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Friday, Jun 23, 2017
Business News

Congress’ failure to reauthorize Export-Import Bank could hinder local exporters

The nation’s exporters have lost what many consider an important asset for expanding their businesses in foreign lands — the Export-Import Bank of the United States.

Congress failed to reauthorize the 81-year-old bank June 30, leaving the legislation stalled in a House committee as members headed home for summer break.

A vote is expected Monday on the House floor on whether to breathe new life into the bank known as Ex-Im.

Local export businesses — there are 75 in the Tampa Bay region — have sought millions from the bank since 2007 to ensure access to competitive export financing that private banks don’t offer and to insure shipments to foreign ports. Other countries around the globe have similar credit agencies, which make it easier for businesses in each of those countries to sell their products outside their borders.

While the bank issue has since been dislodged from a House committee through a seldom-used discharge petition signed by 218 members — both Democrats and Republicans — its future remains shaky for the moment.

Critics say Ex-Im has strayed too far from its original mission of providing export financing only when a transaction is otherwise unlikely to proceed. It also provides financing for companies like Boeing and General Electric which aren’t considered small businesses.

But for eight decades, Ex-Im enjoyed nonpartisan support. And according to the Ex-Im Coalition, which supports the bank, 90 percent of transactions last year benefited small businesses and tens of thousands of small companies benefited from partnerships with larger exporters like Boeing, Caterpillar and General Electric.

“We’re watching this from a bunch of different angles here in Florida, with the Florida Chamber of Commerce and through Enterprise Florida,” said Katherine McIntosh, an international trade specialist with the Small Business Development Center at the University of South Florida.

Only a fraction of this region’s small exporters have taken advantage of Ex-Im Bank, but those who have used it benefited, McIntosh said. Believing it is vital to global competitiveness, she said she plans to provide more education on the institution for local companies if Congress reauthorizes the bank.

“It’s very important, especially to Florida’s aerospace community,” because, for example, numerous small businesses rely on Boeing to purchase their parts and products and use them on equipment they export, McIntosh said. “It’s all part of the global ecosystem.”

There are 908 exporters in Florida — 698 of them are considered small businesses — exporting $9 billion in goods and services since 2007, according to U.S. export data. Of the $6 billion in insured shipments, guaranteed credit or disbursed loans, Ex-Im backed $5 billion, according the bank’s website.

Tampa-based Amalie Oil has taken advantage of Ex-Im Bank’s programs over the years. The company has insured shipments or guaranteed credit through Ex-Im for $48 million since 2007. “We don’t believe (Congress) should do away with it by any means,” said Amalie COO Rick Barkett. While Amalie has expanded its sources through the years for financial services, the bank is still very useful to small businesses, he said.

“In America, any company that manufactures and has a means to distribute to another country, that needs to be a viable option for them because it is helping us grow businesses here,” Barkett said. Amalie sells to about 100 countries.

According to the International Trade Administration, 95 percent of customers for U.S. companies lie outside of its borders.

“Ex-Im financing and other Ex-Im services can be critical to making or not making key export sales,” said Linda Dempsey, National Association of Manufacturers vice president of International Economic Affairs. “The growing importance of exports for manufacturers and their workers — with some exporting 20, 40 or even 80 percent of their U.S. products — means reviving Ex-Im Bank is critical.”

The U.S. Department of Commerce reports that, on average, export companies grow 15 percent faster, pay 15 percent higher wages and are about 12 percent more profitable than companies that don’t export.

According to the Ex-Im website, it has supported 1.3 million U.S. jobs since 2009.

The bank’s services are critical to the bottom line of many of these companies, Dempsey said and especially for companies involved in long-term infrastructure projects or sales where government plays a role with nuclear energy or state-run hospitals, she said.

“It gives companies a viable option,” Barkett said. “Mid size doesn’t want it to go away, either, because it really is going to make it more difficult, possibly, for some businesses to stay in exporting.”

Buffalo International, Inc., a small Clearwater exporter that sells transmission lines and poles to utility companies in the United Kingdom, South America, Australia and Africa, already is feeling a slight pinch from the lack of new services through Ex-Im, owner Francois Petot said.

“We have converted all of our customers from offering them credit to requiring letters of credit. We get paid when we ship,” Petot said. The shutdown of all new services through Ex-Im may eventually affect how much Buffalo sells, he said.

“I really don’t understand why they didn’t renew it,” Petot said. “Ex-Im has never cost the taxpayers a dime. It’s not corporate welfare” as some critics assert, he said.

Ex-Im has actually generated $2.7 billion for U.S. taxpayers over the last six years, according to the Ex-Im Coalition, mostly through fees collected from foreign customers.

“Closing Ex-Im is monumentally stupid. And I’m a conservative Republican,” Petot said, noting that he has done business frequently with Ex-Im through the years.

There have been times when Ex-Im has been seen as boosting foreign competition, McIntosh said.

In one such case, Delta Airlines balked at Ex-Im financing Boeing aircraft sales to foreign carriers because it allows those foreign carriers to pay less for airplanes and charge lower fares than it otherwise could. “In effect, the bank has helped some companies grow and others, like Delta, experience a disadvantage for not using it,” McIntosh said in a recent piece she wrote for the Small Business Development Center.

“The power Ex-Im has on competition is not a bad thing but one of its benefits,” McIntosh said. “The more businesses learn to utilize it, the more they can grow internationally.”

Just how the regional congressional delegation, as a whole, will vote on a reauthorization remains unclear.

U.S. Rep. Dennis Ross, R-Lakeland, hasn’t announced how he will vote. “He prefers to flush out and research both sides of the argument fully before making a decision,” his press secretary Joni Shockey said last week.

U.S. Rep. David Jolly, R-Indian Shores, says he supports Ex-Im.

“In a perfect free market, I would prefer that Ex-Im not be necessary,” Jolly said. “But the reality is 60 other nations provide loan guarantees that allow private sector companies to compete for international contracts.” He said Ex-Im returns enough to the national treasury to fully fund mental health services to veterans and early childhood education services to communities across the country.

“In Pinellas County alone,” Jolly said, “Ex-Im allows at least 19 companies to compete internationally, and contributes to more than 1,600 local jobs.”

Jolly expects a fight on the House floor Monday. “But every time I hear ‘Bank of Boeing’ I respond by saying this is the bank of the supply chain. Small and medium businesses are part of the supply chain. Those are the businesses most impacted by this.”

yhammett@tampatrib.com

(813) 259-7127

Twitter: @Yvette_Hammett

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