Export-Import Bank used by local companies in jeopardy
Published: Thursday, August 14, 2014 at 11:07 a.m.
Last Modified: Thursday, August 14, 2014 at 11:07 a.m.
A government agency that gives U.S. businesses reassurance in the sometimes-risky world of exporting — including four Alachua County companies — could come to a screeching halt if Congress doesn’t vote to extend it.
The Export-Import Bank of the United States, often shortened to the Ex-Im Bank, is set to have its charter expire on Sept. 30.
“Every developed country in the world and then some has an export credit agency,” said Jorge Arce, a director and senior trade specialist with the U.S. Commercial Service. “They’re literally talking about unilateral disarmament and letting the Chinese have the world market to themselves, and the Europeans and the Mexicans and the Canadians, and everybody else but us.”
A Senate bill, introduced on July 30, would extend the Ex-Im charter through 2019, but action won’t be possible until Congress returns from its current recess.
The 80-year-old bank’s offerings to U.S. exporters include assistance in obtaining loans needed to fulfill orders when not available from private-sector lenders, and guarantees that cover 90 percent of the financial risks, such as in the event of war or a foreign buyer not paying. The insurance then allows more flexibility with buyers in terms of toning down the cash payments up front and more favorable credit conditions.
The buyers abroad can also get help in financing to use low U.S. interest rates and stretching out repayment deadlines.
Critics of the Ex-Im Bank say exports should be financed solely by private business and that those reaping the bank’s benefits can receive favoritism.
Arce said the “corporate welfare” argument looks solely at dollar amounts instead of the many smaller companies that are aided by the Ex-Im Bank.
“You sell one Boeing, and Ex-Im Bank has to work damn hard for about 10 to 15 months just to equal up to one aircraft,” he said, noting that about 99 percent of Ex-Im companies are small businesses.
Gov. Rick Scott favors extending the program. He wrote to congressional leaders in July: “Failure to reauthorize the Ex-Im Bank would mean companies from other countries would likely get business that would otherwise have gone to American firms.”
More than 700 Florida companies have received assistance in $7 billion worth of exports since 2007, Scott added.
The Ex-Im website lists four Alachua County companies as using the bank within the past seven years: Halcyon Dive Systems, a diving-equipment maker in High Springs; Driltech Mission, a manufacturer of mining equipment and supplies in Alachua that is now part of Sandvik Mining; Regeneration Technologies, now RTI Surgical, a maker of medical implants in Alachua; and Allchem Industries Holding Corporation, a chemical distributor in Gainesville.
Staci-Ann Bertrand, the Gainesville Area Chamber of Commerce’s director of industry and development, said the Chamber supports the Ex-Im Bank because of the growing necessity for businesses to look beyond U.S. borders.
Exports of goods and services were at an all-time high in 2013 for the U.S., totaling $2.3 trillion, the International Trade Administration reported. Florida made up $60.5 billion of that.
“The need to expand internationally has become even greater. So companies who are just regional companies and who are not accessing international trade and investment are going to be on the decline,” Bertrand said, adding that U.S. companies that export have, on average, twice as many employees.
Most area companies aren’t “exporting as much as they should be,” Bertrand said, so that’s why the Chamber has been doing its Export Gainesville Initiative. That includes consultations with area businesses on how to export and the Export University 101 seminar in June.
The regional companies, though, wouldn’t be hurt if the extension doesn’t go through, she said.
“Because many of our companies are regional companies,” Bertrand said, “it’s not going to really affect them as much as some of our larger companies who are being backed by the Ex-Im Bank.”