Finance and international volatility

With today’s news cycle running 24 hours a day and policy narratives being shaped by 140-character messages, the velocity of potential volatility certainly has increased. As businesses are faced with this emerging reality, the choices laid out are to watch it unfold and react, or proactively prepare to address the possible implications.

This year at the World Trade Association’s Wisconsin International Trade Conference on May 11, the finance session co-chaired by me and Bryan Mulkerron, vice president, senior relationship manager at Bank of America Merrill Lynch, will attempt to navigate the turbulent state of global trade through the experiences, expertise and narratives of seasoned panelists.

The panelists are Nancy Ebben, director of international finance at Oshkosh Corp.; Jeffrey Eineichner, chief financial officer at Power Test Inc.; and Lee Hornick, vice president of finance for Winsert Inc. The companies and their respective executives provide a diverse backdrop for this year’s finance session, as each occupies a different space in industry, operational size and resources deployed. They demonstrate how their preparedness allows them to react and make better and more profitable decisions for their respective companies.   

As turmoil emerges from topics like free trade agreements (North American Free Trade Agreement, Trans-Pacific Partnership and Regional Comprehensive Economic Partnership) and their renegotiations, withdrawal or U.S. exclusion; tax reform proposals; continued sanction discussions; Brexit, Frexit, Nexit and Grexit, each executive reflects on the potential impact to his or her international trade strategies. They must consider the resources at all stages of expansion and how to prepare their staff to utilize the available resources.

Eineichner’s experience in leveraging state resources such as the Wisconsin Economic Development Corp., the ExporTech program, Milwaukee 7 and others have assisted him in steering Power Test clear of the choppy waters in previous volatile moments. With roughly 50 percent of Winsert’s operations tied to international trade, Hornick has considered various structural options related to maximizing tax benefits and the potential implications of the proposed U.S. tax discussions. Ebben and her team are involved with sales to almost every country in the world and are incredibly creative in mitigation of as much risk as possible, utilizing virtually every mitigation tool known and even creating a few herself.

Mulkerron and I also are no strangers to advising businesses on international volatility. I currently advise clients of Trade Acceptance Group Ltd., a firm that provides trade credit insurance and export finance solutions to U.S. exporters. Mulkerron previously worked as a risk management consultant at Euler Hermes, an Allianz company, the world’s largest trade credit insurer, and now works in the global commercial bank, advising middle-market companies at Bank of America Merrill Lynch.

While the only true constant is change (something the participants know all too well), it is more evident and rapid in the current environment. The result is that preparation, planning and knowledge of the available financial resources in the global arena are crucial for continued success and rapid response. The export market still provides an immense opportunity for Wisconsin companies and will only grow over time. Financial flexibility is needed in order to realize the benefits, just as agility is required for every other discipline within your business. Without this knowledge, a company’s ability to pivot becomes significantly more difficult, if not impossible.  

Bruce Glaub is a principal at Trade Acceptance Group Ltd.