RICHARDS INTERNATIONAL, LTD. Mr. JOE L. EVINS, RICHARDS INTERNATIONAL, LTD., Chairman, House Small Business Committee, 2361 Rayburn House Office Building, Washington, D.C. DEAR MR. EVINS: We have a copy of the Press Release announcing that the Subcommittee on Government Procurement under the chairmanship of Representative James C. Corman will conduct hearings designed to broaden American small business participation in the procurement of goods and services financed with AID funds. Our company is an exporter sepcializing exclusively in supplying bakery machinery and specialty raw materials to bakeries in foreign countries. We can definitely be considered as a "small business" since our yearly sales volume is only approximately $700,000.00. We are very much interested in having the Agency for International Development make available funds to the Baking Industry overseas so that they can modernize their equipment and purchase those specialty raw materials which will enable them to produce better bread at a lower cost. Many bakeries in foreign countries are vitally interested in purchasing modern, efficient ovens and bakery machinery, but they cannot secure long term local financing to enable them to do so. For example, our company had a booth in the building sponsored by the United States Government at the El Salvador International Fair in November. There were at least ten bakeries in El Salvador that were interested in purchasing some of the bakery ovens and bakery machinery that we displayed there. However, they were not able to place their orders with us because they could not obtain adequate financing locally. We have in our files a number of orders from the Dominican Republic, as well, covering bakery ovens and bakery machinery which our customers want to purchase but which they cannot buy because local financing or dollar exchange just is not available. The same situation is true in many other countries in Central and South America where we do business. All of the foreign Governments are definitely interested in seeing that good quality bread at low prices is made available to their citizens. I also believe that it is definitely to the best interest of the United States Government to see that the Baking Industry in foreign countries can modernize its productive equipment so as to keep the price of bread at the lowest possible level. In order to do this, AID financing is degnitely needed. If you so desire, I would be very pleased to appear before your Committee to testify on the importance of expanding the AID financing of bakery machinery, bakery ovens and specialty raw materials throughout the world. I have been in the export business for the past 41 years. For the past 25 years I have been directly concerned with the export of bakery machinery and specialty raw materials to bakeries throughout the world. I spend approximately six months of each year travelling to visit our customers overseas. I am personally acquainted with the situation in practically all of the countries of Central and South America and in the Caribbean Islands. Yours very truly, RICHARDS INTERNATIONAL, LTD., RICHARDS INTERNATIONAL, LTD., Mr. JOE L. EVINS, Chairman, House Small Business Committee, Re Agency for International Development-Problem in Financing Machinery DEAR MR. EVINS: We are a Small Business, specializing exclusively in the sale of bakery machinery and bakery raw materials to companies in foreign countries. Our total yearly sales volume is only $700,000.00. Last November, at the urging of the Office for International Trade of the Department of Commerce, we exhibited some of our equipment at the El Salvador International Fair held in San Salvador, El Salvador. As a result of this Fair, we sold some ovens and machinery to three different bakeries in Costa Rica. We were informed that arrangements would be made for financing these sales through loans granted by the Agency for International Development. In December, 1968, I made a special trip to San Jose, Costa Rica and I visited officials of the Banco de Costa Rica with our agent. In December, 1968, I was informed that the Letters of Credit covering the equipment that we had sold would be opened promptly. We did not receive these Letters of Credit from the Chase Manhattan Bank until April 10th and the Letter of Credit as established by the Agency for International Development specified that shipment had to be made by April 30th and the documents had to be presented to the bank by that time. This was an obvious impossibility, since we had specified two to three months delivery on the bakery ovens and four to five months delivery on the bakery machinery, which represents the time that the manufacturers require to produce this special equipment. This morning, we received a cablegram from our representative in Costa Rica to the effect that the Agency for International Development will extend the Letters of Credit only until June 30th, The ovens covered by our orders have already been shipped to Miami and they are being loaded within the next week or ten days on board a steamer sailing for Costa Rica. However, other machinery worth in excess of $28,000.00 is in the process of being manufactured, and we have been informed that this work will not be completed until the middle or the end of July. We would best be in a position to ship this equipment early in August. It is obviously not our fault that the Agency for International Development waited from December until April before they issued the Letters, of Credit. If they had issued the Letters of Credit promptly in December we certainly would have been able to make shipment before June 30th. I would appreciate your kind cooperation, Mr. Evins, as Chairman of the House Small Business Committee in getting in touch with the Agency for International Development and having them extend the expiration date of the Letter of Credit in question. The details of this Letter of Credit are as follows: AID #26-12 27-12 BANCO DE COSTA RICA LETTER OF CREDIT #17886, CONFIRMED BY CHASE MANHATTAN BANK OF NEW YORK, If this Letter of Credit is not extended we will suffer an irreparable loss since this equipment has been manufactured specifically for the customer in question. Yours very truly, J. B. SPARK, President. RICHARDS INTERNATIONAL, LTD., New York, N.Y., May 21, 1969. Re Project Loan 515-L-018 to the Republic of Costa Rica. DEPARTMENT OF STATE. Agency for International Development, GENTLEMEN: At the request of the Bureau of International Commerce of the United States Department of Commerce, we exhibited our bakery ovens and bakery machinery at the El Salvador International Trade Fair in November, 1968. As a result of our exhibit at this Fair, we sold a number of ovens and some bakery machinery to bakers in Costa Rica, and we were informed by a representative of the Banco Central de Costa Rica that these purchases would be financed with funds made available by the Agency for International Development. After the Fair was over, in December, 1968, I went to Costa Rica and I visited the Banco Central and I was informed at that time that the Letters of Credit would be opened promptly in our favor. On April 11th, 1969 we received from the Chase Manhattan Bank of New York their Letter of Credit #E736440 which was opened at the request of the Banco de Costa Rica, their Credit #17886 #26-12 27-12 AID for $43,550.00 covering a bakery oven, bakery machinery, and baking pans for Panificadora Nacional in San Jose, Costa Rica. This letter of credit expired on April 30th. Obviously, complicated machinery such as that covered by this letter of credit, cannot be manufactured, shipped to a seaport, loaded on board a steamer, and have the documents presented to the Consul of Costa Rica, viseed by him, and returned to us in time to present all of the papers to the bank within 20 days after the issuance of the letter of credit. Immediately after we received this Letter of Credit, we got in touch with our representative in Costa Rica and we requested him to obtain an extension of the Letter of Credit. We pointed out that the oven could be shipped from the factory in May, and that we would be able to present documents to the bank sometime in June. However, we stated that the Champion machinery listed below: Champion thoro mix high speed dough mixer_. Champion No. 3 rounder___ Champion 2-pocket dough divider_.. Champion No. 3 overhead proofer.. Champion lane SM moulder___ $6,555.00 6,850.00 2,595.00 7,900.00 4,500.00 would not be manufactured until the end of July and we requested that the Letter of Credit be extended to permit us to make shipment in August. We have been informed by our representative that the Letter of Credit has been extended to June 30th. This will give us ample time to manufacture the oven and to present the shipping documents to the bank. However, today we received a cablegram from our agent informing us that they cannot obtain an extension of this Letter of Credit from the Central Bank to permit us to ship the Champion Machinery at the end of July and to present the documents to the bank in August. If the Letter of Credit had been opened promptly by the Banco de Costa Rica in December, we would have had no difficulty at all in making shipment within the time limit specified under the Letter of Credit. However, I have been informed that there were certain problems that had to be ironed out between the Agency for International Development and the Banco de Costa Rica, and that consequently the issuance of the Letter of Credit was delayed until April 10th. We see no reason why we should be penalized because of your negotiations with the Banco Central de Costa Rica which resulted in a delay from December to April in opening the Letter of Credit. We hereby request your kind cooperation in arranging for an extension of this Letter of Credit so that we can ship this equipment from the factory at the end of July and present the corresponding shipping documents to the Chase Manhattan Bank in August. Yours very truly, RICHARDS INTERNATIONAL, LTD., P.S.-All of this equipment is intended for use in a large commercial bakery. By installing this equipment, the bakery will be able to produce high quality bread which it can sell to the people in Costa Rica at a low price. RICHARDS INTERNATIONAL, LTD., New York. N.Y., May 22, 1969. Re Agency for International Development Loan No. 515-L-018 to the Republic of Costa Rica. Mr. JOE L. EVINS, Chairman, House Small Business Committee, Rayburn House Office Building, Washington, D.C. DEAR MR. EVINS: I wish to refer to the letter written to you on May 19th. In this letter I failed to indicate the Agency for International Development Loan Number to the Republic of Costa Rica which was the basis for the Letter of Credit which was issued in our favor by the Chase Manhattan Bank. I have listed this Loan Number above so that in getting in touch with the Agency for International Development you can refer to it correctly. I have just received a cablegram from my agent in Rica who has stated that he cannot arrange for any additional extensions on this Letter of Credit in Costa Rica and that the request for the extension of the Letter of Credit will have to be handled through Washington. We are writing to the Agency for International Development today as per the copy enclosed herewith. Unless we can secure the extension of this Letter of Credit which will permit us to complete and ship the equipment which is in process we will suffer a loss which will compel us to go out of business. Anything that you can do to assist us in obtaining this extension will be greatly appreciated. Yours very truly, J. B. SPARK, President. STATEMENT OF MR. J. B. SPARK, PRESIDENT OF RICHARDS INTERNATIONAL, LTD. The Government of the United States is frequently criticized in countries throughout the world, and in particular in Central and South America because the AID Program does not yielld immediate benefits to the poorer citizens. If the United States Government wants to do something that will result in immediate recognition of its AID Program, I would like to suggest that consideration be given to modernizing the bakeries in these different countries so that they can produce good quality bread at low prices. The vast majority of the bakeries throughout the world are still using production methods which went out of style in the United States in the 1880's and 1890's. Many bakery ovens are primitive brick affairs heated by wood and in a few cases by an oil burner. These ovens burn the first lot of bread that is baked and this has to be thrown away. The last lot of bread that is baked usually comes out raw, because the oven is too cold, and this bread, too, must be discarded. The bakeries then add the cost of the material and labor involved in the production of the unsaleable bread to the cost of ingredients and labor used in the production of good bread. This results in higher prices for all bread sold to the public. As far as equipment is concerned, many bakeries are still mixing dough by hand. Those that have mixing machines, are using old, inefficient, obsolete machines which went out of style in the United States from 30 to 40 years ago. I have been in the export business since I was graduated from college in 1928. For the last 25 years I have been engaged in supplying bakeries overseas with bakery machinery and specialty raw materials. I spend approximately six months of each year travelling in foreign countries. I am therefore personally familiar with the problems that the bakers in foreign countries face in supplying good bread at low prices to the citizens of their country. I have been informed by the owners of bakeries in many different foreign countries that they would be willing to purchase modern ovens and machinery if they could get financial assistance in the form of 3 to 5 year loans from their banks. I have visited the banks, and I have invariably been informed that if funds could be made available to them through AID for financing bread bakeries, they would be willing to make the loans. And that is how the matter stands in most countries. The amount of AID financing being made available to foreign bakers is just a drop in the bucket compared to the financing being made available to other industries. And yet, there is no industry that is basic as the baking industry. And there is nothing that the AID could do which would so quickly have an impact on the people in countries overseas, as enabling bakers to turn out better bread at lower prices. If the Agency for International Development will make funds available to the bakeries in foreign countries to modernize their equipment, it will be helping the Governments in these countries to keep down the price of bread. It will also be helping the American farmers, by increasing the market for American wheat. I therefore strongly urge your Committee to bring such pressure to bear as may be necessary so that the Agency for International Development will initiate a program aimed at modernizing the bakeries in selected countries overseas so that the price of bread can be kept as low as possible and so that civil unrest can thus be minimized. Mr. J. B. SPARK, President, Richards International, Ltd., HOUSE SMALL BUSINESS COMMITTEE, DEAR MR. SPARK: Reference is made to your recent letters regarding your request for further extension of the Letter of Credit covering your sale of bakery machinery to Costa Rican interests under financing arrangements made by the Agency for International Development. In connection with this Subcommittee's hearings on small business participation in AID financed procurements, we are requesting the AID Administrator to submit his comments regarding the issues raised. If you agree, the Subcommittee will include your letters, the AID response, and any additional views or recommendations you may wish to present in the record of our hearings. It will be helpful if you would provide your written approval for this by July 10 when we will resume the hearings. Sincerely yours, Hon. JOHN A. HANNAH, JAMES C. CORMAN, M.C. Chairman Procurement Subcommittee. HOUSE SMALL BUSINESS COMMITTEE, Washington, D.C., June 17, 1969. Administrator, Agency for International Development, DEAR MR. ADMINISTRATOR: This is in reference to the request of Mr. J. B. Spark, President, Richards International, Ltd., of New York City for further extension of a Letter of Credit issued in connection with the purchase of bakery machinery financed by AID loan No. 515-L-018 to the Republic of Costa Rica. Mr. Spark states that his company's inability to timely perform the contract is due to delays in opening the letter of credit and that such delays were occasioned by transactions between AID and the Costa Rican bank. The letters we received from Mr. Spark are enclosed for your further information. Your comments by June 24 will be appreciated. Sincerely yours, Hon. JAMES C. CORMAN, JAMES C. CORMAN, M.C. Chairman, Procurement Subcommittee. DEPARTMENT OF STATE, AGENCY FOR INTERNATIONAL DEVELOPMENT, Chairman, Subcommittee on Procurement, Washington, D.C. DEAR MR. CHAIRMAN: Thank you for your recent letter concerning the matter of extension of the terminal shipping date of a Letter of Credit in favor of Richards International, Ltd., New York City, in the amount of $43,550 to enable that firm to conclude a sale of equipment to Panificadora Nacional in San Jose, Costa Rica. I am pleased to be to report that our AID Mission in San Jose had previously requested our approval to extend the terminal shipping date and that we cabled our approval on June 5, 1969. At that time we telephoned Mr. Spark of the action we had taken and asked him to furnish some additional required documentation which has since been |