Local demand for its industrial equipment and services is down by 15%, yet far from letting staff go, ETI is hiring extra people.
Équipements et Techniques Industriels, a Le Havre-based company employing some 80 workers, is beating the economic crunch by expanding its business abroad with the help of EIB lending channelled through the local branch of Société Générale.
It’s one of the huge list of small and medium-sized enterprises (SMEs) that receive EIB financial support through local banks – nearly one million businesses in 2008 alone.
The EIB increased its lending for SMEs, the bedrock of the European economy, by more than 42% last year to more than EUR 8bn, and is continuing to ramp up its support this year as part of its efforts to foster economic recovery.
A significant proportion of ETI’s clients are industrial firms, especially in the surrounding region of Normandy, which are suffering the effects of the crisis. All local suppliers to these firms are feeling the strain, but ETI also caters to an international clientele, importing equipment from some 15 countries and exporting to the same number.
With a turnover of EUR 20m in 2008, ETI stocks some 15 000 articles at its Le Havre office and branch offices in Dieppe and Le Petit-Quevilly, the most expensive of which cost several million euros. But stocking is only an intermediate stage of the very specialised process in which the firm is involved: selecting equipment, diagnosing and advising on client needs, assembling, packing and shipping industrial toolkits – even the training that goes with their use.
ETI’s strategy of expanding abroad to compensate for falling local demand is based on three main pillars, explains Yvon Kervella, Project Manager in ETI’s Export Department. First there is the direct export of industrial equipment to a broad range of clients. Then there are technical workshops and laboratories set up on site for large projects. And finally, ETI offers vocational training.
Algeria is ETI’s most important market for exports generally, and for vocational training in particular. The firm has an office in Algiers, and recently completed a project for the Algerian Ministry of Vocational Training, catering to 44 schools in all.
“After we won the tender, the process started with the selection of, in this case, plumbing tools and fittings, and compiling them into toolkits,” Kervella said. “Then followed shipment to Algiers, clearing customs, delivery at the schools, checking quality and quantity, commissioning and start-up, and one-week training courses for the teachers, who in turn are now educating a younger generation of professional plumbers and fitters.”
For this kind of project, which can take up to two years from start to finish, payment typically follows only on completion. This is why ETI needed additional working capital to finance its international expansion, and why Société Générale lent the firm EUR 375 000 from funds made available by the EIB.
Because ETI obtained a loan from EIB resources, the terms were better than it would be able to get from other sources of funding.
“We have confidence in ETI and we find it important to continue lending to our good clients, also in difficult times, with the help of the EIB,” said Yannis Faucillon of Société Générale’s Le Havre office. “I call this la logique du partenariat.”
It is precisely this “logic of partnership” that is at the core of the “EIB Loans for SMEs” initiative, of which ETI is a beneficiary. Not only is the EIB boosting the quantity of its finance for SMEs, but after a wide consultation last year with SME groups, banks and relevant public institutions, it has revamped its lending process to make it simpler, more flexible and more transparent.
Red tape has been cut, and loans can now be made for a wider range of needs such as investment in intangible as well as tangible assets, and to increase working capital.
A solid basis has been laid for a quantum leap in SME financing in the years to come.