STEMpi™

Our newest education and mentorship project is getting a cross-border facet. Stay tuned for major announcements…

STEMpi

The main premise underlying the Modeling for Success℠ program is to prepare young people to succeed in life and to enable them to create tangible value in the 21st century business and technology environment.STEMpiModelingforsuccess

Using innovative, mentor-guided bootstrap-based “finance, build and market” approach developed around sophisticated, technologically enhanced “old school” ship, plane and train modeling, as well around “new school” drone and micro-satellite assembly, teach, empower and equip the students with a multidisciplinary toolbox of relevant STEM, business, legal and communications skills, strengthened personal qualities and broad networking contacts.

STEMpi™ is an educational, vocational and networking franchise centered around unique student personal and professional training and development, which is centered around STEM (science technology engineering, math), business, media and communications programs.

The comprehensive curriculum is designed to teach students tangible VALUE CREATION using technology funding, design, CAD/CNC, programming, computational, engineering, product assembly, video production, social media, team building, negotiations…

View original post 4 more words

Seasons Greetings and Best Wishes in the New Year!

BSCGHolidayWishes2014

Why Weak Currencies Have a Smaller Effect on Exports

Because manufacturers increasingly use components from abroad to make things, exports now incorporate a lot more imports

Workers at a Robert Bosch GmbH plant in Blaichach, Germany, use touchscreen panels on the automobile gasoline direct injector valve assembly line. Germany is an export powerhouse.
Workers at a Robert Bosch GmbH plant in Blaichach, Germany, use touchscreen panels on the automobile gasoline direct injector valve assembly line. Germany is an export powerhouse. PHOTO: KRISZTIAN BOCSI/BLOOMBERG NEWS

As various central banks loosened monetary policy this year, some economists predicted another cycle of beggar-thy-neighbor currency wars, in which countries race each other to become the cheapest exporter.

But it hasn’t panned out that way, and now a growing body of evidence suggests why: A shift in trade dynamics is blunting the impact of a weak local currency.

This could be all the more relevant now, when the monetary policies of the world’s most powerful central banks—the Federal Reserve and the European Central Bank—are heading in very divergent directions, possibly taking the value of their currencies along with them.

When a country loosens its monetary policy, interest rates fall and investors tend to pull their money out in search of higher yields elsewhere, pushing down the currency’s value.

That is still happening. But the dynamic isn’t affecting trade flows as much as expected. What has changed is where businesses source the things they need to make the products they export. Manufacturers once found most components needed to make their goods at home. Now they increasingly look abroad for such inputs. As a result, exports now incorporate a lot more imports.

It is still the case that when a currency such as the euro weakens, it reduces the price of goods sold by German manufacturers in the U.S. But it also increases the price of the things that German manufacturers import to make those exported goods.

Containers at the Port Newark Container Terminal in Newark, N.J.
Containers at the Port Newark Container Terminal in Newark, N.J. PHOTO: JULIO CORTEZ/ASSOCIATED PRESS

Measuring the impact of global supply chains on trade flows is the task of a project undertaken by the Organization for Economic Cooperation and Development and the World Trade Organization.

Using detailed figures from economies around the world, economists at the two bodies have measured how much foreign content there is in each nation’s exports, confirming a significant increase since the mid-1990s. The foreign content of Switzerland’s exports, for instance, increased to 21.7% in 2011 from 17.5% in 1995, while the imported content of South Korea’s exports almost doubled, to 41.6% in 2011 from 22.3% in 1995.

Economists at the International Monetary Fund and the World Bank have used those measures to assess whether currency movements have the same impact they once did on exports and imports. They found that the effect has in fact reduced over time, by as much as 30% in some countries.

Policy makers are beginning to take note. “As countries become more vertically integrated via global value chains, exchange-rate variations will have a diminishing impact on the terms of trade,” said Benoît Coeuré, a member of the European Central Bank’s executive board and one of its thought leaders, speaking in California last month. He concluded the process will reduce the role of currency moves as “shock absorbers” that direct global demand toward weaker economies from stronger ones.

Japan offers the clearest indication that big currency depreciations don’t deliver the export boost they once did. In early 2013, the Bank of Japan launched a massive stimulus program that increased the supply of yen and led to the currency’s sharp depreciation against the dollar and the euro.

That strategy was a key element of Japan’s package of measures designed to lift the economy out of a long period of stagnant growth. But what followed was something of an anticlimax. The yen’s weakening had little impact on Japanese exports, and failed to restart economic growth. Puzzled policy makers pointed to the weak state of demand in the global economy, but even if that were the case, Japanese exporters should have gained market share.

A similar pattern has emerged in the wake of the ECB’s January decision to launch its own program of quantitative easing. Like the yen, the euro weakened, continuing a decline against the dollar that started in early 2014 and now amounts to roughly 20%.

In early 2015, the launch of QE was expected to boost eurozone growth by aiding exports. But once again, the impact of a weakened currency has been modest. Indeed, in the three months to September, eurozone growth was held back by a more rapid growth of imports over exports, while industrial output flatlined.

Experts believe it takes about 12 to 18 months for foreign-exchange moves to have their full impact on trade flows, so the effect would have been felt by now in both the eurozone and Japan. The euro started weakening against the dollar in early 2014, while Japan is about three years into its currency depreciation.

Those disappointments don’t mean currency movements caused by the great divergence between the Fed and the ECB won’t have any impact. That is a key concern for U.S. businesses in the wake of the Fed’s decision this month to raise interest rates for the first time in almost a decade—just weeks after the ECB moved its policy in the opposite direction. Many economists still expect the U.S. to suffer some slowdown in exports, while the eurozone enjoys some pickup. Already in the first 10 months of 2015, the U.S. trade deficit widened by 5.3% from a year earlier, reflecting a decline in exports.

And as the economists from the IMF and World bank have noted, the degree to which a currency movement boosts or reduces exports depends on how large their foreign content is. For the economy as a whole, the foreign share of U.S. exports is at the lower end of the global range, at around 15%, compared with more than 25% in Germany.

“It’s more complicated as a story for the U.S. because of the low foreign content,” saidSebastian Miroudot, a trade economist at the OECD.

Write to Paul Hannon at paul.hannon@wsj.com

Shutdown of U.S. Ex-Im Bank Puts Companies in a Financing Bind

IT-USExportsReprint_Page_2
Ethiopian Airlines had to scramble at the last minute this summer when it needed to pay for a plane it ordered from Boeing Co. MMBAMM years ago.

The East African carrier got the aircraft last month but, instead of owning it, the airline is leasing the plane from a bank, said Chief Executive Tewolde Gebremariam. It couldn’t secure a loan for the purchase because it lacked a financing guarantee from the U.S. Export-Import Bank.Amid a clash over spending priorities, congressional Republicans effectively shut down the U.S. Ex-Im Bank by failing to reauthorize the agency at the end of June. That means the bank can’t make new loans or provide loan guarantees to foreign companies so they can buy American products and services. And American companies can’t renew their export-credit insurance policies.

The shutdown was a blow to many companies in the U.S. and abroad that are fighting for revenue in a sluggish global economy. Many foreign companies like Ethiopian Airlines are looking to do business with trusted American suppliers, while U.S. companies are searching abroad for new customers.

A strong dollar and weaker growth hamper those efforts. U.S. exports of goods and services were down 3.5% from a year earlier in the first seven months of 2015. Exports fell 3.2% in August, according to the Commerce Department.Declining exports, combined with a lack of U.S. Ex-Im Bank funding, is “a double-whammy,” said David Ickert, finance chief of Air Tractor Inc., which makes small aircraft for the agriculture industry. Softer prices for crops such as soybeans have growers in places like Brazil and Argentina ordering less equipment, he said.Air Tractor, based in Olney, Texas, typically uses export-credit insurance from the U.S. Ex-Im Bank. Foreign customers typically account for over half of the company’s sales, but Mr. Ickert expects that figure to drop to 30% this year. “There are definitely some multiple headwinds we’re facing right now,” he said.

Many foreign companies say they can’t secure financing from commercial banks without some kind of government-backed financing or guarantee, which most developed countries offer through their own Ex-Im banks.Ethiopian Airlines’s Mr. Gebremariam said he hopes to buy more than two dozen planes from Boeing in coming years, but will consider going to European rival Airbus Group SE if the U.S. Ex-Im Bank stays out of business.“There’s definitely an impact on our expansion and growth,” he said. “Some economies in Africa are considered high risk, so banks wouldn’t be able to finance us directly without Ex-Im backing.”

In a letter sent to Boeing officials last week, Comair Ltd., an aviation company based in South Africa, said a continued lack of U.S. Ex-Im Bank support would force the airline to borrow in foreign currency. But doing so, given the volatility of its local currency, the rand, would “expose Comair to too great an exchange-rate risk on its balance sheet,” said CEO Erik Venter.Boeing said such sentiments reflect private conversations it has been having with customers for months. “They want to keep buying American, but the uncertainty over the future of the Export-Import Bank is forcing them to consider other options,” said a company spokesman. Boeing, a strong proponent and major beneficiary of the bank, expects it to reopen. But an extended shutdown would prompt Boeing to consider moving work offshore to compete for contracts that require Ex-Im backing, Chairman Jim McNerney said last month.General Electric Co. MMGEMM is already doing so, to make it easier for its customers to use Ex-Im funding from other countries, such as Canada, France and Hungary. In Hungary, where GE has manufacturing facilities, the export-import bank is providing a loan to Bresson AS Nigeria Ltd., a power-generation company, to buy GE turbines for new plants in Nigeria, said Barakat Balmelli, a financial adviser to Bresson on the deal.

Hungarian officials are looking to increase their level of new export-import-related lending to €1 billion, or about $1.1 billion, by the end of the year. Last month the government expanded agreements between its Ex-Im Bank and local Hungarian commercial banks.

Ms. Balmelli said Bresson chose to work with Hungary’s Ex-Im Bank partly because of the U.S. shutdown. “You have other countries changing their policies to accommodate these new business opportunities while the U.S. is just fiddling about,” she said.61ae8-exim-bank1

Last week, the U.S. Ex-Im Bank’s Republican supporters moved to bring the bill reauthorizing the bank to a vote. The procedure would force a vote on the bill, which is backed by nearly all Democrats and many Republicans, later this month.

Meanwhile, small U.S. companies, which can’t relocate or move jobs overseas, are feeling the brunt of the bank’s closure. W.S. Darley & Co., a maker of firetrucks and related gear, said the shutdown already has cost it a contract worth about $7 million.

The customer’s loan didn’t get final Ex-Im Bank approval, and since W.S. Darley’s contract was contingent on that financing, “that sale could just be gone,” said Chief Operating Officer Peter Darley.

With projects falling out of the pipeline, employees at the Itasca, Ill., company are worried about their jobs, he said. “It hurts us. We had a lot of good momentum,” he said, referring to building firetrucks for foreign cities and towns.

Featured Image -- 2741“We might be losing projects we’re not aware of,” he said. “If a buyer knows that Americans don’t have an open Ex-Im, they might not even knock on the door, or invite us to the bid table.”

Write to Kimberly S. Johnson at Kimberly.Johnson@wsj.com

http://www.wsj.com/articles/shutdown-of-u-s-ex-im-bank-puts-companies-in-a-financing-bind-1444093160

U.S. Export Weakness Hampers Growth

Strong dollar and global economic strains undermine foreign trade in goods and services

Hopes for an American export boom are wilting under the weight of a strong dollar and global economic strains.

U.S. exports are on track to decline this year for the first time since the financial crisis, undermining a national push to boost shipments abroad. Through July, exports of goods and services were down 3.5% compared with the same period last year. New data released Tuesday by the Commerce Department showed that exports of U.S. goods sank a seasonally adjusted 3.2% in August to their lowest level in years.
IT-USExportsReprint_Page_2
The weak trade performance is restraining overall economic growth, a sign of how troubles in China and other major economies are dinging the U.S. economy.

“Foreign demand remains the weakest part of the economy,” said Jim O’Sullivan, chief U.S. economist at consulting firm High Frequency Economics.
It didn’t seem that way in 2010, when President Barack Obama set a goal of doubling exports over five years. Some big cities took up the challenge, including Portland, Ore.

Facing a battered economy at home, Vanessa Keitges, president of Portland-based Columbia Green Technologies, lined up sales in Belgium and New Zealand. In Canada, she chased public-building projects and Wal-Marts. Within three years, one-quarter of the green-roofing company’s sales were outside the U.S.

But that proved to be a high-water mark for the company’s foreign ambitions. Ms. Keitges is now focusing on the strengthening domestic market for the company’s rooftop planters as weak growth abroad tempers demand and a strong dollar creates pricing problems.

Exports seemed a golden opportunity as Portland and the rest of the nation emerged from the 2007-09 recession. Foreign sales were a major contributor to U.S. economic growth in 2010 and 2011, outstripping past recoveries. Political leaders hoped selling goods and services abroad would offer a sustained boost to the job market at home.

But the dream of an export boom has faded.

As unemployment has declined, American consumers have reasserted their dominant role in driving economic growth. And a strong dollar and weakness overseas have helped turn international trade into a drain on overall economic growth in four of the past six quarters.

The Federal Reserve worries exports will be a persistent drag on the broader economy going forward. Fed Vice Chairman Stanley Fischer in August said it was “plausible to think that the rise in the dollar over the past year would restrain growth…through 2016 and perhaps into 2017.” If the Fed begins to raise short-term interest rates later this year, that could provide new fuel to push the dollar’s value even higher.

Exports of goods and services grew 80% from 2003 to 2008, but then expanded only 48% from 2009 to 2014, according to Census Bureau data.

A Commerce Department official described President Obama’s export-growth initiative as “catalytic and a success,” driving exports “despite strong global economic headwinds and macroeconomic factors outside our control.”

The administration is looking to spur trade growth through agreements such as the Trans-Pacific Partnership. Senior officials from around the world are meeting in Atlanta, trying to complete the expansive trade deal after talks stalled earlier this year.

It isn’t just the U.S. where exports have been a disappointment in recent years. Globally, growth in trade volume is set to trail the pace of economic growth for the third year in a row, and trade growth has been averaging just half its pre-financial crisis pace. In the immediate aftermath of the recession, confronted by weakness in the domestic economy, U.S. policy makers saw opportunity in global markets.

Following Mr. Obama’s lead, the Portland metro region in 2012 set its own goal to double its exports in five years. “This is how we fight for jobs in the next economy,” then-Portland Mayor Sam Adams declared. In the past year, Portland has quietly shelved that aim. The value of Portland-area exports actually declined slightly between 2012 and 2014, according to tallies from the Commerce Department and the Brookings Institution, a Washington think tank.

After Portland set its goal, economic conditions started to shift. The value of major currencies declined relative to the dollar, making American-made goods more expensive for foreign customers. Growth slowed in key markets such as China and Canada. At home, the U.S. economy regained its footing.

Over the past year, Portland first was caught up in a labor dispute that caused gridlock at ports along the West Coast, then it lost regular ocean-bound container service. Local officials also came to realize export growth depended overwhelmingly on chip maker Intel Corp., MMINTCMM which has extensive facilities in the Portland suburbs.

Exports of computer and electronic products helped drive a more than doubling of the metro area’s exports between 2003 and 2008, according to Brookings. But Intel has suffered from a slowdown in demand for personal computers.Measurable gains from smaller companies are likely to take years to materialize. Federal estimates show only about 5% of U.S. firms export, with nearly two-thirds of the annual value concentrated among 500 companies.

Hand-tool maker Astro Tool Corp. in the Portland suburb of Beaverton has seen many of the challenges up close. Over the past year, general manager Mike Barnes dedicated half his time to chasing foreign customers, while still overseeing day-to-day operations of the 30-employee company. He faced a steep learning curve. “We, A, didn’t know how to do it, and B, we didn’t have the money to do it,” he said. “You can’t just go to the Internet and say, ‘Where do we find foreign opportunities?’ ”

He eventually landed a small grant to hire a consultant and tapped connections for advice. The share of Astro’s business coming from overseas climbed over the past year to 25% from 15%. But he also watched at a trade show as a foreign competitor sold a cheap, knockoff version of a product similar to his.

The Portland region is trying to court foreign companies that already incorporate exports into their business model. But those companies aren’t immune to global pressures.

Two years ago, exports were nearing 70% of the sales of Shimadzu USA Manufacturing Inc., a subsidiary of the Japanese maker of instruments to test everything from wine fermentation to the urine of Olympic athletes. Now the plant in an industrial park at the far southern edge of metro Portland is getting closer to 50-50 as domestic growth outpaces sales gains abroad.

Foreign customers “can get it cheaper from Japan now than they can from the United States. We’re not as competitive as we were,” said Joe Shaddix, vice president of operations and manager of the factory, referencing the strong dollar.

At the same time, domestic demand for test instruments is developing among marijuana growers as states move to legalize the drug. The factory has expanded what it can make, becoming U.S. Food and Drug Administration registered.

Mr. Adams, the former mayor, remains a strong advocate for the goal of doubling exports—if not by 2017, then eventually. He worries the Portland economy isn’t keeping up with the quality of life that draws twenty- and thirty-somethings at an enviable rate.

“Obviously the timeline will move, but keeping that goal front and center is key,” he said.
Fi3E Badge
Write to Mark Peters at mark.peters@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

http://www.wsj.com/articles/u-s-export-weakness-hampers-growth-1443576283

Post-Boehner, risk of December government shutdown and Export-Import Bank closure is high

Fluent In Foreign Business

On Friday, House Speaker John Boehner announced he will resign at the end of October.


Photo: Associated Press The Export-Import Bank building in Washington D.C.

With John Boehner stepping away from the negotiating table, the chances increase for a December government shutdown and a permanent shuttering of the Export-Import Bank.

Other question marks: Will Congress and the White House be able to agree on new federal borrowing authority and revise the way the U.S. pays for the upkeep of roads and bridges.

The immediate shutdown threat may have passed, since Mr. Boehner, a core group of House Republicans, House Democrats and a Senate majority appear to be in agreement on a stopgap bill to carry the government from Oct. 1 through Dec. 11.

Mr. Boehner told reporters he plans to get as much done as he can before he leaves. President Barack Obama said he…

View original post 540 more words

Post-Boehner, risk of December government shutdown and Export-Import Bank closure is high

On Friday, House Speaker John Boehner announced he will resign at the end of October.


Photo: Associated Press The Export-Import Bank building in Washington D.C.

With John Boehner stepping away from the negotiating table, the chances increase for a December government shutdown and a permanent shuttering of the Export-Import Bank.

Other question marks: Will Congress and the White House be able to agree on new federal borrowing authority and revise the way the U.S. pays for the upkeep of roads and bridges.

The immediate shutdown threat may have passed, since Mr. Boehner, a core group of House Republicans, House Democrats and a Senate majority appear to be in agreement on a stopgap bill to carry the government from Oct. 1 through Dec. 11.

Mr. Boehner told reporters he plans to get as much done as he can before he leaves. President Barack Obama said he hoped Mr. Boehner would try to get as much done as possible in the next month and pledged to help him do that.

What happens to the government in December will be determined by Mr. Boehner’s successor.

If House Republicans choose a new speaker who favors more confrontations with the White House, the outcome could be either a partial government shutdown or a full-year stopgap spending bill—an option that the Defense Department, in particular, opposes unless the measure is written to allow new programs to begin.

Whoever gets the speaker’s gavel may feel obliged to promise the conservative wing of the party a willingness to go all the way to a shutdown to achieve goals such as ending funding for Planned Parenthood.

For years, there has been speculation that Mr. Boehner would strike a grand compromise with Obama and the Democrats and then resign. The first part of that—a push for a grand bargain on tax and entitlement spending, as he tried to negotiate in 2011—is probably out of reach given the proximity of the next elections.

More in realm of possibility before Boehner leaves is a smaller agreement, perhaps on the debt ceiling and reviving the Export-Import Bank. If not, all bets are off.

Here are some of the deadlines to watch during the House leadership transition:

EX-IM: The charter for the Export-Import Bank of the U.S. was allowed to lapse on June 30. Some Republicans and small- government groups oppose reauthorization, saying Ex-Im benefits only a few large corporations and that its activities should be left to the private sector. Boehner backed the Ex-Im’s renewal.

Two key decision-makers, Majority Leader Kevin McCarthy and Financial Services Chairman Jeb Hensarling, are Ex-Im opponents.

OPIC: The Overseas Private Investment Corp.’s authorization runs through Sept. 30. Republicans have been divided over whether the loan-guarantee agency should continue. Last year, 116 House Republicans voted against reauthorization.

DEBT LIMIT: The Treasury Department has been using so- called “extraordinary measures” to juggle the government’s cash flow. Secretary Jacob Lew has said that borrowing authority needs to be raised before late October or else the U.S. could default on its obligations.

In 2011, the government was pushed to the brink of default in a dispute over a debt-limit extension.

HIGHWAY BILL: Highway, transit and road safety programs are currently authorized only through Oct. 29. Lack of action could cause programs financed through the the Highway Trust Fund to shut down, partially or completely. The chief complication is that the fuel taxes that provide the bulk of Highway Trust Fund revenue haven’t been increased in more than two decades and haven’t kept up with growing infrastructure needs, better fuel efficiency and changing driving patterns.

Agreement on sustainable funding streams—such as shifting to a vehicle-miles-traveled system—has been difficult, and leading House Republicans have discussed using corporate tax changes to fund a long-term bill, though so far no plan has been unveiled.

TAX BREAKS, NUTRITION: The race to be speaker — and a possibly more contentious battle for the majority leader spot — could determine the ability of Congress to renew dozens of tax breaks that expired at the end of 2014 and to come to a compromise on reauthorizing $30 billion in nutrition programs that expire Sept. 30.

Main Street awaits fate of Ex-Im Bank, key lender

Mary Howe, president of Howe Corp. in Chicago, relies on the Export-Import Bank of the United States for credit insurance.

Lawrence Collins
Mary Howe, president of Howe Corp. in Chicago, relies on the Export-Import Bank of the United States for credit insurance.

The fate of the Export-Import Bank of the United States, a key lender for many small companies that do business overseas, again hangs in the balance.

The bank’s fund runs out Sept. 30. While the bank’s charter technically expired June 30, it continues to service loans with terms of up to 18 years. Adding to the drama, the U.S. government could potentially shutdown Oct. 1 if a budget agreement is not reached. However, the bank’s reauthorization is not directly tied to the federal budget process.

Known as “Ex-Im” for short, the bank is a financial lifeline and safety net for many small businesses that export goods in foreign markets than can be risky. The bank provides loans and insurance to support exports. President Barack Obama has been a vocal supporter of renewing Ex-Im’s funding, calling the move a “no brainer” over the summer.

For small business owners such as Mary Howe, the potential closure could reduce her access to working capital. Howe’s family business, Howe Corp. in Chicago, exports up to 40 percent of its industrial refrigeration equipment to places including Central America and Canada.

And if the Ex-Im Bank’s funding isn’t renewed? “Our backup plan is to self-fund; it’s going to get tight,” Howe said.

Read MoreBattle lines drawn over Export-Import Bank renewal

The Senate voted in July to fund Ex-Im as part of a longer-term highway bill, which has since moved to the House for consideration.

The vote in the U.S. Senate on the bill was a strong signal of bipartisan support for the Ex-Im bank and “businesses and workers that we have empowered in the past to grow their exports,” the bank’s Chairman Fred P. Hochberg said in an email statement to CNBC. Ex-Im Bank has been funded for some 80 years.

Since Ex-Im’s charter expired in June, it has not been able to make or guarantee any new loans, or extend insurance, partly due to congressional disagreement over who receives funding from the bank. The financial institution did $20.5 billion in financing last year.

Ex-Im Bank’s small-business authorizations in fiscal year 2014 were more than $5 billion, as measured by total dollar volume, which is nearly 25 percent of the total-dollar volume of overall authorizations.

The bank approved more than 3,300 small-business authorizations, nearly 90 percent of the total number of Ex-Im Bank authorizations.

The remaining $15.5 billion supports exports at other big corporations—including General Electric, which announced last week it would move about 500 U.S. jobs overseas to avoid losing business to foreign competitors, due to uncertainty about the bank’s charter. GE says 400 of the 500 positions will now be based at its facility in France, dependent on the company’s winning bids. The additional 100 jobs currently are in Texas, but will move to Hungary and China.

“Our customers rely on export credit agencies, like U.S. Ex-Im, to finance their critical power projects,” said Jeff Connelly, vice president of supply chain at GE Power & Water, in prepared remarks.

But critics, including House Financial Services Committee Chair Jeb Hensarling, Republican of Texas, see the bank as a form of corporate welfare. “Most of this goes to very successful, well-heeled companies that don’t need the help in the first place,” Hensarling told CNBC over the summer.

Export-Import bank

Andrew Harrer | Bloomberg | Getty Images

Still, the future of the bank is a “huge issue” for small companies, according to Morrison Textile Machinery Co. in Fort Lawn, South Carolina. President Jay White says Ex-Im allows the company, which designs, manufactures and installs textile machinery globally, to insure its overseas business on a rolling basis.

“If I can’t get Ex-Im insurance, I am taking on credit risk myself—the profit on my job would be eaten up if I get commercial credit insurance,” White says. “This overseas credit support is very important to my business,” he says.

And while Ex-Im Bank’s charter technically has expired, it will remain operational through the end of the month and continues to service existing loans. The bank’s funding lapse coincides with a potential government shutdown if a congressional continuing resolution is not passed to keep the government operational.

Read MoreEntrepreneuers who do biz overseas await bank’s future

(Tea Party) Republican Job Killers and the Export-Import Bank

You know things are bad, when I have to cite a left leaning newspaper such as the NY Times, as an information source bashing Republican Party.  Yet, the author of the OP-ED below, does make some valid points.  Rather than go into additional explanations on this issue, I simply would like to pose a few questions to let the readers think and decide for themselves. These questions will address both pros and cons of the issue. Answers will be published in the next post.

  • There are overwhelming votes in both the House and the Senate to pass the Ex-Im reauthorization, yet a hand-full of congressmen from the Tea Party is blocking the reauthorization bill in the committee. What does this say about our Democratic process?
  • Whose interests are these Tea partiers serving?
  • Why can’t large companies such as Boeing and GE finance exports themselves rather than lose orders?
  • What would be an estimated annual impact of the Ex-Im shutdown?
  • Since US Ex-Im financing represents less than two percent of annual US exports, why do we care if the Bank goes away?

Republican Job Killers and the Export-Import Bank

Joe Nocera, NY Times OP-ED COLUMNIST

“At a time when we want to compete around the world, it is hard to believe what is happening in the U.S. Congress,” said Jeff Immelt, the chief executive of General Electric.

“The ultimate irony is that we are on the verge of an American manufacturing renaissance,” bemoaned Jim McNerney, the chairman of Boeing. “Yet this action is causing companies to start looking outside the U.S. instead.”

“People complain that the bank only helps big companies,” said Doug Oberhelman, the chairman and C.E.O. of Caterpillar. “A lot of our suppliers are small. They don’t export, but we do. And if we aren’t exporting, they aren’t selling to us.” He added, “I find it staggering that we would put highly paid export-oriented jobs at risk.”

What Oberhelman finds “staggering,” Immelt finds “hard to believe” and McNerney finds ironic is the refusal of Republican extremists — led by the House Financial Services Committee’s chairman, Jeb Hensarling — to allow a vote on the reauthorization of the Export-Import Bank of the United States, a vote that would pass in a landslide. The Ex-Im Bank, which insures and sometimes finances export sales, had to stop making deals at the end of June, when its reauthorization deadline came and went.

Although the Ex-Im Bank still exists, it has been reduced these days to managing its portfolio, rather than underwriting or insuring new deals. According to Boeing, its foreign rival Airbus, which can tap not one but three export credit agencies, is spreading the word to potential aircraft customers that Boeing can no longer compete when bids require sovereign insurance. That is hardly the only such example.

The damage this is doing to our economy is starting to become clear. In recent weeks, Boeing, America’s largest exporter in dollar volume, made two sobering announcements: first, that Asia Broadcast Satellite canceled an $85 million satellite contract expressly because there was no Ex-Im support. (Boeing is hoping to renegotiate.) More recently, Kacific, a Singapore-based satellite company, told Boeing not to bother bidding on a satellite contract, again because of a lack of Ex-Im financing.

As a result, McNerney told me, “layoffs in the hundreds” have taken place in Boeing’s satellite division.

This week, it was G.E.’s turn to make Ex-Im-related news. First, it said it would move 400 jobs to France to manufacture — and export — gas turbines, and 100 final assembly jobs to Hungary and China. Then it said it would create a new turboprop center in Europe that would employ up to 1,000 people. In both cases, G.E. said the moves would allow the company to take advantage of European export credit agencies.

When I spoke to Immelt, McNerney and Oberhelman, whose company also uses the agency, they all sounded astonished that this important tool, which they need to compete with companies abroad, was being taken away for purely ideological reasons.

“If no other country had export financing, that would be one thing,” said Immelt. “But that’s not where the world is. What you are really doing is helping Siemens and China Rail” — companies that rely heavily on their countries’ export financing.  Immelt told me that G.E. currently has $11 billion in potential deals that require export credit agency financing. That’s real money, even for General Electric.

McNerney pointed out that many big deals require export financing for the bid to even be considered. He also noted, ominously, that 10 to 15 percent of Boeing’s aircraft exports are dependent on Ex-Im support. Losing that business would be devastating for the company, and its employees.

When asked about the accusation from the right that the Ex-Im Bank is a classic case of government picking winners and losers, Oberhelman said that “if this doesn’t change, we’re all going to be losers.”

The anti-Ex-Im Bank faction is having a glorious time mocking the G.E. and Boeing announcements. A spokesman for Heritage Action for America, the conservative think tank leading the charge, described G.E.’s moves as “multinational crony capitalism.” Hensarling issued a statement claiming Boeing could finance the satellite deals itself to prevent layoffs; “it just chooses not to.”

And an unidentified financial services committee staffer told Politico that the loss of 500 G.E. jobs was a drop in the bucket for a company that employs 136,000 people in the U.S.

That heartless quote reminded me of an anecdote in “Confidence Men,” Ron Suskind’s book about the Obama administration’s financial team during the president’s first term. Some of Obama’s top advisers wanted to let Chrysler fail. But in a critical meeting, Ron Bloom, a former adviser to the United Steelworkers who was a member of Obama’s Auto Task Force, said, “Mr. President, these are the reasons we can’t kill this company. The damage to these communities and people will never be undone.”

Chrysler was ultimately saved because the president’s advisers suddenly understood that it was their role to save jobs, not to sacrifice them on the altar of economic purity. What will it take for the Republicans to come to the same realization.

GE to Move Turbine Jobs to Europe, China Due to EXIM Bank Closure

Fluent In Foreign Business

Reuters

General Electric, GE

 (Reuters)

General Electric Co (GE) said on Tuesday that it will move 500 U.S. power turbine manufacturing jobs to Europe and China because it can no longer access U.S. Export-Import Bank financing after Congress allowed the agency’s charter to lapse in June.

GE said that France’s COFACE export agency has agreed to support some of the industrial giant’s global power project bids with a new line of credit in exchange for moving production of 50-hertz heavy duty gas turbines to Belfort, France, along with 400 jobs. GE also said in a statement that 100 additional jobs will move from the United States to Hungary and China.

The company said it is now bidding on $11 billion worth of international power projects that require export credit agency financing, including some in Indonesia.

The U.S. jobs will be moved from facilities in South Carolina, New York, Texas and Maine…

View original post 312 more words

Museum of International Trade and Merchant Banking

Role of trade and finance in shaping global economies.

STEMpi

Modeling for Success

Fluent In Foreign Business

Helping To Grow Your Business Abroad

Emerging Market Insights

How to make a killing in Emerging Markets without losing your shirt?

Ideas That Work @ GIDASPOV.COM

Strategy | Creativity | Innovation | Fundraising | Marketing

Nu Leadership Revolution Blog

“Helping Emerging Leaders Gain the Competitive Advantage in the Future"

Mike Z's Blog

Exploring the causes of cancer throughout the world

Bucket List Publications

Indulge- Travel, Adventure, & New Experiences

FranchisEssentials

The franchise professional's resource...

We Help Insurance Agencies Stand Out

WordPress.com News

The latest news on WordPress.com and the WordPress community.

Follow

Get every new post delivered to your Inbox.

Join 473 other followers

%d bloggers like this: