The Export-Import Bank, Vital to US Global Competitiveness
The future of the Export-Import Bank is back before Congress. They must decide whether or not to renew its Charter or to end funding to the export credit agency, which will expire on June 30. The dividing issue is whether or not the agency creates a tax burden or surplus for tax payers. Differing accounting methods back strong data for both sides, but there is no doubt that the Export-Import Bank is vital to US global competitiveness.
Ex-Im Bank currently supports 8,877 exporters throughout the U.S. with financing needed to turn export opportunities into sales. Ex-Im Bank takes great care to structure its products and services to meet the needs of small businesses. With the understanding that breaking into a new market can be a challenge, Ex-Im bank facilitates the process by working with lenders and brokers so that U.S. companies get what they need to be competitive for sales in international markets.
Ex-Im Bank’s main benefits include risk protection, working capital to U.S. companies, credit to foreign buyers, and extended financing terms. From 2007 to 2015, 886 Florida-based exporters have received $9 billion in financing which supports 52,231 jobs according to state data on exim.gov. It has an even broader impact on the manufacturing sector with the machinery, chemical and transportation Equipment industries benefiting the most from the Ex-Im Bank in this state. The top three export destinations are Mexico, the Dominican Republic, and Saudi Arabia for Florida-based products financed through Ex-Im Bank.
The bank’s assistance can be tracked at the local level by visiting exim.gov and searching by Congressional districts on the Florida map. The location of area businesses that utilize the bank’s services will populate on the map. Data on total export values per exporter can be viewed below the map. There are 75 exporters named and marked in the districts covering the Tampa Bay Region.
The Ex-Im Bank allows the U.S. to grow key industries and provide higher waged jobs where we have a competitive advantage. The sector that highlights this fact the most is the aerospace industry, with one company that leads them all: Boeing.
Boeing is the largest aerospace exporter and has topped the list of American exporters of all industries according to its website. Unlike many manufacturers who sell to overseas markets by building factories abroad, Boeing’s roughly 160,000-strong labor force is almost entirely American. Boeing’s strategy for growing its export business is to promote American exports in general and small-business exports in particular. Boeing uses the services of the Ex-Im Bank and is a strong promotor of it to small businesses. If this is such a great thing for our economy, why would it be under attack?
Large multinationals such as Delta Airlines can track their competition on a global scale. If Ex-Im Bank finances Boeing aircraft sales to foreign carriers, such as Air India, then the U.S. government is in effect underwriting foreign competition. Delta’s complaint stated that the financing reduced Air India’s cost of acquiring airplanes. Those lower capital costs in turn allowed Air India to offer lower prices than it otherwise could to flyers. Ultimately, affecting Delta’s bottom line. In effect, the bank has helped some companies grow and others, like Delta, experience a disadvantage for not using it.
The power Ex-Im Bank has on competition is not a bad thing but one of its benefits. The more businesses learn to utilize it, the more they can grow internationally. Understanding the services the bank offers is the first step to improving your competitive edge. Visit exim.gov for a complete list of products and services available to small businesses.