The bank’s charter expired in July and it is unclear if Congress will renew it this year.
On Tuesday, GE said that with the fate of Ex-Im in flux it has reached an agreement with France’s export credit agency, Compagnie Française d’Assurance pour le Commerce Extérieur (Coface), that could result in the company moving 400 jobs from South Carolina, Maine and New York to France. The timing of that transition is unclear. Those 400 jobs do not currently exist, but that is the number of jobs GE would create in France if it wins pending deals that Coface has agreed to help finance.
If those deals had received financing from the Export-Import Bank, the jobs would have gone to South Carolina, Maine and New York. The jobs involve the manufacturing of heavy-duty gas turbines. GE is currently bidding on $11 billion worth of projects that require some form of backing from export credit agencies, and Coface has agreed to finance a “significant portion” of that, a GE spokeswoman said.
GE used Tuesday’s announcement to chide Congress over the status of the bank.
“We do not make today’s announcements lightly, and in fact, have done everything in our power to avoid making these moves at all, but Congress left us no choice when it failed to reauthorize the Ex-Im Bank this summer,” John Rice, GE’s vice chairman, said in a statement. “We know this will have an impact not only on our employees but on the hundreds of U.S. suppliers we work with that cannot move their facilities, but we cannot walk away from our customers.”
GE also plans to move 100 jobs from Houston to Hungary and China by 2016. Those jobs are connected to the assembly of aeroderivative gas turbines. The company currently has workers in all three locations. It will shift the 100 jobs away from the Houston facility because it can no longer take advantage of U.S. Ex-Im financing, while it could still benefit from Hungary’s and China’s export credit agencies. About 80 percent of GE’s gas turbines are sold to countries where ECA sponsorship is required.
GE’s announcement echoes warnings issued recently by executives at Boeing, which is also a major beneficiary of the bank, when they said the company was mulling moving jobs overseas because of the uncertainty over Ex-Im’s future.
Boeing Chairman James McNerney Jr. in July called the decision to allow the bank’s charter to expire “a triumph of ideology over any description of pragmatism.”
Opponents of the bank, such as House Financial Services Chairman Jeb Hensarling (R-Texas), contend it mostly benefits large companies and that they could secure the needed financing in private markets without the aid of taxpayers.
The Export-Import Bank is the official credit export agency of the United States and it offers loans and loan guarantees to foreign buyers of U.S. goods. Big companies like General Electric and Boeing benefit from the bank because it helps finance the purchase of billions of dollars of their products, such as the sale of Boeing jets to the foreign airline Emirates.
The bank also helps hundreds of small and mid-sized U.S. businesses sell their goods overseas and compete with foreign businesses on major contracts like building infrastructure abroad. Most other developed nations have a credit export agency similar to Ex-Im.
Many credit export agencies, or ECAs, require companies that benefit from its financing to have significant operations in the region where the ECA is based, which is why the shutdown of Ex-Im in the United States is prompting U.S. companies to consider moving jobs overseas.
“While our preference is to continue producing power generation equipment in our best U.S. factories, without customer access to the U.S. Ex-Im bank, we have no choice but to move our work to places that will offer export credit financing of these projects,” Jeff Connelly, Vice President, Supply Chain, GE Power & Water, said in a statement.