Failure to Renew Ex-Im Bank Charter Leads to Loss of US Manufacturing Jobs
Last December, we urged Congress to reauthorize the Export-Import Bank and thereby avoid putting U.S. exports and manufacturing jobs at risk. Despite pleas from the National Association of Manufacturers and the U.S. Chamber of Commerce that the bank is vital for helping U.S. manufacturers compete, some Republicans opted to kill the bank as an example of corporate welfare. The bank’s charter was not renewed, and it began turning away business July 1.
The consequences were immediate. In September, General Electric Co. said it will move production of large, gas-powered engines to Canada from Waukesha, WI, along with 350 jobs, to access export financing no longer available in the United States. GE will invest $265 million in a new assembly plant at a Canadian location yet to be determined. In exchange, Export Development Canada (the Canadian equivalent our Ex-Im Bank) will provide financing for a range of future products.
That same month, GE received a line of credit for various power projects from France’s export credit agency that will result in 400 U.S. manufacturing jobs moving to Europe. Another 100 U.S. jobs will be moved to Hungary and China next year to access export credit for customers of jet engines.
GE executives say the company is bidding on $11 billion in projects, mostly in developing nations, and that those bids won’t be entertained if they aren’t sponsored by an export credit agency.
While GE has been a major beneficiary of the Ex-Im Bank—76 percent of the value of the bank’s loans and guarantees went to GE and just nine other companies in 2013—plenty of smaller operations have benefited, too.
One is Apollo Solar in Bethel, CT. The company makes electronic controls for solar power systems. Some 90 percent of the company’s products are used to power cell towers in developing countries in South America, Central America and Africa. John Pfeifer, the company’s founder, says if the Ex-Im Bank were to be reauthorized, he could quadruple sales in 2016. As it is, he laid off three of his nine employees in October because projects couldn’t get financing.
To recap, the Ex-Im Bank is the official export credit agency of the U.S. government. Its mission is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. A self-funding agency, the bank borrows at a low Treasury rate and lends that money out at a higher rate. That margin turns into profit. In fact, the bank returned $675 million to taxpayers in 2014.
Established in 1934, the bank must be reauthorized by Congress every four to five years. Reauthorizations were approved with bipartisan support 15 times, but that ended last summer.
There is hope. On Oct. 9, a majority of House lawmakers took a rare procedural move to force a vote on reauthorizing the bank. Some 42 Republicans and 176 Democrats signed a discharge petition to force a vote on reauthorization as early as Oct. 26. (There was no such luck in the Senate.)
U.S. exports in 2014 set a record for the fifth straight year, reaching $2.35 trillion. Since 2009, U.S. exports are up more than $760 billion. We said it once, we’ll say it again: Don’t mess with success.