The inventory detailed in the computer system consists of about 100,000 items, only about a third of which Rucker actually owns and holds on his property. The rest is "extended inventory," or items he knows that dealers and salvage yards have for sale. The extended inventory grows weekly as his sources check in with lists of the latest junk they've found.
When a customer calls asking for a particular item, Rucker queries his computer to see if he has it. "It takes about four keystrokes," he says. If the item sits in extended inventory, he calls the owner and negotiates a deal, already knowing what price it will fetch when he resells it. What the computer has enabled him to do is match supply with demand and complete his own buy-and-sell transactions within days, which puts his capital to work efficiently.
This year he will offer customers the ability to tap into his computer system from remote locations to check on parts availability -- an especially valuable feature for foreign customers whose workday overlaps Rucker's by only a few hours.
* * *
Just after Christmas in 1986, Rucker packed for his first trip abroad, a full month in Australia searching for business. At the time, Tracom had annual sales of just $500,000, and had barely started uncovering potential business close to home. But Rucker felt, based on his limited experience, that he could get good prices abroad and that the individual orders could be quite large compared with the average back home.
Only months earlier he had completed that first deal with Detco Australia. The company had five branches in Australia, and Rucker made appointments to stop at each one. At the end of his trip, he met over sandwiches with the president of the company in his private office. For the head of a such a tiny company, Rucker wasn't bashful. "I just sat back and told him that I wanted all their business," says Rucker. "He said, 'If you only do business with us in Australia, we'll only do business with you in the United States.' We shook on it." Since then, Tracom has shipped more than $1.5 million worth of engines to Detco.
A year later, again using industry directories, Rucker planned a trip to visit dealers in England. When he arrived at Blackwood Hodge PLC, which uses Detroit Diesel engines in construction equipment, he announced himself at the gate. "I got into a golf cart and was taken to the corporate office," says Rucker. "I went into the boardroom and about 15 people started filing in. I'm wondering, what do these guys do, and why do all of them want to see me? One of them said, 'Mr. Rucker, we want to talk with you about used products. We're going to supply all of Europe with remanufactured products, and we've been looking for the past year and a half for someone reputable to supply us.' " Tracom received orders worth $75,000.
As successful as he was on foreign soil, Rucker was striking out at home in his attempts to finance the deals. Banks frequently lend against assets, and Rucker had no assets left to collateralize. He even found it difficult to finance the original deal with Detco Australia, despite having a letter of credit -- a guarantee from Detco's bank that it would pay the full contract amount once it had proof of shipment. "It didn't make any difference," says Rucker. "The banks didn't want to do it. They didn't understand it."
Rucker managed to finance many of the deals by factoring his domestic receivables, an expensive alternative. He also received a Small Business Administration-guaranteed loan for $250,000. But it wasn't enough, and he had to slow his pursuit of foreign business. "Everyone gives lip service to loaning people money for exports," he says, "but when the rubber meets the road, they don't come up with it.
"I went to banks with letters of credit that were solid. Bankers looked at them and said, 'You've never done it' or 'You don't have enough hard assets.' I went to the biggest bank in Fort Worth. They said a letter of credit didn't guarantee that I would get the goods or ship them. You work so hard to get an order and a document saying you're going to get paid, then you can't get financing to buy the goods. Most people would throw their hands up and say, why bother?"
Rucker says he visited at least 15 banks in the Dallas-Fort Worth area without receiving a single loan to finance his foreign sales. One particular experience rankles him even today. "I spent a week or two putting together the documents," he says. "On Tuesday I called and the guy says it didn't make it to the loan committee, but I should call back on Thursday. On Thursday he says he needs more information. A week later he calls and says they don't do that kind of business, foreign business. I said, 'I thought you said you had an international department.'
" 'Yeah,' he says, 'but all they do is wire money.' "
* * *
Early in 1988, at the international department of one large Dallas bank, Vijay Fozdar and Fred Waldkoetter were preparing to set out on their own. Both had broad experience in foreign trade. Fozdar had spent 14 years with several international trading companies in the Far East, and Waldkoetter had headed foreign trade operations in Europe, Africa, and the Middle East for a Dallas bank. In 1986 the pair had started building a foreign trading company for what was then InterFirst Bank Dallas.
Now, the bank was in deep financial trouble, just months away from a Federal Deposit Insurance Corp. takeover. Even in better times the bank was not a place where smaller companies could get help on foreign sales. In fact, that was true of nearly all financial institutions: small banks lacked the expertise to finance foreign sales, and large banks, which did have the know-how, dealt only with big customers.
"Very few banks," says Fozdar, "have the international capability to help small companies. The returns just are not there for handling them. Banks only get a 2% to 4% spread over the cost of funds per annum. Because of the narrow spread, and the small amount of money a small company gets, it's not worth it. You'd go broke doing those deals." And even if a business secures a 90% loan guarantee from the SBA or the U.S. Export-Import Bank, most banks think that they can easily do without the high administration costs and low yield of such loans.
