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Debate in Congress over the future of the U.S. Export-Import Bank (Ex-Im) is heating up. Without congressional action, Ex-Im will be unable to provide new loans or guarantees to American exporters after its charter expires on September 30.
In other words, Ex-Im will be forced to close its doors if Congress doesn’t act. The result will be lost sales and lost jobs here at home.
What does that mean for workers and companies in Indiana? The Hoosier State is nation’s 13th largest exporter, selling more than $34 billion worth of goods overseas last year. These exports support good jobs in Indiana, primarily in the transportation, chemical and machinery sectors. As Ex-Im’s website shows, the bank authorized $2 billion worth of export support for 166 Indiana businesses between 2007 and 2014.
With so much at stake in Indiana, it’s no surprise that the Indy Chamber supports Ex-Im. Michael Huber, President and CEO, stresses Ex-Im’s importance for small American businesses: “While private commercial banks remain necessary to provide working capital and export finance, they exhibit a level of timidity in helping the small and medium enterprise (SME) market. We must make every effort to help our small businesses grow to a size enabling them to access private market financing. The Ex-Im Bank does just that.”
Ex-Im’s critics don’t seem to grasp that the bank’s support is indispensable to many of these small businesses. Without Ex-Im guarantees, commercial banks won’t allow small businesses to use foreign receivables or inventory as collateral. Far from crowding out the private sector, Ex-Im guarantees let private banks extend loans and guarantees that they wouldn’t be able to make otherwise.
Take Fort Wayne-based Murray Equipment, Inc., which sells piston and rotary positive displacement flow meters through its Total Control Systems brand (TCS). Most of its competitors are large and have no difficulty securing export finance. “The question was how to meet our customer’s need to be able to purchase our product on credit terms,” says David Musselman, CFO. For this small company, the answer was Ex-Im credit insurance. Since it began using Ex-Im in 2001, the firm’s exports have grown to 50% of its total revenue.
Exports today support more than 30 jobs at Abro Industries, Inc. in South Bend — and 1,500 additional jobs at its various suppliers. Like Murray Equipment, Abro began by purchasing credit insurance in 2003 for its African business. Sales to Africa more than doubled to more than $20 million in just a few years. This opened the way for an Ex-Im working capital loan in 2009, and sales soared. President Peter Baranay credits Ex-Im: “Clearly we could not be doing what we’re doing today without Ex-Im Bank.”
Last but not least, there's Draper, Inc. a medium-sized company that uses Ex-Im. Draper sells a variety of products, including projection screens, solar control coverings, and gym equipment. The firm was introduced to Ex-Im in 2007, when one of its customers in Mexico couldn’t obtain financing on its own. Thanks to Ex-Im, Draper made a $50,000 sale it would not have made otherwise, and the sale opened the door to a host of export opportunities. Nate Lamar, International Regional Manager, recognizes the bank’s importance: “Without Ex-Im Bank, I know that many overseas customers very likely will not be able to do business with Draper.”
If Congress fails to reauthorize Ex-Im by September 30, the bank will be forced to shut its doors. For a host of small Indiana businesses, that will mean lost sales and lost jobs. It’s time for legislators to get to work and renew Ex-Im.
Editor’s note: Due to confidentiality concerns, one of the small business examples was removed.