Posted on 10/11/2015 2:13:48 PM PDT by E. Pluribus Unum
With the recent news that a $1.1 billion order for Boeing jetliners by South African airline Comair is at risk of cancellation, on the heels of recent announcements of three lost U.S. commercial satellite sales, the failure of Congress to hold a vote on re-authorization for the Export-Import Bank of the United States (Ex-Im) can now be seen clearly as an example of how inaction is causing the American aerospace industry to lose ground against its foreign competitors, and potentially thousands of workers to lose their jobs.
U.S. companies large and small have been telling members of Congress for months now that overseas customers are going to buy from their foreign competition in the absence of the ExIm Bank matching finance options provided by every other foreign government. Sadly, these warnings have been ignored.
Critics of Ex-Im cannot be more mistaken in their claims that Ex-Im’s financing is “corporate welfare;” in the aerospace industry, the thousands of companies that are an integral and integrated part of the supply chain for aircraft as well as the space industrial base are at risk. For these suppliers, there will be the initial loss as U.S. aircraft and satellite manufacturers begin to slow down their production. There will be an even greater impact going forward for aircraft suppliers as they lose the aftermarket maintenance, repair, and overhaul revenue that lasts as long as exported aircraft are in service.
The timing of losing Ex-Im support could not be worse for the aerospace industry given the downturn in U.S. defense spending. The shared aerospace and defense industrial base that supplies our military is relying more on commercial sales to sustain itself and innovate, and more than 80 percent of that commercial production is exported. Besides risking high skill and high wage jobs, our national security is also jeopardized as many small and medium sized suppliers will find themselves unable to survive, let alone compete, without support for exports from Ex-Im.
The purchase and payment lead times in our industry are long, and the clock is ticking. The price for delay in the vote to re-authorize Ex-Im is going up every second, and our nation’s security and economy will ultimately bear the cost.
Melcher (LTG U.S. Army-Ret.) is the president and CEO of the Aerospace Industries Association.
Even with all of that corporate welfare?
bflr
Let the Aerospace industry run on its own money.Not the taxpayers money.Let them take the risk and get the reward for producing aircraft that are wanted around the world.
The Export-Import Bank should be killed and it should stay that way.
Repatriate and then we’ll talk about Ex-Im. Don’t care if repatriation applies to you or not.
Obama desires this because it hurts Americans, the economy, and our power base. Plus he gets to throw it at his enemies as their fault. Wins all across the socialist board.
Try going to a real bank and make application for a loan with arrangements to pay them back like the rest of us and other businesses have to do.
“Critics of Ex-Im cannot be more mistaken in their claims that Ex-Im’s financing is “corporate welfare;” in the aerospace industry, the thousands of companies that are an integral and integrated part of the supply chain for aircraft as well as the space industrial base are at risk. For these suppliers, there will be the initial loss as U.S. aircraft and satellite manufacturers begin to slow down their production. There will be an even greater impact going forward for aircraft suppliers as they lose the aftermarket maintenance, repair, and overhaul revenue that lasts as long as exported aircraft are in service.”
None of what follows supports his opening statement that its not corporate welfare. All points worth discussing, but it is indeed corporate welfare.
Not positive, but I think Boeing got into the Ex-Im because all the overseas competition was State subsidized, and they could not compete without some sort of hand out. The real problem for Boeing is its heavily unionized work force.
Without the Ex-Im, Boeing could well fold, leaving the US without a viable commercial plane builder. Its space and mil business cannot sustain it long.
Because politician sucks up too much money, our product is not competitive any more.
Who is it you want to go to the bank, Boeing or Comair?
Comair is buying the planes; shouldn’t they borrow the money they need?
Yes, and under the Ex-Im that’s just what they do. Ex-Im makes it possible for large loans to be made attractive to banks by creating the potential for them to graduate to sovereign loans in the case of default. In other words, if Comair defaults on their Ex-Im guaranteed loan, then the Government of South Africa is on the hook for it, directly indemnifying the US Government for its guarantee.
Without this sort of system in place the risk cost to the bank for making such a loan to Comair would make the loan quite costly if a bank would make the loan at all.
If Boeing can’t offer the possibility of attractive borrowing costs to its overseas customers it will lose them to producers who do offer such protection to the banks - and that is virtually EVERY other producer, whether from France, Great Britain, Russia, Japan. You name the country and if they are interested in exports, they have some sort of government backed export financing scheme. Count on it.
If all governments all got rid of export financing guarantees, it would be a level playing field, but it would be a rough one, with far fewer trade opportunities and higher costs for everyone.
It’s just stupid for the United States to just deal itself out out the game unilaterally.
Getting a loan and then repaying the loan is NOT “welfare.” It is financing.
W have 94,000,000 people in this country, and probably about 30,000,000 illegal invaders, with close to 80% of those on every form of government welfare.
BS.
You have failed to understand that it is the taxpayers of SOUTH AFRICA that ultimately guarantee an Ex-Im guaranteed loan to support a purchase by Comair - NOT the taxpayers of the US.
That’s the only reason export guarantee loans work - because the government of the BORROWER’s country guarantees to underwrite the loan - NOT the taxpayers of the lending country.
You ever negotiate one of these export guarantee packages? I have.
...if Comair defaults on their Ex-Im guaranteed loan, then the Government of South Africa is on the hook for it, directly indemnifying the US Government for its guarantee.What a circle jerk. "Guaranteed" by who? Don't give me that "South Africa on the hook $hit. Why else would the US Congress be involved?
In case you don't know it dimwit "the US Government" is ME.
I have. The US government ultimately is the final guarantor of the loan. If no one else pays the US government will. It is simply a mechanism to lower borrowing costs to the borrower which subsidizes the sale by the manufacturer. Just like Freddie and Fannie and ultimately will end the same.
Has Goldman Sachs, Bank of America, Citibank, Wells Fargo, and JP Morgan stopped making corporate loans? Has Boeing been unable to float bond and stock issues?
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