Ex-Im future brightens with discharge petition
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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