AIA Board of Governors Meeting
As prepared for delivery
Chairman Fred P. Hochberg
May 22, 2014 – Williamsburg, VA
Good afternoon. Thank you, Marion, for that introduction—and thank you all for being here today.
I want to begin by reading a letter from the President.
And I quote: “I have signed H.R. 5548, the Export-Import Bank Act… which extends the Bank's charter for 6 more years. This sends an important signal to both our exporting community and foreign suppliers that American exporters will continue to be able to compete vigorously for business throughout the world…
This authority will give the United States needed leverage for use in negotiations to eliminate predatory financing practices whereby countries mix official export financing with concessional foreign aid in an effort to undercut bids on major overseas projects.”
This rather flattering letter is signed by the President of the United States. But when I looked at it carefully, I noticed something interesting about it: it's dated October 15th, 1986. And the president who wrote it is Ronald Reagan.
Just a little food for thought for some of the folks who might be on the fence when it comes to Ex-Im and our role in promoting a pro-growth agenda.
Now, before I say a lot of flattering things about the companies you all represent, I'm going to start by bringing you all back down to Earth.
Because there's a company out there—an American small business—that is outdoing all of you. In fact, they manufacture and sell more airplanes than Airbus, Boeing, Embraer, and Bombardier combined. And they sell their planes all across the globe.
With sales of 25 thousand planes last year, Pacific Miniatures—or PacMin—is a family business located about 10 minutes north of Anaheim, California that produces planes like this one.
You might be familiar with their products. You'll find them in airline and travel offices worldwide. They've also been an Ex-Im customer since 2005, and today more than 35 percent of their sales are exports.
So while you all represent successful businesses, only PacMin can truly be described as a model aerospace company.
But PacMin is also a great example of the breadth of our work at Ex-Im.
As you all know, our mission is to equip American exporters—both the large and the very, very small—with the tools they need to venture out to new frontiers, and to create new jobs here at home.
We fill in the financing gaps when private banks are unable or unwilling to offer adequate support. And by breaking down barriers to financing, we level the playing field for U.S. businesses as they face off against stiff foreign competition.
Of course, if you work in the aerospace sector, you know a thing or two about stiff foreign competition. You face it each and every day.
Our business is making sure that your products—American-made products—have the opportunity to succeed on their merits against that competition. Of course, we're prohibited from supporting military projects. But many of you who work in the defense industry are moving more and more into the commercial aerospace sector.
And we've been standing alongside you for almost as long as that industry has existed. In fact, our earliest aerospace deals date back to the mid-1940s, when we financed the sale of U.S.-built planes to several Latin American countries.
Since that time, as the American aerospace industry has ascended to greater and greater heights, our support has taken off in tandem with your growth. Let me give you a recent example of what that looks like.
A little over two years ago, Ex-Im set an ambitious goal: to provide $1 billion in financing support to producers of American-made business aircraft and helicopters by the end of 2014. And in February—ten months ahead of schedule—I had the opportunity to visit Gulfstream headquarters in Savannah and announce that we had met that goal.
The transaction that put us over the top? It's financing the sale of eight Gulfstream aircraft to a Chinese leasing company. Yes, China is buying American. And from what I heard on my recent tour of Gulfstream, more is on the way—a lot more.
The billion dollars in business aircraft and helicopter financing we've completed since 2012 is a nice number—and it was hard-earned. But at Ex-Im, we don't measure our progress just by the dollar value of the transactions we authorize.
We measure it by the lives changed—and the communities transformed—as a result of the global success of vital U.S. companies.
So the most important thing about that Gulfstream transaction is that it's supporting 2,100 quality American jobs in Savannah—and at suppliers throughout the country. Of course, that's on top of the thousands of other American aerospace jobs that our $1 billion in financing represents.
We've got critics out there who like to derisively refer to us as the ‘bank of Boeing.' To that I say: we're the bank of any eligible company that wants to sell more American products and add more American jobs.
We're definitely the bank of small businesses in the heart of hundreds of American communities—including many aerospace suppliers… Places where the benefits of some of our largest deals echo the loudest and longest.
And you know what? We're also the bank of Gulfstream.
They've tripled their international fleet in the last decade, and since 2006 they've added more than 4,000 new jobs in Savannah.
We're the bank of SpaceX. Eight years ago, SpaceX was a small business with big ideas. But once they got the financing support they needed to compete on a level playing field, those innovative ideas turned into realities. And that growth has spawned 4,000 quality American jobs.
We're the bank of Air Tractor, a small business in Olney, Texas. Before partnering with Ex-Im, they exported about ten percent of their crop dusters and firefighting planes—today, it's more than half. And that growth has empowered them to add more than 100 middle class jobs in North Texas. That makes a huge difference in a community of 3,000 people—for a town with two traffic lights and one Dairy Queen, Air Tractor is big business.
And of course, we're the bank of Pacific Miniatures.
We're proud to support an essential American industry—from the tiniest aviation accessories to the most advanced satellites; from the smallest companies to the largest.
And we're prouder still that our aerospace authorizations have supported more than 100,000 quality, lasting jobs in communities across the country—just over the last two years alone.
Let me say that again: 100,000 jobs.
Of course, America's continued success in the aerospace sector will depend on more than just what happens here in America. So I'd like to take just a moment to talk about a couple of the most important global trends coming our way.
First, we're witnessing the emergence of capital markets as a funding source for aerospace transactions. In fact, in the last five years, more than one-third of our long-term aircraft transactions have been done in capital markets. And pretty soon, we'll be looking to capital markets to finance satellite deals as well. So this trend is already well underway.
Why? Basel III and other banking reforms are changing the face of how exports and trade are financed.
The truth is, the banking market has changed over the last five years in ways that nobody could have predicted. The days of banks doing ten- or twelve-year loans—the kind of long-term financing necessary to make many aerospace projects possible—those days are over.
And both the private sector and ECAs are increasingly responding to that new reality by opening up more sources of capital—frequently at reduced costs. As the world continues to adapt, capital markets are only going to grow more and more relevant as a vehicle for long-term financing.
Second, we all know that the landscape is changing—and it's bringing more and more serious challengers into the global arena. China and Japan are building planes to compete. France and Russia have their eyes set on leading on the satellite industry.
They still can't match America on quality or innovation—but what they can do is use aggressive financing tactics to win deals against U.S. exporters.
Every one of our competitors has their own version of Ex-Im… Only their export credit agencies are frequently not bound by the same accountability standards that we are. They don't have to conduct economic impact analyses. They don't have to be as transparent. And they certainly don't have to fight for their lives in Congress every few years.
We want to be held to the highest of standards. It's how we ensure that we continue to serve the American people responsibly. But it also creates a reality in which other countries can potentially drum up financing terms that give their national industries an advantage over American-made products.
Today, most aerospace competition is centered around us, Europe, Canada, and Brazil—all of whom generally play by the rules. But more and more countries are getting into the act. And they're bringing more than just product competition. They're bringing some of the most aggressive financing the global aerospace market has ever seen.
Despite this trend, U.S. companies are continuing to excel in the global marketplace. Of course, the reason for that is simple: the American aerospace industry produces some of the best, most sophisticated products in the world.
So when GOL in Brazil wants to ensure that their engines are maintained at the highest quality, where do they go? They go to Delta TechOps in Atlanta—to the tune of 400 American jobs throughout the supply chain.
When Hong Kong wants to expand their telecommunications capacity, where do they look? They look to Space Systems/Loral—which just added 600 new jobs for engineers, technicians, and other skilled employees.
When Kenya Airways wants to expand their fleet, what do they buy? They buy Boeing 777s. And, by the way, Kenya Airways happens to be Ex-Im Bank's largest overseas buyer so far this year. That's right—Kenya Airways is our largest client for 2014.
Let's not forget that we have the most important advantage of all. The world still demands products stamped “made in the U.S.A.”
That advantage is stronger than the disadvantages we face from the rise of unregulated financing worldwide. It's stronger for now. But the gap is narrowing.
The private sector does a terrific job of financing this industry, but the truth is, they can't do it alone. That's why FDR created Ex-Im in 1934. And, this year, that's why Ex-Im's reauthorization is so important.
We've been at your side essentially since the birth of your industry. And we want to stay there—supporting your success in establishing new markets… Introducing new technology to the world… Proving again and again that the sky is not the limit… And, most importantly, supporting job growth in cities and towns across America.
The problem is, not everyone understands the value Ex-Im provides. That's despite our 80-year track record, despite supporting more than a million U.S. jobs over the last four years, and despite the fact that we run a surplus for the American taxpayers.
In fact, we returned a surplus of one billion, 57 million dollars to the Treasury last year. I was so proud of that number—one-zero-five-seven—I made it the password to my iPhone. I hope you'll keep that just between us.
This fall, our charter is set to expire. And unless Congress acts, we'll be forced to close our doors on October 1st. The President stands strongly behind your industry; he's asked for Ex-Im to be reauthorized for five years, with a $160 billion lending cap. Those five years would deliver added confidence to countless American exporters—and certainty to your potential buyers overseas.
Delivering that confidence to U.S. exporters shouldn't be controversial.
Supporting American job growth shouldn't be controversial.
Keeping America competitive in the global economy shouldn't be controversial.
Our critics will tell you that Ex-Im is all about picking winners and losers. Well, a look at our record will show you that the only winner we pick, every single time, is the American worker.
If you make it in America—if you put Americans to work—we want to put you in a position to win deals against foreign competitors. We want your companies—all of your companies—to have the financing support you need to keep thriving in an increasingly competitive environment.
You represent our most robust industry. And you can lend your voices to the critical conversation surrounding Ex-Im—so that we can continue to level the global playing field for you and your employees.
And that's not all you can do to ensure that America continues to lead: you can keep innovating.
We'll take care of the financing. You come up with the next breakthrough idea. Maybe that will be more fuel-efficient engines. Maybe it will be reusable rockets. I can't tell you what the next great aerospace innovation is going to be—although some of you in this room probably have an idea… or two, or three.
But I can tell you that Ex-Im intends to be there—as we have for so many decades—standing right alongside the innovators who are ensuring that America continues to succeed.
We can't win that fight alone. But I plan to fight to make sure we're still there for you for many years to come.
We want to equip you with the financing freedom to build the next great American jet—or even the next great model jet—to conceive of the next great innovation in rocketry, to hire the next American worker, and to ensure that America continues to lead the world as this industry climbs to even greater and greater heights.