Manufacturer Finds Export Financing

Erath Veneer is a manufacturer of domestic sheet wood veneers. The company was started in 1966, and has been headquartered in Rocky Mount for its entire existence because of its proximity to the furniture industry, which is its primary customer, and the forests from which it derives its raw materials. Veneers are also used by manufacturers of doors, windows, paneling and flooring.

In recent years, the American furniture manufacturers have shifted much of their production overseas because of lower labor costs. Because the veneer manufacturing technology has not been copied as yet by these foreign furniture contract manufacturers, Erath has not suffered a decline in sales. However, they are now selling much of their veneer direct to the foreign contract manufacturers because the American furniture manufacturers have insisted on domestic veneers when contracting with their foreign suppliers.

Erath has arranged to sell these foreign customers on letters of credit, which insures payment. However, the letters of credit have resulted in payments being received by Erath 90 to 120 days after shipment is made. This has created a working capital shortage because of the substantial increase in Erath’s accounts receivable. Gene Willis, the Vice President of Finance of Erath, contacted Scott Martin, the Director of Commerce of Franklin County, for assistance in finding a suitable financing arrangement to eliminate the working capital shortage.

Diligent referrals and contacts with state and local lenders eventually led to a successful financing deal with a local community based bank.