign buyers of U.S. capital goods. The program is designed to reduce transaction turnaround time and provide additional support for U.S. small-business exports.

“Selling machinery requires much quicker turnaround because customers need answers right away,” said Stuart Roberts, vice president at F. L. Smithe Machine Co. “Ex-Im Bank Delegated Authority enabled NorthStar [lending institution] to provide quick decisions to our customers, which enabled us to secure a sale. Many times, there’s a lot of competition, and the most competitive financing wins the order. Financing is critical, but so is the lead time associated with obtaining financing.”

President Obama signed into law a $787 billion stimulus bill on Feb. 17, 2009. Formally called the American Recovery and Reinvestment Act of 2009 (Recovery Act), this bill has enough money to provide $2,570 for every man, woman, and child in the U.S. (Do the math and you’ll find it’s based on a population of about 306 million.) Instead of directly giving us that kind of stimulus, the government has tailored the bill with the objective of saving or creating millions of jobs to halt the deepening recession and get the economy back on track. Pennsylvania’s Republican Senator, Arlen Specter, provided one of the key swing votes that allowed passage of the bill. Senator Specter said, “I supported the economic stimulus package for one simple reason: The country could not afford not to take action. The unemployment figures, the latest earning reports, and the continuing crisis in banking made it clear that failure to act would have left the United States facing a far deeper crisis in the future.”

A deal closer

As an example of how the bonus depreciation can positively impact both equipment suppliers and package printers, below are some excerpts from a letter written by Dick Chesnut, president of W.R. Chesnut Engineering (www.chesnuteng.com), to his congressman, The Honorable Rodney Frelinghuysen. Chesnut wrote this letter on Jan. 29, 2009 to encourage Congressman Frelinghuysen to support similar capital equipment write-off incentives in any new stimulus package.

“I would like to document the beneficial impact of the Tax Stimulus Package of 2008 that President Bush and Congress enacted.

About this time last year (February ‘08), we contacted our customer in Massachusetts who prints pressure-sensitive labels. At that time they were considering the purchase of a new Combination Flexo Gravure Press …

At that time we presented information about the Economic Stimulus Package. We informed them that they could write off 57 percent of the cost of the machine in the year ‘08, provided the machine was purchased and installed before December 31, 2008. They signed the order without delay. The rest is history …

What’s more important is that I have no question that this order was placed with us in a timely manner in order to allow time for the construction and installation of the press. As a result of this, Chesnut Engineering added 6 full-time people to its staff and placed many orders to outside subcontractors for materials and supplies.”

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