International Aviation Club of Washington DC
Think about this number - $100 billion.That's the estimated sales this year of new aircraft worldwide.It's a big number.
When I became Chairman of the Export-Import Bank three years ago, annual commercial aircraft sales were $75 billion. Three years from now, sales are projected to be over $120 billion worldwide.
When I think about the $100 billion in aircraft sales and the jobs they support - the jobs that are stake - I think about how we at Ex-Im Bank can help ensure that those jobs are located right here in the United States.
There is a worldwide air transportation boom underway. More people are taking more aircraft on more trips - and more goods are moving by air - than ever before.
This underscores the importance of aviation for moving passengers and cargo as the critical link in global commerce and infrastructure.
When you put aside wheat, soybeans and other commodities we sell overseas, aerospace goods and services are America's leading export - large commercial aircraft, business jets, general aviation planes and helicopters, communications satellites and much more.
They require the highest level of innovation and engineering - which we have in abundance.These exports keep us a world leader and provide millions of good jobs from coast to coast.
Boeing alone directly employs 161,000 workers in every state and 1.3 million supplier-related U. S. workers, many of them in small businesses.Overall, almost 10 million Americans work in some aspect of this remarkable industry - producing over five percent of our GDP.
They're at work building the world's best equipment, operating passenger and cargo services, staffing some of the world's largest airports, providing needed support activities and skills training, and a host of other enterprises that keep the industry flying.
This is all the more remarkable given the intense competition from other countries eager to build their own aircraft and increase their share of this growing export market.
In recent years Boeing and Airbus have dominated the large aircraft market - with Bombardier and Embraer edging their way into it - and newcomers in Japan, China and Russia are working hard to develop and manufacture their own commercial aircrafts.
But America continues to win in the global aviation market because of what you do so well - and for what the Export-Import Bank helps you achieve by financing exports that are hard to secure conventional bank financing for - or exports to countries that are hard to finance - and sometimes both.
We often finance products that require 10 year, 12 year, 14 year, 18 year terms - too long for commercial banks now reluctant to go beyond five or, at most, seven year terms.These longer terms are crucial to finance aircraft, nuclear power plants, communication satellites, and complex infrastructure projects - sales that are vital to our export industries.
When lack of financing would stymie a good, solid export transaction - with hurdles like the pullback by banks slammed by the world financial crisis and more stringent regulations like Basel III - we will work with you to overcome these hurdles.
That's why we added new financing options to include the capital market facilities to expand the sources of capital we can provide for exports. For example, this week we issued our 50th Ex-Im guaranteed bond - for a three-year total of over $8 billion sold to investors.
As a result, Ex-Im Bank today has a more vital role than ever to ensure that capital goods keep flowing to help move the global economy forward.
With the decline in what was the global economic engine - consumer spending, primarily by Americans - the demand for infrastructure worldwide can become a more reliable and sustainable engine for global economic growth.
That's one reason I am confident about the U.S. and the global economy.
We've been doing our part since FDR and Congress created the Export-Import Bank in 1934.In our early years, we financed highways in Latin America and Burma, railroads in China and India, and airlines and airports worldwide.Our first aviation transaction was for Pan-Am in Latin America in 1940.
Eight decades later, we're still responding to our nation's economic needs.
As we reported just two weeks ago, all transactions by the Ex-Im Bank in fiscal year 2012 topped $35.8 billion - two and a half times higher than the $14.4 billion annual total just four years earlier.
Our total outstanding exposure topped $106billion last month.With the reauthorization by Congress now behind us, our exposure ceiling has increased to up to $140 billion - giving us greater capacity to meet vital financing needs.
In terms of jobs supported by our financing, we went from 115,000 in 2008 to 255,000 last year. Added up, we supported 950,000 million export-related jobs over the past four years - nearly one million jobs.
We did all this at no cost to the taxpayers.What we earn from our customers pays all operating costs of the Ex-Im Bank - and what's left over goes to the U.S. Treasury.
Just last month, after closing the books on our fiscal year 2012, we sent $803 million back to the Treasury - our CFO did it with one keystroke - on top of the $1.9 billion we sent back in the previous five years.
Our financing last year helped move forward President Obama's National Export Initiative - a comprehensive effort to double U.S. exports by 2015 - and create and sustain two million U.S. jobs. With almost three years under our belt, we're making solid progress toward that goal.
And President Obama is directly involved in this initiative. Just a year ago this month in Indonesia, he helped close the deal with Lion Air - Boeing's largest commercial aircraft order ever - $21 billion to buy 230 Boeing aircraft over the next several years.
Not only will one of Asia's leading low-cost carriers modernize and expand its fleet, this will support over 100,000 U.S. aerospace-industry jobs over the next decade in the United States.
America is not only exporting the aircraft, we are exporting how business is done. Low-cost carriers, first championed by Southwest, are a business model that has changed the face of modern air transportation.
Jobs.
That's why the Ex-Im Bank is deeply involved in the aviation industry.In fiscal 2012, Ex-Im provided about $12 billion in new financing to aviation-related businesses - sustaining and creating about 85,000 of the 255,000 jobs we supported.In two years, that could be $2 billion higher.
A word here about the Aircraft Sector Understanding - the ASU - which President Obama and I fully support.
The ASU is a framework for aircraft export financing by OECD nations to rein in below-market rates and other subsidies that distort markets, and ultimately raise costs.Left alone, these distortions would foster a race to the bottom and depress sustainable economic growth.We want competition to be on the basis of product quality and value, not on which government can offer the lowest rates and fees.
Begun as an OECD initiative in the 1980s, the ASU evolved over years of negotiations, and emerged in its present form last year.As a result, new higher fees levied by Ex-Im and other nations' export credit agencies take effect on January 1 - just 50 days from today.
These ASU fees will roughly double what we're required to charge.For example, an upfront fee of 6.25 percent today for a B-rated customer will become 15.1 percent on January 1.On top of that, we will adjust the fees quarterly to keep them in line with commercial rates.
Our fees are already in line with commercial rates.So the new ASU fees will encourage more business for commercial lenders - and less reliance on Ex-Im Bank.
Our goal, and the ASU's goal, is to limit financing only to those credit-worthy aircraft deals - where the private sector is unable or unwilling to support them.
Our position is simple:We want to be a financer of last resort - and not the go-to guys for every transaction.We don't subsidize anybody.We don't compete with banks for customers.We want only the customers the banks don't want because of perceived risks or capacity constraints.
We financed less than two percent of America's $2 trillion of exports this year - but it's a crucial two percent that includes a lot of commercial aircraft sales - and a lot of sales to sub-Saharan Africa where we can get a solid U.S. foothold in that challenging, but potentially lucrative, continent.
End of message about our rates.
Of our 2012 aviation transactions, most went for new commercial aircraft, our traditional strength.But we also financed general aviation sales, after-market support, engineering and related services, and even airport facilities.Eighty-five percent of these transactions benefit small businesses.
That brings me to something else important - that our financing supports U.S. jobs and the world economy in ways you have to see firsthand to understand.
Last week, I was stranded in Miami because of Hurricane Sandy - probably the first time in a century that Miami was a safe haven during a major east coast hurricane.While there, I visited Fernando Poitevin, the COO of LAN Cargo at the Miami International Airport.We've financed over two dozen aircraft and spare engines for LAN.
His company not only flies Ex-Im-financed Boeing planes - supporting tens of thousands of direct and indirect jobs.LAN also employs about 1,400 U.S. workers for passenger and cargo operations in Miami.
LAN Cargo has the largest warehouse facility at the Miami airport - it invested $80 million to build it - and the largest refrigerated facility at any U.S. airport. We had to wear Arctic-grade coats just to walk through it.
In my brief visit, I saw them unload flowers from Colombia, asparagus from Peru, and fish from Chile from a brand-new Boeing 777 cargo plane, then transfer them to trucks headed for other cities - reaching American shelves less than 36 hours after leaving Latin America.
Over 4,000 tons of air cargo flow through Miami every week - in both directions.
After ground crews empty the incoming planes of the mostly perishable imports, they load the same planes with U.S. exports like electronics, medical equipment, farm machinery, spare parts and aircraft equipment.
What I saw was a dazzling logistical operation carried out by U.S. workers - making sure that not a minute is wasted.
In other words, Ex-Im Bank's financing for LAN Cargo sustains a virtuous circle of job-creating trade activity whose whole is greater than the sum of its parts and grows the economies and strengthens relations within our hemisphere.
Another company I've gotten to know is Ethiopian Airlines.We negotiated a $1 billion loan guarantee so they could buy a fleet of new Boeing 787 Dreamliners and GE spare engines.
Our Ethiopian Airlines transaction not only finances a lot of new planes, it expands African markets for our commercial aircraft in a continent where demand for air travel is exploding.
That not only drives exports, it expands trade and travel relationships in Africa in ways we have yet to imagine.This is important, really important, for America's future.
While large transactions like these get the headlines, there are plenty of smaller aviation transactions that add up to tens of thousands of jobs now and in the future.
For example, last year I toured the Delta Airlines maintenance operation in Atlanta, with Richard Anderson as my guide.Ex-Im provided financing so that Delta can perform overhauls for Gol Airlines of Brazil and Aeromexico.
That not only provides more work for skilled machinists - an important export of services - it enables Delta to expand that important income stream.
We worked with the Air Tractor Company in Olney, Texas - its 270 workers own the company - to sell new specialty crop-dusters to farmers in Brazil and Argentina.We worked with helicopter manufacturers to approach customers in China - there are only a few hundred civilian helicopters in the whole country today - and the potential exists for many thousands more.
When Ex-Im financing can make a difference, we're interested in expanding U.S. exports in the growing market for aviation infrastructure on every continent.
The Bank in recent years financed U.S. sales to foreign airports for ground equipment, warehouse facilities, safety and security improvements, cargo handling systems and other products - even legal services to help a Middle Eastern country write its national aviation regulations.
Airports in Monterrey and six other Mexican airports now have high-tech security equipment made in the U.S. because of our financing.We facilitated foreign purchases of the Oshkosh Corporation's airport rescue and fire fighting vehicles and their advanced foam systems.
This is facilitating the company's transition to civilian sales from defense production - where its armored trucks and troop carriers have helped save countless lives in Iraq and Afghanistan.Oshkosh has over 11,000 workers in eight states.
I could go on and on, but I think you get the point - aviation infrastructure is rich with potential for U.S. exporters, and I'm determined that we take full advantage of that potential.
In every country I've visited in recent years, each airport has been a major construction site - and there hasn't been nearly enough U.S. involvement.
This is a historic opportunity we can't miss.
Two final thoughts I want to leave with you.
First, we'd like to take credit for successes like these I mentioned, but the real reasons are the terrific new and innovative products designed and built in America - large and glamorous ones like the Boeing 787 Dreamliner - to more routine engine overhauls in Delta's Atlanta maintenance complex.
Businesses like these are sustaining U.S. leadership in technology, innovation, management and reliability - keeping the Made in USA label valuable and trusted throughout the world.
Second, and most important, the Export-Import Bank wants to work with you.Let's get together and brainstorm new ideas for both of us.I know there's tremendous potential for U.S. aviation exports.
I am bullish on you.I am bullish on America. The Export-Import Bank is ready to work with you to create jobs and uplift your communities - and to build our nation's economic foundation for the rest of the 21st century.
Thank you.