GLOBAL TRADE SOLUTIONS, INC OFFSET OVERVIEW. 2 OFFSET DEFINITIONS THE OEM OBLIGATOR AND ITS...
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Transcript of GLOBAL TRADE SOLUTIONS, INC OFFSET OVERVIEW. 2 OFFSET DEFINITIONS THE OEM OBLIGATOR AND ITS...
GLOBAL TRADE SOLUTIONS, INC
OFFSET OVERVIEW
2
OFFSET DEFINITIONS
• THE OEM OBLIGATOR AND ITS SUPPLIERS’ BUSINESS TRANSACTIONS WITH FOREIGN INDUSTRY RELATING DIRECTLY TO THEIR PRODUCTS
DIRECT OFFSETS
• THE OEM OBLIGATOR AND ITS SUPPLIERS’ BUSINESS TRANSACTIONS (THIRD PARTY PRODUCTS, TECHNOLOGY TRANSFER, TRAINING, INVESTMENT) WITH FOREIGN INDUSTRY
INDIRECT OFFSETS
3
WHAT IS OFFSET?
A TRANSACTION WHEREIN A CONTRACTOR (OEM) PROVIDES A PRODUCT TO A FOREIGN COUNTRY, AND IN RETURN, ACCEPTS AN OBLIGATION TO PROVIDE THE FOREIGN COUNTRY WITH INDUSTRIAL COMPENSATION EQUAL TO:
(1) AN AGREED-UPON PERCENTAGE OF THE ORIGINAL CONTRACT PRICE(2) A SPECIFIED DOLLAR AMOUNT
OFFSET IS ALSO CALLED:
• INDUSTRIAL COOPERATION• CO-PRODUCTION• COUNTER PURCHASE/COUNTERTRADE• COMPENSATORY TRANSACTION• BUY BACK• SWAP• BARTER
4
RESOLVING OFFSET OBLIGATIONS
-MANUFACTURING
-INDIRECT PROJECTS
-TRADING CREDITS
-PARTNERS’ ACTIVITIES
-PARENT CORP PURCHASES
-NON-PRODUCT PURCHASES
-TECHNOLOGY TRANSFER
-PRODUCT SUPPORT
-SOFTWARE APPLICATIONS
MULTIPLE PATHS CAN BE PURSUED
5
STRATEGY
CAPTURE WHAT YOU ARE DOING
• LINK ALL PURCHASES, ACTIVITIES, AND INVESTMENTS TO LOCAL INDUSTRIAL COOPERATION PROGRAMS (ICP) OR OFFSET OBLIGATIONS.
• IF NOT, THEN OBLIGORCOMPANIES WILL EXPEND ADDITIONAL RESOURCES TO MEET OBLIGATIONS THAT COULD HAVE BEEN SATISFIED BY OTHER TRANSACTIONS…….AND THIRD PARTIES LOSE POTENTIAL REVENUES BY NOT ASSISTING THE OEM OBLIGATOR.
FBJ94-65
6
GTS MISSION - OFFSET
• THAT MANY OF COMPANIES HAVE THE POTENTIAL TO EARN OFFSET CREDITS BASED ON THEIR CURRENT ACTIVITIES AND FUTURE STRATEGIES
• THAT GTS CAN BRING VALUE TO BOTH THE OEM OBLIGATOR AND THE COMPANY DOING QUALIFIABLE INTERNATIONAL ACTIVITIES.
ASSUMPTIONS
7
OFFSET RECOGNITION PROCESS
TIMING IS EVERYTHING
LOCAL PARTNER SUPPORT
SCREENINGPROCESS
NON-DISCLOSUREAGREEMENT
EXCHANGE OF DATALOI OR MOUAGREEMENT
BUSINESSPLANDEVELOPMENT
TIME
NEWCO
PREAPPROVALREQUEST
FINAL APPROVALS
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CLASSIC TRADING SCENARIO
THIRD PARTY ACTIVITIES ASSISTING OEM
GTS COORDINATINGWITH THE COUNTRYOFFSET AUTHORITIES, AND BOTH COMPANIES
COMPANY Y HAS NO OBLIGATION, BUT IS DOING AN ACTIVITY THAT WOULD EARN CREDIT
COMPANY X NEEDS CREDITS,BUT CANNOT PERFORMTHE OBLIGATION
9
HOW MULTIPLIERS WORK
• EACH COUNTRY TARGETS DESIRED ACTIVITIES AND APPLIES INCENTIVES ( OR MULTIPLIERS ) TO ENCOURAGE THOSE ACTIVITIES
EXAMPLES (EACH COUNTRY IS DIFFERENT)
1 to 1 FOR PROCUREMENTS
1 to 3 FOR TRAINING
1 to 5 LOW TECH XFERS
1 to 7 LOCAL INVESTMENTS
1 to 10 HIGH TECH XFERS
COUNTRIES VALUE ACTIVITIES DIFFERENTLY
10
WHO HAS OFFSET OBLIGATIONS ??
• US DEFENSE
BOEING, GENERAL ELECTRIC, LOCKHEED MARTIN, UNITED TECHNOLOGIES, NORTHROP GRUMMAN, BAe SYSTEMS, HARRIS…….
• TIER ONE AND TWO SUPPLIERS TO THE OEMs
• MANY EUROPEAN COMPANIES
MOSTLY FORTUNE 100 COMPANIES
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STRATEGIC BENEFITS
• CREATES NEW CORE BUSINESS OPPORTUNITIES
• OPENS NEW GLOBAL CHANNELS
• BENCHMARK INTERNATIONAL COMPETITION
• SUPPORT CURRENT RELATIONSHIPS
MORE THAN JUST OFFSET
12
COUNTRIES DOING OFFSET
• UK
• SPAIN
• NETHERLANDS
• GREECE
• NORWAY
• SWEDEN
• DENMARK
• BULGARIA
• POLAND
SOME OF THE MOST ACTIVE
• TURKEY
• UAE
• ITALY
• CZECH REPUBLIC
• ISRAEL
• TAIWAN
• S. KOREA
• ROMANIA
• S. AFRICA
13
OFFSET TRANSACTION
UNIQUE SOURCE OF REVENUES
YOUR
COMPANY
GTS
REVENUES
CREDITS
OBJECTIVE - TO LEVERAGE YOUR BUSINESS DEALS TO
DEVELOP NEW RELATIONSHIPS OR PROFIT
OEMs
BUSINESSACTIVITY
14
HOW TO LEVERAGE OFFSET
ASSUMING THAT THE PARTIES CAN DETERMINE A COURSE OF ACTION…….
• A STATEMENT OF WORK IS DEVELOPED• YOU PRICE OUT THE EFFORT• CALCULATE THE CORRESPONDING AMOUNT OF OFFSET CREDITS TO FUND PROJECT• PROPOSE TRANSACTION TO THE COUNTRY• LINK OBLIGOR TO THIS OPPORTUNITY
GAINING OFFSET CREDITS
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PROCUREMENT TRANSACTIONS
• PROCUREMENT ACTIVITIES
• MARK ALL POs
• STRATEGIC RELATIONSHIPS
• SUPPLIERS
• CUSTOMERS
• MISC COMPETITIVE INITIATIVES
DO WHAT MAKES SENSE
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COUNTRY CRITERIA FOR CREDIT
• INCREMENTAL…new or increased work?
• CASUALTY…is the link to the obligor clear?
BOTTOM LINE:
COUNTRIES BELIEVE THAT U.S. COMPANIES WILL NOT PLAY HARDBALL FOR OFFSET CREDIT RECOGNITION
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CAPTURING CURRENT EFFORTSMARK PURCHASE ORDERS FOR OFFSET
----------- MAY USE ALL OR ANY PART OF THEVALUE OF ITS PURCHASE ORDER(S) WITHSUPPLIER FOR OFFSET PURPOSES; INCLUDINGBUT NOT LIMITED TO, (1) FULFILLING ----------’SOFFSET OR INDUSTRIAL BENEFIT OBLIGATIONS,(2) TRANSFERRING OFFSET CREDITS GRANTEDAS A RESULT OF SUCH PURCHASE ORDER(S)TO THIRD PARTIES, AND (3) RETAINING CREDITSGRANTED FOR USE IN SATISFYING FUTURE OFFSET OBLIGATIONS
18
DOING INTERNATIONAL BUSINESS
INCREMENTAL PROCESS
INVOLVEMENT
MARKETSURVEY
EXPORTING
DISTRIBUTORSHIPBILATERALMANUFACTURING
JOINT VENTURE
MULTIPLECOUNTRYOPERATIONS
TIME
19
SUPPORT AVAILABLE
• GTS INTRODUCTIONS TO OTHER COMPANIES THAT MAY OFFER NEW OPPORTUNITIES FOR YOU.
- TECHNOLOGY
- MARKET
- COUNTRY SPECIFIC INTERESTS
GTS CAN HELP
20
OPPORTUNITY SELECTION
• GTS CAN ASSIGN OFFSET CREDITS TO OTHER COMPANIES IF YOUR ACTIVITIES CAN BE IDENTIFIED AS QUALIFYING FOR CREDIT.
• ANY ACTIVITY MUST MAKE GOOD BUSINESS
• NEVER DO ANYTHING JUST FOR OFFSET CREDITS
CREDIT TRANSACTIONS
21
SUMMARY LEVERAGING OFFSET
• OPPORTUNITIES ARE INCREASING
• NOTHING IS EASY
• NEED STRATEGY AND FOCUS
• MUST ASSESS BOTH RISKS AND REWARDS
22
FOR MORE INFO
CONTACT
FRED JOHNSON
GLOBAL TRADE SOLUTIONS, INC.
office 615-541-2523
fax 615-469-4563
email [email protected]
on the web at www.gtsworldwide.com
OR QUESTIONS
PROCESS
1. Client provides documents 2. Obligor submits for their offset obligation. 3. GTS negotiates credits 4. Fee paid to Client
PROCESS
1. Client provides documents 2. Obligor submits for their offset obligation. 3. GTS negotiates credits 4. Fee paid to Client
Obligors
Obligors
GTS
GTS
Country Offset Authorities
Country Offset Authorities
33
3
3
Procurements Procurements
2 2
1 1
1 1
4 2
4 2
Typical Offset Transaction
PRODUCT DELIVERIES
PRODUCT DELIVERIES
QUALIFY SUPPLIER BID OPPORTUNITIES PLACE ORDERS
QUALIFY SUPPLIER BID OPPORTUNITIES PLACE ORDERS
Global Procurement Process
LOCAL COMPANY
SELECTION
LOCAL COMPANY
SELECTION COUNTRY SELECTION
OFFSET CREDITS OFFSET CREDITS
DEVELOP
STRATEGY
DEVELOP
STRATEGY CURRENT SUPPLIERS
CURRENT SUPPLIERS
Foreign Company
Obligor
Local CompanyLocal Company
Third Parties
Offset Authorities
OFFSET RELATIONSHIPS