News Column

Boeing, others lobby for Export-Import Bank renewal

July 20, 2014

By Warren L. Wise, The Post and Courier, Charleston, S.C.

July 20--Last year, the federal Export-Import Bank helped Boeing customers finance $8 billion in commercial jet sales to foreign companies.

It aided the much smaller Fort Lawn-based Morrison Textile Machinery Co. with funding for overseas equipment sales to firms in Turkey, Egypt and Bangladesh.

And it stepped in for Columbia-based Bridge to Life, which reached out to help foreign firms buy the chemical solution Bridge provides for organ transplants.

But funding from the bank could dry up soon amid a growing debate over whether the program is a prime example of what critics call "crony capitalism."

Unless Congress acts to reauthorize the 80-year-old institution by Sept. 30, the Export-Import Bank, which provides loans and loan guarantees when other financing is not available, will see its charter lapse.

Fifteen Republican governors, including Gov. Nikki Haley, have endorsed the bank's renewal. South Carolina's U.S. Sens. Lindsey Graham and Tim Scott joined Haley in calling for reauthorization, in part because Boeing, one of the bank's biggest users and the state's top exporter, operates an airplane-building plant in North Charleston that directly employs about 7,500.

"As elected officials from a state where thousands of hardworking families benefit from exports, we urge you to reauthorize the Export-Import Bank before its charter expires this year," wrote Haley, Graham and Scott. "As the official export credit agency of the United States, Ex-Im is a vital export finance tool to the businesses in our state -- at no cost to American taxpayers.

"Ex-Im allows South Carolina businesses to compete globally on a level playing field," the three political leaders wrote. "Without Ex-Im our local businesses would be forced into a global market with foreign competitors that receive extensive support from their own export credit programs. Allowing Ex-Im to expire will deliberately disadvantage American businesses and lead to increased unemployment."

Some Republican congressmen and several conservative groups oppose the agency because they believe it distorts the free market to benefit a few connected corporations.

The bank's opponents have forged an alliance with some American airlines, which say the bank's guarantees give an unfair cost advantage to foreign rivals, particularly carriers from the Persian Gulf that have been aggressively building up their fleets with jets such as the Boeing 787 and 777. Domestic airlines, among them some of Boeing's largest customers, are not eligible for such subsidies.

A key U.S. House Republican is among those standing against the bank.

Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, opposes reauthorization and called the bank a "sweetheart deal" for "a politically connected bank or company," according to McClatchy News'Washington bureau.

"Taxpayers shoulder the risk, and you get the reward," he said. "But if you work at a small business or other American company competing in the global marketplace, it's unfair. Ex-Im effectively taxes you while subsidizing your foreign competitors."

The Obama administration and many U.S. Senate Democrats strongly support reauthorization.

"The Ex-Im Bank helps American companies create and support jobs here at home at no cost to taxpayers, and that helps us meet our export goals, which is why reauthorization of the Ex-Im Bank has historically enjoyed bipartisan support in the past," White House press secretary Josh Earnest said in June.

During the Farnborough Airshow in England, which ends Sunday after a seven-day run, Boeing commercial airlines executive Ray Conner argued that eliminating U.S. loan guarantees would do little to protect American carriers from foreign competition, since those competitors would simply turn to European agencies for help buying planes from overseas rival Airbus.

Failure to keep the bank running would risk American jobs and give a leg up to Airbus, which receives similar support from European governments, Conner said.

"For us to not have the Ex-Im Bank would put us at a huge disadvantage in the marketplace for sure," he added.

Conner is optimistic Congress will act to renew the bank.

"I think we've put together a pretty good coalition of businesses with solid support," he said.

That group includes the Washington, D.C.-based Coalition for Employment Through Exports and the Charleston Metro Chamber of Commerce.

"The benefits that the Export-Import Bank provides for businesses in South Carolina are vital for maintaining competitiveness and expanding opportunities for growth," said Bryan Derreberry, president and CEO of the Charleston Metro Chamber.

"For these companies, especially small businesses, to be able to compete globally, they need Ex-Im's help to reach foreign markets and customers," he said. "If Congress fails to reauthorize Ex-Im, American companies would be put at a disadvantage in global markets, resulting in lost sales and lost jobs."

Last year, the bank supported $37 billion in exports that supported more than 200,000 jobs in the U.S. at 3,400 companies, according to the Coalition for Employment Through Exports. Small- and medium-sized businesses account for nearly 90 percent of the bank's transactions, according to the bank's website.

The bank gets no federal funding, but it is chartered through Congress and has been reauthorized 16 times. It earns money from the deals it helps finance and sent $1.1 billion to the U.S. Treasury last year, according to Jay Henderson with the Coalition for Employment Through Exports.

South Carolina provided 1.7 percent of all U.S. exports in 2013, according to John Hardy, CEE president. Scores of firms exported products last year from the Palmetto State, including Boeing.

Hardy said a multibillion-dollar corporation such as Boeing needs massive amounts of liquid assets, not only from commercial lenders but the Ex-Im Bank as well to compete successfully. Boeing uses the bank for 15 percent to 20 percent of its sales.

"If the bank were shut down, there would be dramatic consequences," Hardy said. "Boeing would have to compensate for the loss of the resource, and it would have a significant impact on the 15,000-plus suppliers, many of them small- and medium-sized businesses."

Jay White, president of Morrison Textile Machinery Co. in Chester County, echoed Hardy's sentiments. "Ex-Im has been a big piece of our competitiveness," White said. "Without it, we would be losing a huge amount of our business. This is not a corporate welfare situation at all."

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The Associated Press contributed to this story.

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Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.

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(c)2014 The Post and Courier (Charleston, S.C.)

Visit The Post and Courier (Charleston, S.C.) at www.postandcourier.com

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Source: Post & Courier (Charleston, SC)


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