Pacific Miniatures is big example for Obama’s export initiative
Pacific Miniatures of Fullerton has been manufacturing precision scale model aircraft for almost 65 years. But lately, it’s become a prime example for the Obama administration’s National Export Initiative, which seeks to double U.S. exports in the next five years.
The company’s products, which also include authentic scaled-down replicas of ground vehicles and satellites, are far removed from anything a parent might buy at a hobby shop along with a tube of airplane glue. Pacific Miniature models, which range from desktop size to several feet in length, have been used by customers to unveil new aircraft designs, entice prospective buyers and commemorate billion-dollar business deals.
“Our customers include airframe manufacturers such as Boeing, Bombardier and Airbus, aircraft leasing companies and the military,” Chief Executive Fred Ouweleen said. “Sometimes, the models are as important to a deal, if not more so, than the real aircraft.”
For the Export-Import Bank of the United States, the important point is where those models are sold; Pacific Miniatures exports 30% of its products. The nation’s trade deficit would shrink if more U.S. businesses recognized that “95% of the world’s customers live outside of the U.S,” said bank Chairman Fred P. Hochberg, who visited Southern California recently to tour Pacific Miniatures’ operations and highlight the agency’s exporting programs.
The bank, which is the federal government’s primary export promotion arm, authorized a record $24.5 billion in export financing for U.S. businesses for the fiscal year that ended Sept. 30. The agency’s efforts include direct loans for companies that have had difficulty getting bank financing. In California, the bank claimed credit for helping 403 companies export $1.3 billion in goods and services.
For Pacific Miniatures, the bank’s help has come in the form of peace of mind. The company has used export credit insurance from the bank since 2005 to ensure that it gets paid.
“If our customer defaults, we would get to make an insurance claim and get reimbursed,” Ouweleen said. “So far, the Export-Import Bank has insured 30% of our shipments. The costs are very reasonable. We’ve never had to use it, but it’s nice to know we have it.”
Through September, the nation’s trade deficit was $379 billion, up 40% compared with the same period last year. Hochberg said at least part of the problem was myopia among U.S. businesses that fail to seek customers beyond U.S. shores.
“If there is one thing we can pass along,” Hochberg said, “it’s that people exaggerate the risk of exporting. ‘What if I don’t get paid?’ We wipe that off the table. I can’t guarantee this with a U.S. customer, but I can guarantee that you will be paid if you make a deal with the foreign customer.”
Although Pacific Miniatures has a strong record of exports, it isn’t exactly a typical small business: Its customers are many of the biggest names in aviation.
In October, for example, Boeing Co. contracted with Pacific Miniatures to build a 1/20-scale model of its 747-400F. The teacup version of the flying freighter is now on display in Air China Cargo’s main lobby in Beijing. During the summer, Pacific Miniatures’ 1/4-scale models of the unmanned A160T Hummingbird helicopter were displayed at the 2010 Farnborough International Air Show in England.
Ouweleen brings a passion to his business that began, he said, when he was a child and saw a photo on the back of a cereal box of a man and his son flying a Piper Cub airplane. By 16, Ouweleen was piloting his own Piper. He bought Pacific Miniatures in 1986.
The global recession squeezed the company, Ouweleen said, and sales fell to $6.5 million in 2009 from about $8.5 million the year before. This year, the company’s sales have remained flat, and its workforce was reduced to 75 employees from 100. Ouweleen is hoping for a 10% sales increase in 2011, with exports representing a big part of that growth.
The recession, while painful, brought efficiency.
“We’re lean. We’ve cross-trained our employees,” Ouweleen said. “We move products through a lot faster than we used to.”
Pacific Miniatures’ models are so well regarded by aviation buffs and collectors that they can regularly be found on EBay.
In August, one of about 20 of the 1/100-scale models of the Concorde supersonic jet the company made in 2002 sold on EBay for $1,181, more than four times the original $250 price.
“I wouldn’t recommend our models as an investment,” Ouweleen quipped, “but that sure beats the stock market.”
