The tension has been mounting for months and US groups are finding it hard to get their heads above water: the US Government has chosen not to prolong the existence of Eximbank or ExIm Bank (US Export-Import Bank), which was created in 1935 by Congress under the impulse of President Franklin D. Roosevelt in an attempt to ward off the effects of the great depression.
This is a hard blow, in particular for Boeing, widely seen as being the main beneficiary of this banking structure (to the extent that Exim Bank is frequently nicknamed the Boeing Bank). And yet Boeing is not the only group to use the services of Exim Bank when it comes to selling on export markets; in the aeronautics world for instance, General Electric is a major customer.
It was decided not to renew the charter governing Exim Bank on 1st July last due to pressure from the conservative wing of the Republican majority in Congress which considers that the bank benefits only a very small number of organisations, leaving aside vast swathes of industry, in particular the SMEs. Some of these congressmen go so far as to say that it functions on the basis of cronyism, inadmissible in their eyes since public money is involved.
For 80 years, US industrialists have had at their disposal a bank financing import-export activities, an idea that has now been emulated in most world nations. Which gives some idea of how difficult it is to come to terms with such a body being shut down. For Vice-Chairman John Rice, the GE Group cannot afford to wait for the possibility of a resumption of ExIm’s activities, since its major industrial projects require long-term financial arrangements. He is thus seeking solutions in countries with an export credit agency (ECA) of their own.
This is exactly what the conglomerate has been doing in the past two weeks, in France with its Coface ECA and, last week, with UKEF (UK Export Finance).
First in France, where the big boss himself, Jeff Immelt, travelled to Paris to ratify this agreement with Coface, possibly leading to the creation of 400 jobs on its Belfort site, in addition to the thousands of jobs promised by GE within the framework of its acquisition of Alstom’s energy branch, cleared by in Brussels in mid-September.
But GE is not stopping there; it has also signed a financial agreement with UKEF opening up a credit line of $ 12 billion and enabling it to support confirmed or potential contracts in international markets such as Brazil, Ghana, India and Mozambique. This agreement could lead to the creation of 1,000 jobs throughout the United Kingdom, which has invested over $ 21 billion in the group since 2003. Of course not all of these investments are in the aeronautics sector but, along with the energy sector, they will have a resounding impact. And what is produced in Europe or elsewhere will not be made in the US.
Meanwhile the former Boeing CEO, Jim McNerney, now Chairman of the Board, is a little less pessimistic on the non-renewal of ExIm Bank’s mandate. He’s also downplaying the reasons behind the decision to create a line of interior furnishings in China as well as a paint hangar dedicated to its single-aisle 737s which for him is more about improving customer service than putting pressure on the Congress. A fervent supporter of the ExIm Bank, Jim McNerney explains that its disappearance would be a real disadvantage for Boeing which would lose about 10 percent competitiveness against its competitors in tenders.
One thing is sure, on whichever side of the Atlantic, whether in Western countries, Eastern Europe or Asia, no large group can carry through its international projects alone without serious financial bancking.
Nicole Beauclair – AeroMorning