A bank you’ve probably never heard of holds the key to Boeing’s future in Washington, and Congress is debating whether to shut it down.
It’s called the Export-Import Bank.
It’s been around for 80 years, and it helps foreign buyers purchase U.S. goods and services. In Boeing’s case, it helps airlines secure financing to buy its planes.
“It provides loan guarantees to foreign airlines that want to buy Boeing airplanes,” Boeing’s Tim Neale said. “With the guarantees, the airlines can then go to a commercial lender and get a loan. It’s very important to a certain subset of our customers.”
Fifteen percent of Boeing’s foreign sales in 2013 involved financing from the Ex-Im Bank. In 2012, it accounted for 30 percent.
Some Republican members of Congress are trying to shut the bank down. They consider it corporate welfare and unnecessary.
But what happens to Boeing if this bank shuts down? The president of the bank, Fred Hochberg, told a House Committee Wednesday it would be devastating to U.S. manufacturers.
“We would be unilaterally disarming and putting the sale of Boeing aircrafts and the thousands upon thousands of jobs that are generated from that manufacturer at risk,” Hochberg said. “It’s as though the Honda dealer offers full financing and the Toyota dealer says cash only. There will be a tilt towards that vendor that provides financing.”
Neale said that would put Boeing at a huge disadvantage because its rival Airbus gets plenty of government-sponsored help in financing its deals.
“We will be in jeopardy of losing sales and market share if the bank goes away,” he said. “Our chief competitor, Airbus, has the support of three export credit agencies in Europe.”
Neale said that can’t happen for Boeing to stay competitive. “Since we have emerging competitors in places like China, you do not want to be losing market share,” he said. “We don’t want to be number two. We certainly don’t want to be number three. It’s a very slippery slope.”
And it’s not just Boeing. Every U.S. manufacturer who does business outside the country would be impacted if the Ex-Im Bank closes, and nowhere would that impact be felt stronger than in Washington.
There are 183 companies in our state that have lined up $111 billion worth of financing for their foreign customers in the last seven years. That’s nearly half of the financing the Ex-Im Bank has secured over that time.
That’s why Washington’s Congressional delegation is pushing so hard to keep the bank open. Senator Maria Cantwell spoke on the Senate floor about this issue on Wednesday.
“Without the Export-Import Bank, we are going to be hobbling businesses across the United States,” she said.
The bank is scheduled to close October 1.