In the past 15 days, we have seen GE move production plants to other countries as a result of Congress not re-authorizing Export-Import (EXIM) Bank to process new applications or engage in any new business. You can see those stories here and here.
The bank did issue a statement earlier this year that stated in part:
Due to a lapse in our authority, as of midnight on June 30th the Export-Import Bank of the United States ceased processing new applications or engaging in new business.
This means that EXIM will focus on the management of our $107 billion portfolio of outstanding obligations until such time as Congress acts to reauthorize the Bank.
By providing notice, we hope that you will be able to prepare for shipments and deliveries without the security and peace of mind provided by credit insurance. I suggest that you check with your bank or broker to confirm what the impact will be to your business caused by expiring EXIM guarantees or credit insurance coverage, which may result in canceled or reduced lines of credit.
While our lapse in authority continues, I can report that the United States Senate recently voted 64 to 29 for a five-year EXIM reauthorization bill as part of a long-term highway bill. That bill has now moved to the House for consideration. The super majority vote in the U.S. Senate was a strong signal of bipartisan support for EXIM, and the businesses and workers that we have empowered in the past to grow their exports. It also continues EXIM’s 81 year history of bipartisan support spanning 13 U.S. Presidents.
We have heard from many of you about the detrimental impact this has had on your business and your workers. On behalf of everyone here at EXIM Bank, I want to express our hope and determination that current efforts to reauthorize EXIM Bank will succeed once Congress returns in September. We hope to get back to work equipping you to grow your business and support American jobs through exports.
For NAED distributors, this means the lack of an opportunity to grow in other countries. Back in 2011, Russ Hiller, CFO of Summit Electric Supply, explained the importance of the EXIM Bank to his company in a video that you can view on www.tedtv.tedmag.com.
Here is a transcript of some of that video:
“Foreign sales are extremely important to our growth and one of the areas that we’re looking to for a substantial portion of our growth over the next five to ten years, through areas in Latin America as well as the Middle East and probably long term interest in Asia as well.
I think one of the biggest challenges we face in our export markets is to have the working capital necessary for some of the larger projects that we’re pursuing. There are some terrific opportunities out there with large projects in the engineering procurement and construction field, and in order for a company the size of summit to compete effectively in those markets, working capitol that is available promptly and reliably is an extreme advantage and can really help us to succeed in that area.
We are also intrigued by some of the buyer-side financing that might exist for acquisition opportunities, which have also interested us with some potential acquisitions in other countries where it would be helpful to have the financing power of EXIM Bank if we pursue those acquisitions as well.
The financial backing that EXIM provides can help us pursue the opportunities that we would not have looked at before. And that of course means Summit will be able to grow. We are able to look at markets that for us only a few years ago might have just been a dream. Now I think that those markets are, they hold serious potential for us.”
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