WASHINGTON, Oct. 21, 2015 - Opponents of the Export-Import Bank have directed much of their criticism of the agency at the help it has given corporate giants like Boeing Co. But some much smaller companies are feeling the pinch, too, because of the lapse in the bank’s authorization.
Employee-owned Air Tractor Inc., which manufactures agricultural and firefighting aircraft in the West Texas town of Olney, is at risk of losing a quarter of its business unless Congress agrees to revive the bank.
Half of Air Tractor’s sales are overseas and half of those have required Export-Import credit insurance in order for the company to secure private financing, says Tyler Schroeder, a financial analyst for the company. Without the bank, Air Tractor may have to lay off at least 65 of its 270 workers, he says.
Ex-Im’s supporters in Congress believe they’re on the verge of forcing a vote in the House to reauthorize the bank. Some 218 House members have signed onto a discharge petition needed to bypass the Financial Services Committee and put the reauthorization issue on the House floor - 218 being a majority of the House. More than 40 Republicans, led by Stephen Fincher of Tennessee, signed the petition.
House Speaker John Boehner said Tuesday that the House will vote on the Ex-Im reauthorization next week. Senate Republican leaders say they won’t take up a standalone bill, preferring instead to have it rolled into a pending highway bill, and that appears to be the likely path. Former House Agriculture Chairman Frank Lucas, a major Ex-Im supporter, says a strong House vote next week would make a compelling case for dropping it into a surface transportation authorization bill that the House Transportation and Infrastructure Committee is scheduled to mark up on Thursday.
Ex-Im has broad support in the Senate. Similar legislation received 64 votes as an amendment to a defense bill.
Republicans from agricultural districts have been sharply divided over Ex-Im. While Lucas and Fincher, who is a farmer and also an Agriculture Committee member, back the bank, Texas Rep. Randy Neugebauer, who represents Olney, hasn’t been persuaded by Air Tractor and remains a staunch opponent of reauthorization.
Neugebauer, who is a senior member of both the Agriculture and Financial Services committees, believes the private sector will pick up Ex-Im’s business, but that’s not the case when it comes to Air Tractor and companies like it, according to Schroeder.
Air Tractor finances its sales to Brazil and other countries and then sells the paper to a private lender, Wells Fargo. But Wells Fargo won’t accept any default risk, so Air Tractor either has to find an insurer or take on the risk itself, or a combination of the two. Until Ex-Im’s authority lapsed July 1, Air Tractor could rely on Ex-Im to cover the risk, in combination with Economic
Development Canada, Ex-Im’s Canadian counterpart. (The engines are made in Canada, so Ex-Im can’t cover that portion of the sale.)
After Ex-Im lapsed, Air Tractor turned to a private insurer but it only covered 55 to 60 percent, leaving the firm to keep the rest on its books. That’s only a “very, very short-term solution,” said Schroeder, because Air Tractor isn’t big enough to absorb the risk on more than a few sales.
Air Tractor sold 30 aircraft to South American buyers last year using Ex-Im insurance, but only completed two deals before the lapse in the bank’s authority this year. “As for the future, 2016 is scary for us,” Schroeder says. “If we don’t have Ex-Im Bank … I can’t guarantee you that we’ll sell any aircraft into Brazil or any aircraft into South America.”
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