Foreign companies have used the agency to buy expensive US products when bank loans are not available.
September 16, 2015
by The Associated Press
HARTFORD, Conn. — General Electric Co. said it may move about 500 jobs overseas because Congress did not renew a government program that allows foreign companies to borrow money to buy US products.
Authorization for the US Export-Import Bank was not approved by Congress, forcing it to stop lending July 1. Foreign companies use the agency to buy expensive US products when bank loans are not available.
As a result, GE says 100 jobs from a Houston plant that makes gas turbines will move to Hungary and China in 2016. The Fairfield, Connecticut, industrial conglomerate says those countries have lending options in place for customers.
“We do not make today’s announcements lightly and in fact, have done everything in our power to avoid making these moves at all, but Congress left us no choice when it failed to reauthorize the Ex-Im Bank this summer,” said John Rice, GE’s vice chairman.
Another 400 jobs could be created in France instead of factories in South Carolina, Maine and New York if the company wins projects it is bidding on. The projects require financing, and the export-credit agency in France has agreed to provide it.
GE said it’s bidding on projects valued at $11 billion that require export financing. It said it has reached agreement with the French export-credit agency to provide a line of credit for global power projects. GE said the line of credit will initially support potential orders in international markets that include Indonesia.
To access the required export credit for its customers of its aeroderivatives turbines, GE will move its final assembly from the US to Hungary and China.
Rep. Joe Courtney, D-Conn., a supporter of the Ex-Im Bank, said the refusal by Republicans to back the federal agency is taking a toll.
“This is not a political parlour game in Washington, DC,” he said. “They’ve run the numbers and there’s nothing out there that even comes close to what they’ve been getting from Ex-Im for decades.”
Through a spokesman, Republican Rep. Jeb Hensarling, chairman of the House Financial Services Committee, tied GE’s shift to Europe for capital to its dispute with Connecticut officials over increased business taxes. He also cited GE CEO Jeff Immelt’s role as chairman of the President’s Council on Jobs and Competitiveness.
“It’s troubling that the head of President Obama’s Jobs Council is announcing GE is leaving Connecticut because the state’s taxes are too high and is choosing to send jobs overseas because U.S. taxpayer-provided subsidies are too low,” he said.
GE has not announced it’s leaving Connecticut. It said in June it’s considering relocating its headquarters to a “more pro-business” state.
The embattled and little-known Ex-Im Bank has been at the centre of a fight between tea party Republicans who say it’s not needed and Democrats and some Republicans – backed by manufacturers and large businesses – who say it promotes trade and helps create jobs.
The Ex-Im Bank’s principal role is to guarantee commercial bank loans to foreign businesses and governments to buy US products. US taxpayers would be responsible for a loan if a company operating overseas defaults on a bank loan used to buy a product made by a US company.
© 2015 The Associated Press