Compete, Make the Sale, and Get Paid—Supported in Part by Ex-Im Bank

Compete, Make the Sale, and Get Paid—Supported in Part by Ex-Im Bank

Congress has wrestled with whether or not to extend the life of the U.S. Export-Import Bank (Ex-Im Bank), a chartered federal institution that helps support U.S. electroindustry jobs, tries to level the playing field for U.S. companies competing for sales abroad, and meets unmet demands for export finance. Created during the 1930s New Deal, the Ex-Im Bank is now under threat from a minority of legislators who argue it crowds out private financiers, only caters to large companies, and subsidizes foreign governments. The Bank, as a vital part of the export toolkit for many U.S. companies, has supported billions of dollars of U.S. exports over decades in partnership with the private sector, and must remain in business to help our small, medium, and large companies compete internationally as the world builds new renewable energy installations; modern electrical transmission, distribution, and storage networks; and state-of-the-art medical facilities.

Itron President and CEO Philip Mezey recently spoke on NEMAcast about the importance of Ex-Im.

As of this writing, Congress has extended Ex-Im’s charter, but only until June 2015. Prior to the Sept. 18 passage of a continuing resolution to fund government operations until mid-December, the Bank’s authorization would have expired on September 30. NEMA supports a timely, full, and long-term authorization of the Bank as soon as possible.

In summary, Ex-Im helps U.S. businesses make sales abroad by providing three main types of financing tools:

  • Foreign buyers often require financing of their purchases, but cannot get backing from a commercial bank. In this case, a manufacturer making a bid without financing in hand cannot compete. Ex-Im offers loans to foreign purchasers of U.S.-made equipment who meet strict qualifications.
  • Working capital loan guarantees increased liquidity for exporters and much lower risks for commercial lenders financing exports.
  • U.S. exporters always want to be paid for their goods. Ex-Im credit insurance can help increase foreign sales by limiting the risks of non-payment by the customer.

Industry sectors supported by Ex-Im activities include many within and closely related to NEMA’s scope: renewable energy, power generation, medical equipment, natural resource extraction, and large civil aircraft. Think of all the equipment, parts, components, and services that NEMA companies supply in those areas!

Ex-Im does not compete with private-sector lenders, it partners with them. It assumes credit and country risks that private sector financiers are unable or unwilling to accept. The Bank covers all operating costs and potential losses by charging fees and interest. Some developing countries seeking to purchase U.S. capital goods cannot secure private financing, and Ex-Im provides a viable option for these countries. Moreover, Ex-Im’s services are on offer to U.S. businesses of all sizes interested in selling abroad. The Bank helps small- and medium-sized businesses directly by assisting their foreign sales and indirectly by supporting sales by large businesses that source components or materials from smaller firms.

With 95 percent of the world’s consumers living outside our borders, exports are critical to U.S. job growth and prosperity. Closing Ex-Im would do nothing to support U.S. jobs or competitiveness; on the contrary, it would hobble potential U.S. exporters as they try to compete against foreign firms that enjoy full backing from their home governments’ export credit agencies.

To let your Members of Congress know your views on Ex-Im, start with NEMA’s Take Action tool.

 


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