ICYMI: Lapse of Ex-Im Bank Charter Leads to Job Losses
Since Congress let the Ex-Im Bank’s charter expire in June, companies around the country have been preparing to lay off employees and stopping expansion plans because they now lack a critical export financing tool.
California-based Combustion Associates Inc. was getting ready to close business deals that would have required the addition of 100 employees, but without Ex-Im financing it won’t be able to move forward.
And Boeing told Reuters that it expects to cut several hundred jobs due in part to uncertainty about the future of Ex-Im.
See additional highlights about the negative impacts of Ex-Im’s lapse below.
Boeing Says That The Reductions Are A Must To Stay Competitive. “Multiple commercial [satellite] orders were being delayed by recent failures of launch vehicles and uncertainties about the future availability of financing from the U.S. Export-Import https://exportersforexim.org/files/2015/08/bank, whose government charter lapsed on june 30, the company told key managers in an internal communication. boeing spokesman tim neale confirmed the reductions and said the total number of people affected would be finalized in coming months. some could find work in other parts of boeing, he said. he said the reductions were ‘necessary to remain competitive for ongoing and future business.’” (Andrea Shalal, “Boeing Eyes ‘Several Hundred’ Layoffs Satellite Division,” Reuters 8/24/15)
The Aerospace Industries Association Says Some Of Its Members’ Satellite Sales Were Being Threatened Or Lost Because Of Ex-Im Lapse. “‘American exporters are being put in the uncomfortable position of having to scramble to find private financing to replace Ex-Im programs,’ said Dan Stohr, a spokesman for the Aerospace Industries Association, a trade group. He said some of its members’ satellite sales were being threatened or even lost because of the lapse in Ex-Im’s mandate.Industry executives and bankers said that the bank’s removal from the market, however temporary, had made it tougher to close deals.” (Doug Cameron, “Boeing Loses Contract Over Ex-Im Bank Freeze,” The Wall Street Journal 8/22/15)
Instead of Hiring 100 New Employees, Combustion Associates, Inc. May Lose Three Deals In Nigeria Because Of Ex-Im’s Lapse. “All told, the three projects in Nigeria are worth upwards of $50 million in revenue and would prompt Kavia to hire more than 100 workers. ‘I’m very embarrassed when I say to my client that Ex-Im is still pending reauthorization,” Kavia said in an interview. She initially showed them reports suggesting the bank’s closure would likely be short-lived, but she is now running out of excuses. “Now, we really don’t know when it will be back.’ What makes matters even more challenging, she explained, is that her company’s competitors in countries like China, India, France and Germany all have the support of government-run export credit agencies. In fact, every major trading nation around the world has just such a bank; every major trading nation, that is, except for the United States.” (J.D. Harrison, “Her Small Business Was Ready To Hire 100 More People. Then, Ex-Im Expired.,” U.S. Chamber of Commerce, 8/19/15)
Boeing Spokesperson Hopes Ex-Im Is Reauthorized So U.S. Companies Do Not Have To Terminate More Workers. “The satellite industry is far more reliant on export credit support than sectors such as commercial jets, as most banks are reluctant to finance assets that are difficult to repossess or place with other customers. Ex-Im said that it has backed about 60% of [satellite] sales by U.S. manufacturers in recent years, compared with about 15% of commercial-jet deals. ‘Ideally on ABS and for our other campaigns, Ex-Im will be reauthorized by the end of the year or we will continue to see terminations and losses,’ said a spokesman for Boeing.” (Doug Cameron, “Boeing Loses Contract Over Ex-Im Bank Freeze,” The Wall Street Journal 8/22/15)
Satellite Manufacturer Chief Executive Says The Ex-Im Bank Is A Critical Component For Satellite Deals Success. “‘Ex-Im financing is a critical component of a number of satellites. That has been an issue with orders,’ said MDA Chief Executive Daniel Friedmann on an investor call last month. The company has used Ex-Im and Canada’s Export Development Corp to support sales. ‘Without Ex-Im, there won’t be enough money in the market to finance all the satellites.’” (Doug Cameron, “Boeing Loses Contract Over Ex-Im Bank Freeze,” The Wall Street Journal 8/22/15)
A Partner At Milbank Says That Without Ex-Im, American Companies Are Going To Lose Business To Foreign Competitors. “‘Without [Ex-Im], opportunities could go to Coface, [France’s version of Ex-Im]’ said Dara Panahy, a partner at Milbank, Tweed, Hadley & McCloy who has worked for space clients, including ABS.’” (Doug Cameron, “Boeing Loses Contract Over Ex-Im Bank Freeze,” The Wall Street Journal 8/22/15)