Is the Export-Import Bank’s Demise Starting to Hurt Mid-Market Exporters?

General Electric and Boeing are reacting the most loudly to the continuing lack of Congressional authorization of the Export-Import Bank, with both companies cutting or threatening to eliminate U.S. jobs and moving them overseas because of the demise of the federally funded business- financing agency. But some mid-market and small companies also have begun to react as conservative members excoriated the Ex-Im Bank as an agent of “crony capitalism” for big companies that don’t need the help.

There are growing indications that mid-market exporters are joining Boeing and GE in considering paring domestic manufacturing because the agency no longer is available to ensure access to competitive export financing that private banks can’t or won’t offer.

ProGauge Technologies, in Bakersfield, Calif., for instance, is bidding on a project that could lead to 30 new jobs, but only five are staying in the U.S., according to U.S. News & World Report. “It’s pretty sad not to be able to keep the jobs here” because he couldn’t count on Ex-Im Bank aid, ProGauge president Don Nelson told the magazine.

“The lack of financing for small and midsized companies wanting to export “is a real question for those who think the Ex-Im Bank shouldn’t continue.”

In a similar vein, earlier this month, mid-market satellite manufacturer Orbital ATK became the second company to lose business because Congress didn’t renew the Ex-Im Bank’s authorization, according to the magazine. Senior Director Ted McFarland said that his Virginia-based company lost a bid for the Azerspace-2 satellite with the government of Azerbaijan because it couldn’t provide export-credit financing, so a foreign competitor won the deal.

The lack of financing for small and midsized companies wanting to export “is a real question for those who think the Ex-Im Bank shouldn’t continue,” Gordon Mills, former administrator of the Small Business Administration and a senior fellow at Harvard Business School, told the Wall Street Journal, “because small businesses really require lots and lots of those services. At the moment, there is no other alternative.”

Ex-Im Bank advocates for the mid-market also have noted that nearly 90% of the bank’s deals last year totaling more than $5 billion in financing and insurance directly served small companies.

Still, so far, instrumental conservative members of the House haven’t backed down from their contention that the Ex-Im Bank serves mainly as a slush fund for big companies that don’t need to be taking advantage of taxpayer-guaranteed funds. They assert that this fount of “corporate welfare” has put other U.S. companies at a competitive disadvantage and distorts export markets, and that the bank’s assistance hasn’t been a crucial adjunct to private capital in the vast majority of instances.


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