How you can save the Export-Import Bank
It is a well-known statistic that nearly 1/5th of the new jobs created in the U.S. last year and nearly 33 percent of new jobs over the past decade were created in Texas alone.
It is also no secret that Texas has led the country as the top exporting state for the past 12 consecutive years. In 2013, the state’s export revenues were nearly $279.7 billion, accounting for nearly 18 percent of the nation’s total exports. It’s here, through the Port of Houston, where the majority of these goods are exported.
Many of the jobs created in our region are export related. Manufacturing jobs in our region depend on exports. These are jobs in food production, metal fabrication, heavy machinery, high-tech equipment, and aerospace industries, among others.
These jobs and many future jobs related to the recent energy boom will be put in jeopardy if Congress fails to reauthorize the Export-Import Bank (Ex-Im). The bank, created nearly three quarters of a century ago, promotes U.S. exports and supports U.S. jobs by providing working capital guarantees (pre-export financing); export credit insurance, loan guarantees, direct loans, and other financial services to foreign customers of U.S. companies. The bank often steps in to provide financing that allows exports to continue even when commercial financing is tight.
Up to this point, the Ex-Im Bank has enjoyed bi-partisan support as a result of its success. The bank boasts a less than 2 percent default rate, which incidentally is better than the default rate of many private banks. Since 1990, Ex-Im Bank has contributed $7 billion more than it received to the U.S. Treasury, and contributed over $1 billion back to the U.S. Treasury in 2013 alone. Since 2009, Ex-Im Bank activities have created or sustained 1.2 million U.S. jobs. Nationwide, in 2013 alone, the Ex-Im Bank supported $37.4 billion in US exports and 205,000 jobs.
Local manufacturers argue that eliminating the program would translate into a loss of sales, and ultimately, a loss of jobs. There are a total of 22,000 jobs supported by Ex-Im bank in the greater Houston region that could be affected. “Without the Ex-Im Bank, competing companies in countries with robust export financing programs will be in a favorable position to win business away from the U.S. negating recent gains in state and national employment rates,” states Chad Burke, president and CEO of the Economic Alliance Houston Port Region. The impact would be especially felt in Harris County, where nearly 300 companies rely on the Bank.
The bank’s charter will expire on Sept. 30, 2014, unless Congress passes a bill to re-authorize it. At first glance reauthorization would seem to be the obvious option, but opponents have argued the Bank favors big business to the detriment of small ones. Yet nearly 90 percent of Ex-Im Bank transactions in 2013 benefited small businesses directly. Additionally, there are countless small and medium sized businesses that benefit indirectly by providing services to the large exporters who benefit directly.
Critics of the bank also assert that the government is competing unfairly with private financial institutions. However, according to the U.S. Chamber of Commerce, most, if not all, major U.S. banks actually support the Ex-Im Bank reauthorization. This may be due to the fact that the $20 billion of commercial banking financing that Ex-Im typically guarantees annually is mostly made of up financing commercial bankers would not support due to the risk of working with foreign countries or term conditions. Thus, filling in the role of lender of last resort, the Ex-Im Bank complements, rather than competes, with private financial institutions.
If Ex-Im were to be abolished, and the private sector were to try to fill the void, premiums would likely rise significantly. The exports would migrate to other countries who have their own equivalent of the Ex-Im Bank. In short, U.S. exporters and their well-paying U.S. jobs would be the net losers. Our region, which is the majority user of the Bank, could lose a significant amount of business and jobs. Conversely, competitors in other exporting nations would be the winners.
What can you do? Take a moment to call or write your Congressional member and let him or her know how important you believe re-authorizing the Ex-Im Bank is. You can find your representative at the following link: http://www.house.gov/representatives/find/
The Economic Alliance Welcomes New Members
The Economic Alliance Houston Port Region is a member-based organization with a mission to grow a vibrant regional economy. The Economic Alliance is proud to welcome the following companies to their membership roster since March.
- Alpha Technical Services
- Air Valve Inc.
- Excel Modular Scaffold & Leasing Corporation
- Frost Bank
- Hale-Mills Construction, Ltd.
- Marco A. Arredondo, Inc. (Energy Consultants)
- Martin Recruitment Solutions
- Munsch Hardt Kopf & Harr P.C.
- Nassau Bay Agency
- Port Terminal Railroad Association
- Wayne Wicks & Associates