• 2013 INC 5000 member
• 2013 state “manufacturer of the year” nominee
• 2014 INC 5000 member (albeit a much lower rank)
• 2014 county chamber “small business of the year” winner
• 2015 state “manufacturer of the year” nominee

Everything sounds great, right? Well despite these successes, this small manufacturer could have grown so much more if not burdened by $15,000 to $20,000 per month in higher taxes because of GSP expiration. In fact:

• 2014 ended 4 straight years of double-digit employment growth rates
• plans to break ground on a (further) expansion in 2015 were put on hold indefinitely
• stagnant revenue will keep the company off of the 2015 INC 5000 list

We often publish data about the tax costs of GSP expiration, but that’s only a small part of the story. GSP expiration prevents good – and even great – companies from reaching their full potential.

Our survey last year showed this as well, where 44 percent of respondents reported hiring freezes because of GSP expiration. The impacts were particularly hard on small businesses with less than 25 employees. This includes McGuire Manufacturing in Cheshire, Connecticut, a small manufacturer with 20 employees. As McGuire President Mike McRoberts said at the time:

“As a result of GSP expiration, we have allowed attrition to reduce our workforce by two fulltime positions. I’d like to replace them, and would do so immediately if Congress renews GSP retroactively, but I can’t right now.”

That same survey showed 40 percent of companies reporting capital expenditure delays, which have a ripple effect on other local businesses. Small businesses like B&C Technologies, which has 28 employees in Panama City, Florida, are among the hit hardest once again.

B&C imports industrial and commercial laundry equipment from Thailand under GSP. In March 2014, it bought a building in Panama City Beach with a plan to begin manufacturing in the United States by April 2015.

According to B&C President Bengt Bruce, that goal now has slipped to July 2015 – at the earliest – and plans have been scaled back “quite a bit.”

Instead of a complete overhaul of the building (e.g., new floors, walls, re-designed space) that would have generated significant work for local contractors, B&C is doing only what is necessary to move into the new office space.

None of these impacts show up in the trade data, but they are the practical result of Congress’ continued failure to renew GSP.

NAM highlighted the impact on Momentive, a specialty chemicals and materials producer with a presence in 21 states, including manufacturing facilities in New York, Ohio, West Virginia, Florida, North Carolina, Oregon, Indiana and California. Roger McCrary, Momentive’s Vice President for Global Trade Management, noted the trade-offs that companies must make when Congress fails to renew GSP:

“Our ability to remain an innovative, cutting-edge American company requires access to affordable raw materials. With the increase in tariffs resulting from GSP’s expiration, we need to cut from other parts of our budget, such as R&D. That has an impact on our bottom line and future products.”

These trade-offs are faced by all companies, not just manufacturers. Some companies cut R&D. Others reduce purchases (and limit future profit potential), while others still must lay off workers. In each of these cases, though, the result is clear: even a temporary GSP expiration can have a lasting impact.

Nearly 340 organizations in 41 states (plus DC) have now joined the supporter list. You can see them all here. If you’re not on the list but want Congress to renew GSP, be sure to add your name here so we can keep highlighting the importance of GSP to the different states and congressional districts.

Just as the arrival of September means something different for each person, the way GSP expiration impacts specific companies can also vary greatly. Past research has shown that the overall cost to American companies is about $2 million per day. We won’t know the actual value for the first month of expiration until the August trade data are released in a month or so, but we can look at responses from our August recess survey to some of the company-specific impacts.

For some, expiration was felt immediately. Vortex Optics in Middleton, Wisconsin paid $150,000 in new taxes while Congress was out of DC in August, and expects to pay another $100,000 this month if GSP remains expired. Those taxes are “putting a severe financial strain” on the 100+ employee business according to Vortex Optics President Daniel Hamilton.

For others like Far East American, a Los Angeles-based importer of tropical plywood, GSP expiration hasn’t hurt…yet. Far East American didn’t import any (previously) GSP-eligible shipments in August, but the company expects to pay more than $250,000 in tariffs in September because of GSP expiration.

Finally, there are others for which GSP expiration means no imports at all. One company in Florida (that wishes to remain anonymous) must bid in the next two weeks on business for 2014. Without GSP in place for imports from Indonesia, it cannot match prices of similar goods from China and Vietnam. As a result, GSP expiration likely will cause the two-person company to lose out on a $2 million contract – a huge deal for a very small company!

These are just a handful of the survey responses, and we’ll post more in the coming days and weeks. If you’re a GSP importer, please fill out this survey so we know how expiration is impacting your company (as you can see above, there’s an option to remain anonymous).

Florida companies imported an estimated $997 million under GSP in 2011, saving them on average 4.5%. Colombia was the most important source of GSP imports, accounting for about 21 percent of the tariff savings. Ferrosilicon manganese were Florida’s top import under GSP in 2011 and would have faced average tariffs of 3.9% without GSP.

Yet GSP is set to expire on July 31, 2013, and companies could face tariffs higher tariffs starting on August 1 if Congress does not pass legislation renewing GSP. When GSP expired at the end of 2010, American companies paid nearly $2 million per day, every day, until Congress finally acted 11 months later!

This graphic shows just some of the negative impacts from the last GSP expiration. It also helps explain why more than 335 companies and associations – including at least 24 in Florida – joined the 2011 GSP Supporter List urging renewal of the program when it last expired.

Are you a Florida company that would be hurt by GSP expiration? If so, please take 30 seconds to let Congress know by adding your name to our free 2013 GSP Supporter List right now.