For a fair fight, bring back Ex-Im

Competing in the global marketplace is a slugfest and by allowing the Export-Import (Ex-Im) Bank’s charter to expire, some in Congress have American businesses fighting with one hand tied behind their backs.

The Ex-Im Bank has served a critical role for exporters in the United States for more than eighty years – providing its customers important financing that is unavailable in the commercial market. It is the rare government agency that actually returns money to the Treasury, to the tune of $675 million in 2014.

{mosads}Unfortunately, our country is now facing the sober reality of being the only industrialized nation in the world without an export credit agency to support both domestic jobs and exports.  This is not good for the American economy – or American workers – in the short term or the long run.

Companies from all around the world are lined up to secure contracts that, with all things being equal, would be won by American companies. Each day that United States exporters compete without Ex-Im they risk losing opportunities, unable to bid on contracts despite having the best products and most productive workforce.

How does Caterpillar know? Let us tell you a success story – one that supported American jobs – a story that never would have happened without the Ex-Im Bank.

In late 2013, the Ex-Im Bank authorized a $694.4 million loan to Roy Hill Holdings of Australia for its iron ore mine in the Pilbara region of Western Australia. That approval came after years of hard work by Caterpillar employees and officials at Ex-Im Bank to earn this business. The Ex-Im Bank only supported the Roy Hill loan after an independent firm completed an economic impact study confirming there was a net positive impact on the American economy.  

The Roy Hill project is a multi-billion dollar operation with diverse financing sources, as most business ventures of that magnitude require. A key need of the customer was that the U.S. Ex-Im Bank provided financing. In short, Caterpillar would not have had a chance to compete for this business without our customer receiving financing from the Ex-Im Bank.  

Nearly a dozen manufacturers in U.S. benefit from the Ex-Im Bank financing to Roy Hill and its iron ore mine.  Each of these exporters has thousands of suppliers across the United States that indirectly benefit as well. According to Bank estimates based on data from the U.S. Departments of Commerce and Labor, the credit will support 3,400 American jobs – jobs that help build and grow local economies around the country.

The positive impact for Caterpillar alone stretches across several states. To date, Roy Hill has taken delivery of approximately twenty Caterpillar mining machines built in Illinois and Arkansas. Major components of those machines come from our facilities in North Carolina and Indiana. And Caterpillar employees at our Global Mining offices in Wisconsin have been part of this project from day one.

Nearly fifty more machines are on order with potentially another forty as the project moves into full production. All of this has happened and the mine has yet to ship any ore.

Critics of Ex-Im have attacked the Bank as unnecessary, but that simply is not true. Our customers depend on this credit to fill gaps in their financing needs that cannot be met by commercial banks alone. Commercial banks lend to our customers, but in certain markets there are commercial and regulatory limits on how much commercial lenders can do.  That is when Ex-Im Bank helps companies close the deal.

The current lapse in the Ex-Im charter has created a vacuum – one other nations and our foreign competitors are eager to fill. Already, China and India are offering three times the level of financing the United States used to provide. Without Ex-Im financing, many customers abroad are now forced to look to our foreign competitors backed by their own export credit agencies to purchase products.

To opponents of the Bank, we say this:  If the Ex-Im Bank had not provided financing, it is certain that the Roy Hill project would have gone forward – but with Caterpillar’s foreign competitors reaping the rewards of growth and job creation.

Why would we gift wrap these important opportunities for our foreign competitors?  The Ex-Im Bank keeps American jobs at the forefront in an intensely competitive global economy.

Failing to reauthorize the Ex-Im Bank is akin to unilateral disarmament. In doing so, we’re throwing a fight we could win every time. Congress must reopen the Bank and allow American companies to answer the bell – the economic reward for America’s businesses, communities and workers is well worth it.

Karol is vice president of Global Governmental and Corporate Affairs for Caterpillar Inc.