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As Congress continues to fight a political war over the U.S. Export-Import Bank (Ex-Im), the casualty count - in this case, missed sales and lost jobs - continues to climb across the country.
The toll is mounting in states like Illinois, where small businesses like Digital Check depended on Ex-Im to help the company finance its exports. Congress neglected to reauthorize the export credit agency earlier this summer, leaving Ex-Im without the authority to extend new lines of credit. That left Digital Check, which sells check scanning equipment to clients in nearly 100 countries, without the support it needs to continue expanding its presence overseas.
Consequently, Tom Anderson, the family-run company’s chief executive, says Digital Check stands to lose $250,000 in sales in British markets and around $300,000 in India. That half-million dollar hit has prompted the company to consider completely suspending its scanner leasing services.
“Our concern is our ability to stay competitive in the global markets and avoid any impact on our exports and even our workforce and employees," Anderson recently told the Chicago Tribune.
Staying in Illinois, Multifilm Packaging, which sells packaging materials to the confectionary industry, has stopped seeking new business in Latin America - the company’s primary export market - since Congress turned out the lights on Ex-Im. And thirty minutes east, Weldy Lamont Associates, an engineering firm, is now in danger of losing a multimillion-dollar project to install solar panels to supply power to thousands of villages in Senegal.
"It's a setback,” Frank Gogliotti, one of the project engineers at Weldy Lamont, told the Tribune. “We have to re-evaluate everything now.”
Ex-Im’s expiration has caused economic casualties on the West Coast, too. Steve Wilburn, president of FirmGreen, a small renewable energy company, was forced to lay off 10 of his 17 employees last year because the company lost $60 million in contracts during an earlier period of uncertainty over Ex-Im’s future. “For a small company, relatively speaking, $60 million is a huge hit,” Wilburn told the Fiscal Times. “We spent over two years developing those [contracts].”
FirmGreen is now competing for a $300 million project in the Philippines, but it hinges on securing export credit financing from an organization like Ex-Im. Without Ex-Im, the company will likely lose the contract to a South Korean rival, and with it, nearly 400 U.S. jobs would go down the drain.
Down in Arizona, small businesses are feeling the pain, too. Wudel International, a frozen yogurt company with 10 employees and about $3 million in annual sales, currently ships products to about 40 countries. In fact, the company has in the past five years doubled its exports, with international sales now representing half of its revenue (up from 20 percent since Wudel started using Ex-Im’s services). Sustaining that growth without Ex-Im will be awfully difficult.
“We've got distributors in Australia, South Africa and Europe that rely on the credit that the Ex-Im Bank allows us to provide," Dave Wudel, one of the company’s top executives, told the Phoenix Business Journal. He expressed that Ex-Im “helped our export growth significantly.”
The (employment) body count is climbing in Texas, too. Cindy Lewis, president and chief executive of AirBorn Inc., sells her company’s electronics to aerospace corporations that depend on Ex-Im to help sell their final products overseas. “Congressional leaders continue to ignore the fact that small and mid-sized firms, like AirBorn, also directly use the Ex-Im Bank to help our expansion into global markets,” Lewis wrote recently. “AirBorn is a mid-sized employee owned company. Shutting down the Ex-Im Bank greatly limits our ability to continue our growth and job creation.”
Lewis and AirBorn Inc. aren't alone in the Lonestar State. In fact, Texas is something of a ground zero for the impact of Ex-Im's expiration, as the state's $22 billion worth of exports backed by Ex-Im make Texas one of the two states poised for the most economic damage in light of the bank's closure.
That includes many of the roughly 500 turbine and generator manufacturing jobs that General Electric this week announced it would be moving from states like Maine, New York, South Carolina and - yes - Texas to facilities in Hungary, China and France. The move is being spurred by the company's pursuit of overseas projects that require export financing. Without an export credit agency operating right now in the U.S., GE managed to ink an agreement with COFACE, France's export credit agency.
“Our customers rely on export credit agencies, like U.S. Ex-Im, to finance their critical power projects,” Jeff Connelly, vice president for supply chain at GE Power & Water, said in a statement. “While our preference is to continue producing power generation equipment in our best U.S. factories, without customer access to the U.S. Ex-Im bank, we have no choice but to move our work to places that will offer export credit financing of these projects.”
The collateral damage extends into Indiana, too. Michael L. Parin, president of Damping Technologies, says the bank’s closure is wreaking havoc on his small manufacturing company, which sells an array of parts to aerospace and automotive customers. In a recent editorial, Parin explained that most of his company’s products “end up incorporated into larger products that are major export items.”
“Our company provides 44 Indiana families with stable employment and growth opportunities,” Parin wrote in the column. “The elimination of Ex-Im would needlessly subject these families to the agony stemming from the uncertainties during the time required for customers to find acceptable alternatives to fulfill Ex-Im’s historic functions.”
These are merely a handful of the American companies already feeling the impact of lawmakers’ misguided war over Ex-Im, which with every passing day looks less like an attack on cronyism - as critics have tried to portray it - and more like friendly fire on U.S. businesses. It’s up to Congress to put an end to that fight, reauthorize Ex-Im, and limit the damage to the American economy.