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The fight over the future of the U.S. Export-Import Bank (Ex-Im) is about to get real. Ex-Im’s charter will expire on Tuesday, after which it will no longer be able to provide loans or guarantees to U.S. exporters. Meanwhile, American jobs hang in the balance.
Just ask Jim Hirsch, president and CEO of Air Tractor, a 265-employee-owned manufacturer of agricultural and forestry fire-fighting airplanes based in Olney, Texas.
Last year Hirsch testified before Congress on Ex-Im’s importance. Today, just days before the bank’s charter expires, he says, “Without Ex-Im, 65 jobs at Air Tractor would be at risk immediately.”
Hirsch explains that mid-year is the busy season in Air Tractor’s biggest export market, Brazil. Air Tractor has more than a dozen transactions in the pipeline for Brazil. These transactions are driven by demand for agricultural aircraft that are needed to begin the spray season in Brazil, and thus the timing of these transactions is critical.
Beginning on July 1, if Air Tractor is not allowed to incorporate Ex-Im’s medium-term insurance product, these deals will grind to a halt. Closing down Ex-Im introduces the real risk that these deals will be picked up by a Brazilian competitor instead.
Aircraft are expensive, durable capital goods, and replacement sales will not come around for another 5 to 10 years, Hirsch explains. Any lapse in Ex-Im’s authorization would have both immediate and a long term impacts on sales.
Here’s how Ex-Im explains it:
Air Tractor Inc. … has used Ex-Im Bank’s medium-term insurance for 15 years to export an estimated $40 million of its aircraft, primarily to small private-sector buyers in Argentina and Brazil. The company uses the Bank’s medium-term policies to provide supplier credits, which are loans to international buyers that the company originates and then sells to a commercial lender. About 25 planes are expected to be financed annually. In 2009, Air Tractor also obtained an Ex-Im Bank-guaranteed working capital loan.
Exports account for approximately 50% of Air Tractor’s total sales. The firm’s aircraft can be found working over fields and forests across the United States and around the globe -- in Canada, Mexico, Central and South America, South Africa, Australia, New Zealand, Spain, Eastern Europe, Saudi Arabia, and South Korea.
Closing Ex-Im will not only impact Air Tractor but more than 1,000 other Texas companies and the towns those businesses support.
“I urge Congress to not overlook America’s small businesses and reauthorize the Ex-Im Bank immediately,” Hirsch says.