Fix it, now! GE Move Rekindles Partisan Fight Over Ex-Im Bank Closure - General Electric to move around 500 U.S. jobs overseas to avoid losing business to foreign rivals
From The Wall Street Journal:
General Electric Co. made good on months of threats by announcing Tuesday plans to begin moving U.S. jobs abroad, marking an escalation in the battle between U.S. corporations and congressional Republicans over the now-dormant U.S. Export-Import Bank.
The company’s announcement that it would transfer 500 jobs, while a tiny fraction of GE’s 136,000 U.S. workers, advances a long-running drama over the bank that has divided Republicans and sent tremors of unease through the corporate sector.
For months, companies have warned they faced the loss of overseas contracts after congressional Republicans, who have singled the agency out as an example of corporate welfare, allowed the bank’s charter to lapse in July.
The Ex-Im Bank helps overseas customers of U.S. companies finance purchases with loans and credit guarantees. Supporters have said political gridlock would be broken only after companies start cutting American jobs.
GE said Tuesday it would transfer the 500 jobs mainly to Europe over the next year to field competitive bids for turbines and other industrial equipment with financing from foreign export credit agencies. The job losses will come from facilities in Texas, South Carolina, New York and Maine, GE said.
The U.S. Chamber of Commerce and other business groups have fought to keep the bank afloat. Most of the Republican Party’s presidential candidates oppose the bank, but lawmakers are split.
House Speaker John Boehner (R., Ohio) voiced concern earlier this year about job losses from letting the 81-year-old agency close suddenly, but so far he has yielded to GOP lawmakers who oppose allowing a vote on the measure.
GE said Tuesday it had signed agreements with France’s export credit agency for a line of credit on sales of power generation equipment. The company also said it would move final assembly of jet turbines from Houston to facilities in Hungary and China, making it eligible for similar agreements there.
Other companies warned of more repercussions if the Ex-Im Bank doesn’t reopen for business.
Boeing Co. said Tuesday it had been notified by Kacific, a broadband satellite operator based in Singapore, that it wouldn’t consider bidding on a contract from Boeing without Ex-Im Bank assistance.
Last month, Boeing said a roughly $85 million satellite contract order was in jeopardy after Asia Broadcast Satellite, a Bermuda-based telecommunications company, said it would look outside the U.S. for better financing terms.
Other large industrials that include Caterpillar Inc., Dow Chemical Co. and Westinghouse Electric Co. have warned that foreign competitors are exploiting the Ex-Im Bank shutdown to strengthen their position at the bargaining table.
Most export credit agencies—including the Export-Import Bank—require that most production and jobs for deals they finance be located in their respective countries.
GE executives say they are bidding on $11 billion in industrial projects, mostly in developing nations, that require export-credit agency sponsorship for customers. Countries requiring such sponsorship have accounted for 80% of total sales of gas turbines used in aviation over the past three years, GE said.
“This is not a choice that we made,” John Rice, vice chairman at GE, said in an interview. “This is a choice that was forced on us.”
GE’s announcement Tuesday stoked debate over the fate of the agency, which retains significant support in Washington. President Barack Obama and most Democrats support renewing the bank’s charter, and 64 senators voted in July to reopen the bank.
Rep. Jeb Hensarling, (R., Texas), who as chairman of the House Financial Services Committee has led the effort to close the bank, said in a statement Tuesday he was troubled that GE was announcing that it “is leaving Connecticut because the state’s taxes are too high and is choosing to send jobs overseas because U.S. taxpayer-provided subsidies are too low.”
Bank critics called GE’s announcement a ploy to rally support for an agency that overwhelmingly supports a few multinational companies and say Washington should stop picking winners and losers by subsidizing sales.
Smaller manufacturers, which don’t have the option of moving production abroad, say contracts for exports, already under pressure from a rise in the dollar, could be lost if they can’t find credit insurance or other financing to replace Ex-Im Bank.
Cardinal Resources, a maker of solar-powered systems to clean drinking water, had an application pending for a $29 million deal with the government of Cameroon that has been in limbo since the bank shutdown. “We had hiring scheduled that we weren’t able to do,” said Kevin Jones, chief executive of the Pittsburgh-based manufacturer.
Mr. Jones said he hasn’t been able to find private financing yet for the project. Instead, he said, he was approached by a major Chinese bank last month, a deal that would require purchasing raw materials in China.
He declined the offer and said he hoped the Ex-Im Bank was reauthorized before his customer was lured away.
While Ex-Im makes some loans, much of its business focuses on loan guarantees and insurance programs. Sullivan-Palatek Inc., a maker of industrial portable air compressors in Michigan City, Ind., has boosted export sales over the past four years by using Ex-Im for receivables insurance, a policy that ensures the company is paid for goods sold to foreign customers.
The policy expires on Oct. 1, chief executive Bruce McFee said, putting in jeopardy about half of the company’s export sales, which represent about one fifth of total sales.
“It’s going to substantially put us back in our ability to hire,” he said.
General Electric Co. made good on months of threats by announcing Tuesday plans to begin moving U.S. jobs abroad, marking an escalation in the battle between U.S. corporations and congressional Republicans over the now-dormant U.S. Export-Import Bank.
The company’s announcement that it would transfer 500 jobs, while a tiny fraction of GE’s 136,000 U.S. workers, advances a long-running drama over the bank that has divided Republicans and sent tremors of unease through the corporate sector.
For months, companies have warned they faced the loss of overseas contracts after congressional Republicans, who have singled the agency out as an example of corporate welfare, allowed the bank’s charter to lapse in July.
The Ex-Im Bank helps overseas customers of U.S. companies finance purchases with loans and credit guarantees. Supporters have said political gridlock would be broken only after companies start cutting American jobs.
GE said Tuesday it would transfer the 500 jobs mainly to Europe over the next year to field competitive bids for turbines and other industrial equipment with financing from foreign export credit agencies. The job losses will come from facilities in Texas, South Carolina, New York and Maine, GE said.
The U.S. Chamber of Commerce and other business groups have fought to keep the bank afloat. Most of the Republican Party’s presidential candidates oppose the bank, but lawmakers are split.
House Speaker John Boehner (R., Ohio) voiced concern earlier this year about job losses from letting the 81-year-old agency close suddenly, but so far he has yielded to GOP lawmakers who oppose allowing a vote on the measure.
GE said Tuesday it had signed agreements with France’s export credit agency for a line of credit on sales of power generation equipment. The company also said it would move final assembly of jet turbines from Houston to facilities in Hungary and China, making it eligible for similar agreements there.
Other companies warned of more repercussions if the Ex-Im Bank doesn’t reopen for business.
Boeing Co. said Tuesday it had been notified by Kacific, a broadband satellite operator based in Singapore, that it wouldn’t consider bidding on a contract from Boeing without Ex-Im Bank assistance.
Last month, Boeing said a roughly $85 million satellite contract order was in jeopardy after Asia Broadcast Satellite, a Bermuda-based telecommunications company, said it would look outside the U.S. for better financing terms.
Other large industrials that include Caterpillar Inc., Dow Chemical Co. and Westinghouse Electric Co. have warned that foreign competitors are exploiting the Ex-Im Bank shutdown to strengthen their position at the bargaining table.
Most export credit agencies—including the Export-Import Bank—require that most production and jobs for deals they finance be located in their respective countries.
GE executives say they are bidding on $11 billion in industrial projects, mostly in developing nations, that require export-credit agency sponsorship for customers. Countries requiring such sponsorship have accounted for 80% of total sales of gas turbines used in aviation over the past three years, GE said.
“This is not a choice that we made,” John Rice, vice chairman at GE, said in an interview. “This is a choice that was forced on us.”
GE’s announcement Tuesday stoked debate over the fate of the agency, which retains significant support in Washington. President Barack Obama and most Democrats support renewing the bank’s charter, and 64 senators voted in July to reopen the bank.
Rep. Jeb Hensarling, (R., Texas), who as chairman of the House Financial Services Committee has led the effort to close the bank, said in a statement Tuesday he was troubled that GE was announcing that it “is leaving Connecticut because the state’s taxes are too high and is choosing to send jobs overseas because U.S. taxpayer-provided subsidies are too low.”
Bank critics called GE’s announcement a ploy to rally support for an agency that overwhelmingly supports a few multinational companies and say Washington should stop picking winners and losers by subsidizing sales.
Smaller manufacturers, which don’t have the option of moving production abroad, say contracts for exports, already under pressure from a rise in the dollar, could be lost if they can’t find credit insurance or other financing to replace Ex-Im Bank.
Cardinal Resources, a maker of solar-powered systems to clean drinking water, had an application pending for a $29 million deal with the government of Cameroon that has been in limbo since the bank shutdown. “We had hiring scheduled that we weren’t able to do,” said Kevin Jones, chief executive of the Pittsburgh-based manufacturer.
Mr. Jones said he hasn’t been able to find private financing yet for the project. Instead, he said, he was approached by a major Chinese bank last month, a deal that would require purchasing raw materials in China.
He declined the offer and said he hoped the Ex-Im Bank was reauthorized before his customer was lured away.
While Ex-Im makes some loans, much of its business focuses on loan guarantees and insurance programs. Sullivan-Palatek Inc., a maker of industrial portable air compressors in Michigan City, Ind., has boosted export sales over the past four years by using Ex-Im for receivables insurance, a policy that ensures the company is paid for goods sold to foreign customers.
The policy expires on Oct. 1, chief executive Bruce McFee said, putting in jeopardy about half of the company’s export sales, which represent about one fifth of total sales.
“It’s going to substantially put us back in our ability to hire,” he said.
posted by Sid Cottingham | 5:59 AM
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