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Sixty Laid Off Tennessee Employees Rehired Due to EXIM Support

Exporter/Customer: 
Classic American Hardwoods, Inc.
Export Destinations: 
Worldwide
EXIM Bank Product: 
Export Credit Insurance
Jobs Created: 
68
Jobs Supported: 
128

Classic American Hardwoods

Classic American Hardwoods, Inc. (CAH) truly exemplifies EXIM Bank’s mission of supporting and creating jobs through exports. This Memphis company started in founder’s Bill Courtney’s living room in 2001 and has become one of the most recognized and respected hardwood lumber companies in the world. The company buys lumber from sawmills and dries the lumber, regrades and packages for shipment.

EXPORT CHALLENGE

Not everything went smoothly however. This successful firm experienced a major obstacle on its road to prosperity. To borrow money, its lender required CAH to insure their foreign accounts receivables. CEO Bill Courtney abided and purchased export credit insurance from a private insurer in 2007 and export sales started boom. When the 2008 recession started to hit the international risk portfolio, the private insurer decided to cancel most of the buyers on CAH’s policy. This action had a major impact on the company as exports comprised 60% of its total sales. Mr. Courtney could no longer access funds and was naturally risk averse given the world economic crisis.  Although being very close and committed to his employees, he reluctantly had to layoff half of his 120 employees and those remaining received a 25 percent pay cut.

EXIM SOLUTION

John Koch, president of World Trade Consult, knew how to resolve CAH’s problem. He met CAH through the introduction of one of his other hardwood lumber exporting clients. Mr. Koch explained how EXIM Export Credit Insurance could protect their assets (export accounts receivable) from potential, unexpected losses due to risk events beyond CAH’s control.  CAH was able to start growing again.  With export credit insurance, their lender would include CAH’s export accounts receivable in their bank borrowing base for working capital financing. 

RESULTS

During this period of rich export growth, CAH expanded their hardwood drying and processing capacity to keep up with export growth. EXIM's policy provided protection against both political and commercial risks up to 95 percent of the sales invoice. This reassurance of getting paid reignited CAH’s export sales as buyers were allowed to buy on “open account” credit terms and not have to pay-in-advance. Furthermore, the insured receivables provided funds to fulfill its growing sales orders as CAH’s lender allowed the company to borrow against these covered receivables.

Sales have tripled since 2008 and are now over $46 million annually with active customers in 39 U.S. states and over 30 countries. CAH has even opened offices in China and Vietnam. EXIM has covered $54 million of the company’s export sales during the 2012 to 2017 period. Importantly, all of the laid off employees were rehired and the company now has 128 in its workforce. And that’s what EXIM is all about – supporting jobs here at home.


 

“EXIM’s support saved the day. Our company regained its strength and allowed our sales to remain strong. This had a positive impact for our sawmill suppliers and Classic American as a whole, helping to maintain our goal of continued growth.”
John Hise, European Sales Manager