Ex-Im Bank Chairman Hochberg's Annual Conference Welcome Address 2015
America's Choice: Engagement or Retreat
Chairman Fred P. Hochberg
Apr 23, 2015 – Washington DC
Good morning, and welcome once again to the 2015 Export-Import Bank Annual Conference.
On April 23rd, 1910—exactly 105 years ago today—Teddy Roosevelt traveled to Paris to deliver a message to the world about the character of the American people. Roosevelt had just finished his presidency, and the Sorbonne had invited him to reflect on his time in office, and speak about citizenship. They wanted to hear from him what he thought set Americans apart. And he delivered one of the most iconic speeches in our history—and one which I think perfectly captures the American spirit. He said:
It is not the critic who counts… The credit belongs to the person who is actually in the arena… Who strives valiantly… Who knows the triumph of high achievement, and who… if he fails, at least fails while daring greatly.
There's something uniquely American about risk-taking, about striving for new frontiers, about failing and getting up again—dusting yourself off and getting back in the saddle. Very few cultures value that like we do. And that is something that truly separates the American spirit from much of the world. To put it simply, what Teddy Roosevelt meant was that success belongs to those who show up—who aren't afraid to take on risks or step into the arena.
Look around the room. What do you see?
I see entrepreneurs. I see innovators. I see Main Street American business leaders, sitting side by side with the buyers who count on your quality goods and services. To borrow a phrase, I see job creators—lots of them. The thing about those pesky job creators is that they always show up. Every time I visit a small business that uses EXIM insurance to break into a new market overseas; every time I meet an entrepreneur who uses our working capital to hire more workers; every time I speak to a group like this, full of people who use EXIM products to take on foreign competitors and win… all I ever see are job creators.
That's who shows up. That's who's in the arena.
America faces a choice today: whether we'll continue to engage in the arena of global competition, or whether we'll retreat. It isn't easy going up against China, Russia, or anyone else to win export sales—and the jobs that come with them. You all know how tough it is out there.
If you're an American business looking to grow your overseas sales, you have to contend with a lot of uncertainty. The dollar has risen to new heights; the price of oil has dropped to startling lows. New multilateral institutions, such as the Asian Infrastructure Investment Bank, are forming. And not only could they tilt the competitive landscape—they could also further corrode transparency in global finance.
For U.S. firms, competition in worldwide markets has never been more intense. The nature of that competition has also changed fundamentally in recent decades. There's a persistent myth out there—a belief that a U.S. company simply goes head to head with a foreign rival, competing for sales solely on the merits of quality, innovation, and price. It's a romantic idea of how the world works—but you and I know that it's just not reality. The reality is a lot of hard-nosed competition, grueling hours, red eyes, and long nights in the office.
American workers produce the highest quality, most innovative goods and services in the world. They can step into the arena and compete with anyone—but they shouldn't have to compete against whole countries. But there are some 60 other versions of EXIM in countries around the world, and that number is growing. Many of them don't play by the same rules that we do. They're propping up their domestic exporters. They're offering bargain basement financing that often relegates free market factors like price and value to the sidelines.
More and more, U.S. companies aren't just competing against their counterparts in China, Japan, and elsewhere. They're forced to compete against 'China, Inc.'
Our foreign competitors, particularly those in Asia, are zealous advocates for their national champions—they are forceful and unrelenting in the global marketplace. EXIM is not like them. We don't want to be like them. We're capitalists! We don't take the place of the private sector. We simply provide a backstop for American companies when private financing is unavailable.
How do we do that? By reducing risk, we unleash opportunity.
What does that mean? Well, as many of you know, in the past I've talked about planes, trains, and automobiles—this year, I want to talk about fire trucks.
In 1926, Henry Ford had a conversation with a Chicago entrepreneur named William Stuart Darley. That conversation prompted Darley to transform his equipment company into a manufacturer of fire trucks. When Darley rolled out America's first commercial fire truck later that year—built on the chassis of a Model T—it marked a new chapter for a business that has remained productive and innovative to this very day.
After William Darley passed in 1935, his wife Mary took the reins. She ran the company for 40 years—raising a family and building on an iconic idea. Today, Darley still manufactures fire trucks and pumps—and, as the company points out, “after 100 years, you can still talk to a Darley.” So I did. In fact, I talked to three Darleys. I had the opportunity to meet the founder's grandsons—Peter, Paul, and Jeff—last summer. Jeff told me that buyers get to choose between 150 shades of red—that's even more shades than you'll find at Revlon. He also told me that it's a little lost on him, since he's colorblind. Jeff and his brothers lead the business these days, fulfilling orders for municipal fire departments and, increasingly, overseas buyers.
One of those buyers is Lagos, Nigeria, the largest city in Africa. Recently, their firefighting capacity had been in dire straits; they knew they needed to upgrade their fleet. That's how a city of more than 12 million turned to a town of fewer than 14,000—Chippewa Falls, Wisconsin, where Darley builds its trucks. For small, family-owned businesses like Darley, getting into the global arena is intimidating. Securing the financing necessary to win sales overseas isn't always possible. Private financing proved unavailable for the Lagos transaction, so Darley applied for financing from EXIM. We underwrote a $16 million loan to cover the sale of 32 firefighting vehicles as well as training.
We reduced the risk—the result? Darley unleashed opportunity.
Here's what opportunity looks like. The fire trucks will support 100 U.S. manufacturing jobs, while fortifying Lagos with quality, reliable equipment. Those 100 jobs could very easily have ended up in Jinan, China or Leonding, Austria—where Darley's competitors are located. I think we can all agree we'd rather have those jobs go to Chippewa Falls and other towns in Darley's supply chain. And even though Darley is a small business, 100 manufacturing jobs is big business when you're talking about a little town in Wisconsin. And today, 80 to 85 percent of Darley's exports are financed by EXIM. And that means more jobs—and more security for more American families. That's why Darley is receiving our sub-Saharan Africa exporter of the year award. Let's give them a round of applause.
Now, the opportunity we're unleashing isn't just the opportunity for one company to grow. The question is: will America seize the opportunity to continue to lead in the global economy. The global middle class is projected to grow by 200 million people each year for the next five years—that's the entire adult population of the United States being added, year after year. They're going to need smart highways, power plants, bridges, satellite communications, consumer goods—the demand will be unprecedented. Who is going to step into the arena to meet that demand? The rewards will be huge: a robust economy, a vibrant manufacturing sector, and, most importantly, hundreds of thousands of good-paying jobs.
America can't afford to sit this race out. We need to use every tool in our arsenal to make sure that U.S. companies are able to get in the arena—and win. EXIM is one of those tools. Trade Promotion Authority and trade agreements, such as the Trans-Pacific Partnership, are another. We cannot turn our back on American workers. We have a responsibility as a nation to break down every barrier we can so that our businesses can reach the global middle class. Because every sale an American firm loses out on means that good-paying jobs aren't going to Texas, California, or Chippewa Falls. Instead, they're slipping thousands of miles away.
At EXIM, our role is to support American exporters—but at our core, we're about U.S. jobs. These are private sector jobs, the fruit of free enterprise, evidence of America's ability to compete in the global marketplace. And we measure our success not just by the number of jobs, but by the families made stronger by each of them. How will America keep writing those stories in the coming age? We've talked about the export race ahead of us. We know that export jobs pay up to 18 percent more than others—making our progress real for more American families. We also know that, even as demand grows—for each sale, whether it's fire trucks or ice cream, jobs either come to America or they go elsewhere. It's a zero-sum game.
That's the choice being made here—a fact that some politicians seem to forget. And who feels the impact of that choice most of all? Small businesses. And they make up about 90 percent of EXIM's customer base.
More and more, small companies are making exports a part of their DNA—they know the opportunity is out there. But many of them don't have access to the financing they need to compete globally. EXIM provides that access when there's a gap in the private sector. People like the Darleys—they aren't well-connected. They certainly aren't "crony capitalists". They're not interested in handouts—they pay to use our financing. Like all of our customers, they are entrepreneurs and innovators who want to sell more American-made goods and services.
Gabriel Ojeda is one of those entrepreneurs. Gabriel was born in Mexico City; he became a citizen in 2008. We met last summer in Mesquite, Texas. He runs a small concrete additive business out of a modest warehouse just east of Dallas with his wife, Jane, and their son, David. It's called Fritz-Pak, and they manufacture 40 different specialty products—things like plasters you'd find in swimming pools or sports stadiums. If you've gone to watch the Cowboys or Colts play, you've seen some of their handiwork.
Gabriel epitomized the American Dream. But just as he was preparing to move his company into a new facility, the Great Recession hit. Gabriel was forced to lay off three of his 14 employees—people who were like family to him. He even contemplated selling off the business. That's when they came up with the idea of going global. But when your typical export sale is 10 or 12 thousand dollars, your local bank isn't always interested in financing you. That's the problem the Ojedas ran into. So when private financing proved unavailable, they turned to EXIM for a reliable insurance package to protect their overseas sales. The result? Exports now account for about 35 percent of their business—and now it's not just the NFL whose stadiums they're helping to build. It's World Cup stadiums in Brazil and Olympic stadiums in Vancouver.
The best part? That export growth allowed Gabriel to rehire those three laid off employees: Delvin, Pam, and Andre. They're back in the Fritz-Pak family, earning a paycheck and helping to create even more great exports. It's a testament to the groundwork laid by the Obama Administration, coupled with the hard work and ingenuity of the American private sector that 12 million jobs have been added over the last five years—and that almost 600,000 new jobs have been added since January alone. And at EXIM, we're doing our part, supporting 164,000 jobs last year.
But I used to run a family business—in fact, my mother, Lillian Vernon, and my brother, David, are here today. So I know that jobs are more than simply a number. Yet as a country, we often don't talk about what those jobs mean on a personal level to our friends and neighbors, hardworking Americans like Delvin, Pam, and Andre. Lost in those big numbers is what a job really means for the person who has one. Having a good job is a tremendous source of pride and self-esteem. It brings added meaning and purpose to your life. It's a big part of your identity—how often are we asked: "What do you do?" "Where do you work?"
And that's to say nothing of what a job means for your financial security. Being able to provide for and protect your family is one of the most fundamental human needs. A good job makes it easier to pay the mortgage, or buy groceries, or make a tuition payment for your kid to go to college. It makes your family stronger, your neighborhood brighter, and your local economy more resilient.
Fritz-Pak is but one example of what we strive to make possible at EXIM. But even though the U.S. has added jobs at an historic rate, there are still too many Americans for whom meaningful, good-paying work is out of reach. U.S. small businesses still struggle to secure competitive financing. China and other challengers are still doing whatever they can to beat American companies in global markets.
I know you've just finished breakfast—but let's not ignore the fact that our competitors are trying to eat your lunch. That's what's happening today. So with all that happening today, I want to close by talking about tomorrow. And when I say ‘today' and ‘tomorrow,' I'm not just talking about the conference. Although I do encourage you to engage with our speakers and panels, meet each other, and strike up a deal or two with buyers who are here from nearly three dozen countries.
What I'm talking about is how we as a country succeed in tomorrow's economy. And what's required for America to succeed in tomorrow's economy—good-paying jobs, global leadership, resilient small businesses… all are made stronger by EXIM. The years ahead are critical. Whole economies will succeed or stagnate based on their ability to reach customers beyond their borders. And while EXIM was created more than 80 years ago, we weren't built for the needs of yesterday. We were built for the needs of tomorrow.
For all that America has accomplished, we still face the same choice over and over again—the same choice we faced in the time of Teddy Roosevelt, the same choice we face today, the same choice we'll face tomorrow. And that choice is whether we will keep climbing back into the arena. It's a choice about whether or not we are going to show up.
There's a struggle ahead of us—for the durable economic foundation, for global leadership, for the countless jobs that are up for grabs. But we have to keep entering the arena. We have to show up.
At EXIM, we're proud of our past—supporting more than 1.3 million U.S. jobs since 2009; generating a surplus of nearly $7 billion for taxpayers over the last two decades. But we also know that American businesses and workers are counting on us to be there alongside them tomorrow. So we are going to keep fighting, every single day, to reduce risk and unleash opportunity for the small businesses, the job-seekers, and the entrepreneurs who rely on us for certainty and support.
It's a fight we look forward to—and it's one that America can and must win.
Thank you, and enjoy the conference.