Coalition for Employment Through Exports
As Prepared for Delivery
Fred P. Hochberg
Feb 01, 2011 – Washington, D.C.
Thank you for the opportunity to talk a little about some of the exciting initiatives at Ex- Im—and the trends and opportunities we are seeing in the global marketplace. I also want to personally thank John Hardy and Nichole Westin at CEE. CEE is an invaluable resource for our staff at the bank—and they play a vital role in educating elected officials and thought leaders about how we can best grow American exports. In fact, I first spoke at a CEE event in November of 2009, just a few months on the job. So it is great to be back. And thank you for the opportunity. Bullish on American Business Let me start today by saying I am bullish. I am bullish on American business, on the American worker, and on our ability to reboot, rebuild and reinvigorate America's economy so that it can thrive in the 21st century global marketplace. I am bullish on what President Obama described in his State of the Union as our game plan to Win the Future. One of my favorite parts of this job is that everyday I have the opportunity to meet with women and men who are building and running innovative American companies. They are the secret weapon in our winning game plan. Yesterday I hosted a roundtable with business leaders in New Hampshire. And hopefully, weather permitting, I am heading tomorrow to Iowa and Illinois to visit several companies. These companies are creating cutting edge products. Offering top-notch service. And cultivating talented managers and frontline workers. It is impossible to come away from these conversations anything but inspired and optimistic about our future. And our long-term competitiveness. And it is not just large corporations. Yesterday, I visited Segway in New Hampshire The company does about $50 million in sales and exports about 65% of their products.
While they are not a client yet, we discussed a range of ways Ex-Im can help grow their overseas sales. Frankly, I could go on and on talking about innovative American companies—both large and small—that are selling cutting-edge products. And I know you will be hearing from Charles Tansey and Craig O'Connor at the Bank about our Global Access for Small Business Initiative and our renewable energy work. But my point is: Our nation's entrepreneurial spirit is as strong as ever. The quality of American made products remains second to none. And the President is absolutely right---there is no one who can out-compete, out-innovate or out-build American companies and American workers. I see it when I tour your plants—and meet with your senior management. I see it on the shop floor of your factories. I see it in the ways you are investing in transportation and infrastructure and energy innovation. Take GE's locomotive plant in Erie, Pennsylvania. Management and workers at this plant are proving that when you combine high-quality craftsmanship with competitive financing, American business can compete—and win—against any country and in every corner of the world. As you may have read, GE recently challenged a Chinese competitor for a contract to build 150 diesel-electric locomotives for sale to Pakistan. The sale is valued at $477 million. A central reason GE could submit a strong bid was they were able to match China's financing for the project. The U.S. government, led by our bank, stepped up to provide the financing and ensure that GE and its workers could compete on the price and quality of its locomotives alone—and not be undercut by unfair trade finance policies. This project, if approved, would support 700 U.S. jobs. In addition, these locomotive transactions create a stream of additional employment opportunities over time. The ability of American business to win more of these types of projects will be critical in shaping our economic future and defining our role on the global stage. And it will be a key focus and priority for our Bank. We never want you to walk away from a transaction because China is bidding or because you think you will be facing unfair financing.
Come to us. I can't promise you that we can make it work every time. But we will do everything in our power to make sure that financing does not get in the way of your sale. Because there is one thing that is abundantly clear. And I see every where I travel: The world wants what your companies make. And this Administration is committed to helping you make those sales happen. We are committed to providing you the competitive edge you need to edge out the competition. Looking around this room. I could cite example after example of how each of your companies is building the types of high-quality products—and offering world-class services—that emerging economies want—and need. Look at Boeing. Boeing is revolutionizing air travel in emerging economies. They are doing it by providing the types of aircraft that start-up discount carriers need to expand their operations and update their fleets. These are airlines like Lion Air, GOL, Rynair. We work with these airlines to finance their aircraft purchases. And as you learn more about their business, you see how they are modeled after Southwest Airlines success. So for these companies, the United States is not only providing high-quality, U.S.-made airplanes, but we are also exporting one of the most successful aviation business models in the world. One that is transforming air travel in developing economies—and providing a boost to both business and tourism. It also creates good jobs in the U.S. and in emerging economies. And it makes air travel a viable and affordable option for people in emerging countries—Allowing companies and families to reach each other like never before. This really is emblematic of what we do—and how we work. Not only in aviation, but in power, transportation and telecommunications. Frequently, we enter a new market through airline financing and then expand our portfolio into infrastructure and other projects. From there, we begin working with large companies like Caterpillar or Siemens or CNH. These companies are able to clear the path so that smaller firms and small businesses can ultimately follow suit—and build their presence in key export markets. Your companies really are trailblazers when it comes to opening up—and expanding— critical export markets. It is something I believe you deserve credit for - and it is vital to the long-term growth of the American economy and the overall competitiveness of American business.
Supply Chain Finance For every large exporter, there are hundreds of smaller American suppliers who support your export sales. In fact, last year, U.S.-based corporate operations purchased about $1.5 trillion in goods and services from U.S. small businesses. That is $1.5 trillion. It is why at Ex-Im we created a new supply-chain financing product, which increases liquidity for small business suppliers that sell to U.S. exporters. Our first transaction using this new product was a 90 percent guarantee to support up to $100 million of liquidity from Citibank to suppliers of Case New Holland. Going forward, we will be working closely with the National Association of Manufacturers to make sure more small- and mid-size manufacturers have access to this important product. We are also partnering with the Chamber of Commerce and several private sector banks so we can reach more customers in more communities. Government at the Speed of Business My goal at Ex-Im is to ensure that our bank moves at the speed of business. It is to ensure that when your companies compete for projects around the globe—that financing never impedes your ability to close a sale. That you have a competitive edge. We are doing it by streamlining our processes. And cutting the amount of time it takes to approve transactions. Our goal is to get to YES quicker. So you can close deals quicker. Our transaction time is down about a third. But we have further to go. And here is how I know this streamlining is having tangible results - and ensuring that we are moving at the speed of business. I recently had a call with the CEO of a major U.S. company. He told me that they were starting to use Ex-Im products again---after a three or four year hiatus. He said that our deal teams were able to give his company the financing terms they needed to compete against their global competition - and we were able to get them answers quickly.
That in a nut shell is what we are trying to achieve: Government at the speed of global business. Creative. Innovative. And committed to making the sale happen. That is the competitive edge that Ex-Im provides. And if you take away one thing from today's presentation, I hope it is that point. A Record Year As a long-time businessman, I measure our success the same way I did when I was in the private sector---with report cards and benchmarks. We are a small agency doing big things. For Fiscal Year 2010, Ex-Im financing totaled a record $24.5 billion, up 70 percent from two years ago. Our work supported an estimated $33 billion in export sales, and 227,000 U.S. jobs. And our projections for 2011 are looking strong. Our first quarter numbers show we are off to a solid start for the year. And nationally exports are up 16.8 percent---putting us on track to meet the President's goal of doubling exports in five years. And one thing I always like to note, particularly with reauthorization coming up, is that we do our work at no cost to the American taxpayer. We are a self-sustaining agency. In fact, we have actually earned (above all cost and loss reserves) $5 billion for taxpayers since 1992. Over the course of the last two years, we stepped into the void during challenging economic times to ensure that U.S. companies—large and small—had access to capital and a competitive edge in the global marketplace. And we are looking to build on that success in the current Fiscal Year. We are doing it by targeting our work where it can have the most impact. Infrastructure One area where we see enormous opportunity is in infrastructure. The world is rebuilding itself, particularly in emerging economies. And we want to ensure that American companies and American workers are doing the building.
With global infrastructure investments, including rail, roads and energy, projected to rise as much as 20 percent to $2.1 trillion annually in the next 10 years from the previous decade, there are enormous opportunities available to American companies. For example, India alone is expected to invest $1 trillion on infrastructure between 2012 and 2017—twice the previous five years. Whenever I travel to emerging economies— whether it is India, Indonesia, Brazil or South Africa—I hear the same thing from local officials and business leaders: They want to do more business with American companies. They appreciate your transparency and straight forward approach. They admire the highquality craftsmanship of your products. And the service you provide. But they say when it comes time to consider bids, American companies are often nowhere to be found. They are not showing up. And they are leaving billions and billions of dollars worth of potential sales on the table. Jeff Immelt emphasized this point in his recent op-ed in the Washington Post. Currently, the United States ranks lowest among the world's largest manufacturing nations in the ratio of domestically produced goods sold overseas, better known as export intensity. When the National Association of Manufacturers looked at export intensity: The U.S. ranked 15th among the 15 largest manufacturing countries. Behind Spain, Italy, Sweden even Thailand. This has to change. And it is what Ex-Im and the Obama Administration is focused on. But we need your help. Think about how important these sales could be to your companies, to your shareholders, to our economy - and to our efforts to create good private sector jobs. As someone whose career I have followed for nearly thirty years once said: Eighty percent of life is just showing up. That man is Woody Allen. And his point is spot on. More U.S. companies need to start showing up for projects if America is to remain successful. So let me just close with this point. We want to ensure that you have all of the tools, resources and relationships you need to capitalize on export opportunities across the globe. We want ensure that more U.S. companies—big and small—are positioned to compete for these projects, so we can build the type of export powerhouse that is at the heart of President Obama's plan to double U.S. exports in five years.
To do that we must continue to invest in innovation. In both the public and private sector. We must continue to educate and train the next generation of American workers. So that you have the access to the human capital needed to grow your businesses. We must work together to make the U.S. the best place in the world to run a company. Where the talent and creativity and ingenuity of your employees can flourish. We must create a climate where U.S. companies can be competitive in markets throughout the world. Where you have the competitive edge you need. Like GE in Pakistan. Boeing in emerging markets. John Deere in Eastern Europe. I could go on and on. Our goal at Ex-Im is to give you that competitive edge----and then get out of the way. And let you do what you do best: Developing, building and selling the finest products and services in the world. We cannot grow our economy without growing our export sales. And we cannot grow export sales without the work that all of you do each and every day. Thank you.