An Untapped Resource
Selling solar technology is all about engaging customers from sunny geographies, and among the likely venues it would be hard to quibble with Alice Springs. Known for its desert climate and an average of 300 sun-filled days a year, this small town of 28,000 hardy souls in Australia’s Northern Territory has just completed a unique solar power plant that is supplying nearly one-third of the energy needed for the Alice Springs airport.
The $2.3 million project was a big win for a Silicon Valley company called SolFocus, which manufactures an advanced photovoltaic system of reflective optics that can concentrate sunlight 650 times onto small, highly efficient solar cells. In this case, the plant is providing 600 megawatt hours of electricity—equivalent to the power used in about 70 homes—to the airport’s internal power grid.
During a competitive bidding process, the Mountain View, Calif., firm beat out thin-film and conventional PV vendors to launch its first installation in Australia. Apart from the company’s initial foray Down Under, the project is a major boost for its nascent technology and is a likely springboard to more international business.
Now for the footnote: This deal might not have happened without help from the American government.
Everything begins with a meeting, and in this instance representatives of the U.S. and Foreign Commercial Service, working out of the American embassy in Sydney, arranged the introductions that ultimately led to the project. The Australian government, under a national initiative called the Solar Cities program, contributed half the cost and was therefore a player in the selection process.
Installation was handled by a development partner, Ingenero Pty Ltd., which this summer erected a network of 28 SolFocus concentrator photovoltaic (CPV) arrays, allowing the airport to flip the switch and start drawing from its new 235-kilowatt power station.
“The airport was interested in having an iconic technology—something that was advanced—but they were a bit risk-averse because they had tried another system and had experienced some bad luck,” says Nancy Hartsoch, vice-president of marketing and sales. SolFocus was able to step into the void. With its solution, solar panels operate like a reverse telescope, needing highly directional access to the sun and clear skies. The energy yield is determined by how much sunlight can be converted into power, and SolFocus boasts an efficiency rate of 26 percent—much greater than the average conversion efficiency of 15 percent from traditional silicon solar panels, says Hartsoch.
You’d think it would be a no-brainer for small to medium-sized companies to tap into the Commercial Service’s network of 105 offices in the U.S. and 150 offices overseas to jump-start their export efforts. But surprisingly few CEOs and entrepreneurs know about these resources and fewer still take advantage of them. That’s why, earlier this year, President Obama signed an executive order for a National Export Initiative (NEI), with a goal of doubling American exports over the next five years.
Thus far, the U.S. has a dismal record of doing business abroad, with exports accounting for just 11 percent of the country’s GDP, below those of major economic competitors. Shockingly, less than 1 percent of America’s 30 million companies export at all, and of those that do 58 percent of them export to only one country, according to statistics compiled by the Department of Commerce, under which the Commercial Service resides. This new initiative is aimed at educating U.S. companies about the opportunities, coordinating the efforts of multiple federal agencies, improving access to credit for firms that want to export and working to remove trade barriers that hinder access to foreign markers.
The Commercial Service’s San Jose office—staffed by just five people—is responsible for covering all of Silicon Valley. Because of the nature of the industries there, it tends to focus on information technology, green tech and life sciences. Often, companies discover it by happenstance, when they’re getting ready to ship and need help on licensing and export compliance. Although the office is not responsible for export licensing, the discussions frequently lead to a primer on what the commercial service can do.
And that list is long. It includes customized market research, export counseling, competitive analysis, trade missions, trade show participation in USA pavilions, partner search, assistance with product launches and technical seminars, business facilitation services such as translation and meeting space, and comprehensive credit checks and background information on potential international buyers or partners. For companies that know nothing about foreign markets or cultural etiquette, Foreign Commercial Service advisors act as mentors, providing the coaching and follow-up, from preliminary talks to a final agreement.
On more than a few occasions, eyes open wide and jaws drop when companies find out how many government resources they can engage if they go overseas. To participate, they must achieve minimum U.S.-generated content of 51 percent, which could consist of IP, materials or some combination of manufacturing and assembly. “You can source components overseas as long as you can demonstrate that 51 percent of the product is derived from U.S. interests,” says Joanne Vliet, director of the San Jose office. “At the end of the day we are an economic development agency, and our reason for being is to help the economy and develop jobs in the U.S.”
Since few companies beat a path to their doorstep, the trade specialists do their own outreach, speaking to venture capitalists, attending trade shows and holding seminars on exporting. They troll for startups and approach companies they think have potential for overseas markets. In the case of Sylvan Source, another company on the Commercial Service’s roster of fast risers, the pace is more like a whirlwind. Since participating in trade tours to the Middle East and India earlier this year, company CEO Laura Demmons is racking up frequent flier miles so quickly that she is practically out-racing jet lag. The San Carlos, Calif., company has achieved major breakthroughs in water purification technology and is ready to make a huge leap from the domestic residential market to international municipal and industrial systems in water-scarce countries such as Saudi Arabia and India.
A marketing alumnus of Hewlett Packard, Demmons started her small company in 2003 with former HP engineers and a director of technology commercialization from SRI International. Their goal: Produce a system that removes contaminants more thoroughly than anything else on the market, requires little maintenance and leaves no carbon footprint. Sylvan Source began operations by making small home systems for builders, selling about 1,600 units so far. But the company knew that it had something far more significant when it put industrial effluent through one of its devices and discovered that it could scrub contaminated water from 117,000 parts per million (ppm)—several times more concentrated than sea water—to less than 40 ppm. The core technology, says Demmons, thermally balances degassing, distillation and demisting to reduce the broadest possible range of contaminants. Unlike other solutions, Sylvan Source technology doesn’t require filters or membranes, which can degrade over time.
“We started getting inquiries about industrial markets, and one of the biggest opportunities to make a difference was if we could apply our technologies to municipal desalination and environmental remediation, which could include cleaning up water from oil and gas operations,” says Demmons.
“I would have been the first to raise my hand and say that I had no idea what the Commercial Service does,” she says. Karl Kailing, an international trade specialist, and other staffers took the company under their wings, enrolling it in a trade mission last November to India, where commercial specialists in the Mumbai office introduced them to a company that might become a joint venture partner. Six months later, Demmons was on another mission to the Middle East, visiting Saudi Arabia and Qatar. Habeeb Saeed, the FCS senior commercial specialist in Riyadh not only introduced her to key enterprises but also coached her on the customs and etiquette of doing business in Arab lands, where Western female executives are not exactly plentiful.
Demmons is a big fan of the Commercial Service. The agency, she says, helps companies understand how they fit within the global marketplace and how to articulate value that enables them to stand out from the competition.
Not all of the Commercial Service’s efforts are based on overseas trade tours and in-country meetings. When foreign delegations of businesses and government officials visit America, sometimes as part of inbound missions organized by the U.S. Trade Development Agency, commerce specialists frequently arrange meetings locally.
Although companies that have been clients of the Commercial Service are sometimes tight-lipped about the dollars they generate from sales and contracts made through government assistance, the payback has been substantial. In 2008, the agency logged more than 12,000 successes for American businesses, totaling almost $70 billion worth of goods and services in nearly 200 markets around the world. For every dollar appropriated to the agency, it’s estimated that $430 in export sales have been produced—and that may be a conservative number.
Indeed, for an agency that is still largely under the radar of many executives, those who have hit pay dirt from America’s secret handshake overseas aren’t complaining about the return on investment.
Ken Castle reports for Innovation from Silicon Valley.
Where to Find Help
You don’t need to know anything about exporting or doing business overseas to engage the assistance of the federal government. While some 20 federal agencies are involved in exporting issues and opportunities, the first stop for most small to medium-size companies is the U.S. & Foreign Commercial Service. This is the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration. Heading the Commercial Service is Suresh Kumar, Assistant Secretary for Trade Promotion and Director General, whose appointment by the Obama Administration was confirmed by the Senate in February, 2010. The agency’s headquarters is in Washington, D.C.
The Commercial Service operates 109 offices, called Export Assistance Centers, in major cities throughout the U.S., and 127 offices in 77 countries overseas. The foreign offices are usually located in American embassies and consulates. All of these offices have trade specialists in a broad range of industries and can help American companies with in-depth market research, export promotion, business introductions and one-on-one counseling.
Here are some websites for further information:
www.BuyUSA.gov—The main portal of the U.S. Commercial Service, which allows you to find the nearest Export Assistance Center as well as offices in other countries. You can also call 1-800-USA-TRADE (872-8723) for general information.
www.Export.gov—An omnibus site managed by the International Trade Administration in partnership with 19 other federal agencies including the Department of Energy, Import-Export Bank, Small Business Administration, Department of Agriculture