Plan of Action: Select the best tool & die shops to price the trial parts. They must be throughly counseled in this. Make a presentation of the bids at John Deere with an invitation for a visit. Potential: 100-2000 jobs, est. sales $10-$100 mil/yr+. U.S. MANUFACTURERS The U.S. manufacturer is looking for a way to compete with imports. The following typifies their reaction: 1) They are easily sold on CBI/Costa Rica when presented as a solution to a specific problem. 2) Their perception of Costa Rica is usually negative mainly because they tend to view Central America as a whole. 3) They have little or no experience in direct importing. 4) The perceived logistical problems outweigh the potential savings in many cases. 5) They are reluctant to go it alone but very receptive to counsel offered in an official capacity. PROJECT CONCLUSIONS The Costa Rican metals industry is, to our knowledge, the most advanced of all the CBI countries. It excels in highly skilled engineers and craftsman beyond all expectations of this investigation. Therefore we should reconsider the continuation of this program in its present form. Before we begin a reconstruction of this program we should revalidate its original premise, that is, a sales effort must be part of any marketing plan. The idea that by simply putting prospect and candidate together results in a sale is naive. Unless the matchmaker is throughly familiar with the technical requirements and capabilities of each, a mismatch usually results. I.E., The client, unfamiliar with the true capabilities of the country, sends drawings for simple parts best suited to automation or not within the experience of the candidate. The candidate wrestles with a project outside his present capabilities and nothing happens. The client is disappointed and so is the candidate. The clients may be lost forever and candidates become reluctant to respond to future leads. Presently, prospective metals clients are obtained passively, that is, they independently arrive at a decision to explore CBI and hopefully through the U.S. government bureacracy they are exposed to Costa Rica. The U.S. offices established by Costa Rica greatly increase the odds for exposure but this is not enough. The true potential of these offices is not being realized. With the future of an entire country and its manufacturing base in the balence we need a top level executive sales effort with people who would use their position, contacts, and credibility to sell CBI/Costa Rica. All of the U.S. companies solicited in this program, with the exception of John Deere, began as casual conversations with top executives. John Deere was obtained with a 15 minute talk during a two day seminar open to countries from every continent. Costa Rica was successful because the speaker knew his audience and their needs. The decision of what to sell requires good judgement. It is much easier to sell a corporation on investment after they have had a successful trade experience. As a matter of fact, it was easy to obtain clients of the above caliber and we must be careful not to over extend ourselves. John Deere alone employs over 65,000 people. Therefore, the second most important function is to be selective in what type of work is obtained for bid or investment. By preselecting what projects and parts are sent to Costa Rica we can greatly increase the odds for success. We have two goals in the metals industry: 1) Stop and reverse the degradation of the industry immediately. 2) Build an industry that makes maximum use of available resources and talent. To accomplish these goals we must carefully orchestrate the relationships. By soliciting subcontract work now, we can achive the first goal while at the same time establishing relationships that will lead to conversions, expansions, and new plants. The third function would be to weed out schemes and pipe dreams that tax available resources and undermine the credibility of CBI. REEVALUATION OF THE PROJECT This project should be reevaluated for the following reasons: 1) Phase one accomplished the most important goals. We obtained demonstrative evidence of highly skilled metalworking tasks and used that evidence to aquire clients of a high caliber. 2) The vehicle for compensation is counter-productive. That is, a trading company requires production sources and clients be kept secret. The fee requirement produces the competitive edge and at its worst may require that a contract, vital to a small company fighting to survive, be determined unprofitable. Trading companies do serve a purpose, but not as the foundation of a program as important as this. 3) Time. The pace of this program is not compatible with the events that have been sent in motion. If the potential clients are not quickly handled they will lose interest. If we do not supply work soon for the Costa Rican metal firms some may be lost. REVISED METAL PROJECT Commence full time work on the action plans as outlined for above mentioned companies and continue generating new clients. Establish full time metals office in Chicago. The cost of this office can be greatly reduced by sharing the facilities of CYN Industries. To this effort CYN Industries will contribute the following: --A minimum of 50% or 24 weeks of Mr. Macaitis' time. --The use of CYN offices and facilities as required by him. --An administrative assistant for an equal amount of time. --All auto and travel expenses within driving distance of Chicago. --Telex and telephone cost up to $3,000/yr. --Local promo and entertainment, club dues, etc. --Misc. office equipment and expenses. The cost of this service incurred by CYN Industries is $110,000.00 U.S. for 1 year. It does not include the following: --Transportation to, from, or in Costa Rica. --Transportation outside driving distance of Chicago. --Advertising (est. one trip/mo. of one week duration). Begin work immediately to open a Costa Rican metals office staffed by an experienced engineer/executive to coordinate all projects in Costa Rica. Note: Luis Escalante to describe organization and cost of that office. Costa Rica is competing for the U.S. market. CBI legislation alone will not produce results. We cannot wait for customers to come to us while the competition brings their product to his door. Chairman PICKLE. We thank you, and we will have questions about why your last statement may be true. Now Mr. Jaak Rannik. STATEMENT OF JAAK E. RANNIK, PRESIDENT, AMERICAN CHAM- Mr. RANNIK. Thank you, Mr. Chairman, for the opportunity to address your committee on CBI. I am here on behalf of the American Chamber of Commerce of the Dominican Republic, which was founded in 1923 and represents over 1,500 members employing almost 180,000 people in the productive sector. I am also here on behalf of the Association of American Chambers of Commerce in Latin America [AACCLA], of which I am the regional vice president for the Caribbean. In the Caribbean region, AACCLA has American Chambers of Commerce in the Dominican Republic, Haiti, Jamaica, Panama, Costa Rica, El Salvador, Honduras, Guatemala, and, believe it or not, we still have a chamber in Nicaragua. I myself have lived in the Dominican Republic for a total of 26 years and make my living in the maritime industry there. My firm has been doing business in the Caribbean for 67 years and serves the transportation needs of hundreds of CBI participant companies. Although I am speaking from the vantage point of our experiences in the Dominican Republic, I do know that many of these same experiences have been repeated in other countries of the Caribbean region where we have chambers of commerce. I would like to begin by saying that our business community views the CBI as a success from a number of different perspectives. True, the CBI has not transformed the economies of our Caribbean neighbors overnight, nor has it automatically brought prosperity to every inhabitant of the region; but statistics alone don't tell the story. It should be remembered that the CBI legislation was enacted at a time of a steep decline in the economies of the region, and you only have to consider what might have occurred in the absence of such a program. Contrary to the doomsayers, the CBI has made tremendous contributions on three broad fronts. It has produced a profound shift in the attitudes of local governments toward the potential of the private sector. It has encouraged necessary economic reforms and it has already had a small but measurable impact on nontraditional exports from many of the countries in the region. We are seeing business community support for IMF-type austerity programs, provided that these are coupled with free market economic reforms, to make the Nation's producers more competitive, and I have already seen a dramatic shift toward an export mentality among the business community, large and small. In all this process, the U.S. Department of Commerce has been extremely helpful in identifying suitable areas of investment and helping potential joint venture partners find each other and in matching exportable products with buyers in the United States. Obviously, it would be inaccurate to say that these trends have been uniform in every CBI country. In some countries, the exclusion of textiles and leather has been a major limitation, and in the Dominican Republic, unfortunately, our gains in nontraditional exports have been wiped out by reductions in our sugar earnings. This is particularly devastating because, more than in other CBI nations, we depend very heavily on sugar for our export earnings. Rather than elaborate on the details, I would like to state for the record that we agree completely with Dominican Ambassador Santaella's testimony on sugar here yesterday. Against this background, the greatest limitation the CBI faces today is the acute shortage of project financing and working capital. IMF austerity programs have severely restricted liquidity in the local banking systems, while interest rates are extremely high. I would like to urge the subcommittee to consider legislative measures to ease the current rules against the lending of section 936 funds directly to qualified private sector projects throughout the Caribbean Basin. The Government of Puerto Rico has already taken a step in this direction by making available up to $700 million to Puerto Rican manufacturers for the purpose of setting up twin plant operations in the region. However, as presently_envisaged, this would only be available to United States and Puerto Rican firms and would not be of any direct benefit to local investors in the beneficiary countries. There are many viable foreign exchange generating projects which would qualify for existing loan guarantee programs and which could well benefit from section 936 loans. Section 936 is, in our view, the logical answer to the challenge posed by the CBI, private sector funds for private sector projects working to fuel development in some of our poorest neighboring countries. I thank you very much for the opportunity of presenting these views and would like to respectfully request that I be permitted to submit a fuller text for the record. Chairman PICKLE. We would be pleased to have your full statement, Mr. Rannik, and thank you for your testimony. Now Mr. Timothy J. Bresnahan STATEMENT OF TIMOTHY J. BRESNAHAN, VICE PRESIDENT, BRESNAHAN-THOMAS CO., INC. Mr. BRESNAHAN. Good morning, Mr. Chairman and members of the subcommittee. I have come here today to relate to you from a small businessman's perspective my experiences working under the Caribbean Basin Initiative with a candy manufacturer in Costa Rica. We developed a working relationship that was brought about through the efforts of the Caribbean Basin Promotion Center in Chicago. Bresnahan-Thomas Co. works as a manufacturer's representative in the confectionary and snack industry. Let me briefly explain what that entails. Our company represents various manufacturers in the Chicago marketing area. It is our function to act as both a sales agent for these manufacturers as well as a market adviser. It is critical that we provide marketing input to the manufacturer so |