Prepared Remarks at the Export-Import Bank Annual Conference
Ex-Im Bank - Your Competitive Edge
Fred P. Hochberg, Chairman and President of the Export-Import Bank of the United States
Apr 12, 2012 – Washington, DC
Thank you all for coming. On behalf of President Obama and the entire administration, I'd like to welcome you to the 2012 ExIm Bank annual conference. The president has asked Valerie Jarrett to represent him today and you will be hearing from her shortly. And she will be telling you about this excellent export. We are joined this morning by people from over 40 countries -- a record…from businesses large and small, foreign buyers and senior government officials. You are here to buy, to sell, to network. And I bet a few of you are here to listen to President Clinton. That's ok too. He'll be out later this morning. In fact, one of the reasons you are hearing from me now is that I make it a practice never—and I mean never-- to follow my boss - current or former! Regardless, you're at the right place. Exports are more important to America than ever. That means our work at Ex-Im is more important than ever. Of late, surprisingly, not everyone seems to agree. But we'll get back to that in a moment.
Before I go any further, let's take a look at how the United States advocates for our interests around the globe , particularly, our national security interests.
This graph shows that America has more than twice as many military personnel deployed overseas than the rest of the world combined.
What does this tell us? It tells us America is pretty serious about our strategic and security interests. It tells us we're willing to devote lots of money and manpower to navigate a dangerous world.
But what about America's economic interests? Do we have the same bipartisan consensus that America must do whatever it takes? No. We do not.
Some in Washington think government has no role to play in helping our companies compete abroad. They think we should stand down as American companies compete with foreign companies backed by foreign governments. They think we should disarm in the middle of an economic arms race.
For example, let's take a look at export credit financing over time. Here's Brazil, Germany and China , all of them surging ahead of the United States.
Now, let's be clear, export finance is but one measurement. It doesn't tell us everything about a country's commitment to its economic security. But it's a key measurement that reveals a troubling trend. Other countries have simply been more aggressive than we have in pursuing their global economic interests.
And, their work is paying off. For example, let's look at India - an emerging market where many companies want to do business .
In 2000, the U.S. had a healthy lead over China in selling goods and services to India, and we've grown our exports substantially since. But look at China. They're now exporting twice as much to India as we are.
Now, we have no problem with China increasing its exports to India. They're creating jobs and lifting people out of poverty in both countries. This isn't a zero sum game. It's something that benefits all of us. But America can and should be selling more.
95% of the world's consumers live beyond our borders. And we must follow them abroad so we can create more jobs here at home.
That's why, in 2010, on this very stage, President Obama launched the National Export Initiative. He knows the competition for export markets is heating up. He knows foreign governments are supporting competitors to American companies like never before. That's why President Obama is committed to ensuring American companies have the financing and other tools they need to compete in the international marketplace.
American companies can effectively compete on cost, on value, on quality and the reliability of our products. That's a competition we can win day in and day out. And the NEI has provided an important jumpstart.
Exports are up over 15% annually since 2009 - which has us on track to meet the President's goal of doubling our exports by the end of 2014. In 2011 alone, America exported more than $2 trillion worth of goods and services -- an all time record. American exporters have reason to be proud. We have never sold more to more places.
But now, a few in Congress want to gut the NEI by gutting Ex-Im. They want to unilaterally disarm American companies just as foreign competition is heating up, just as American companies are dealing with what Jeff Immelt calls industrial policy on steroids.
There are over 60 export credit agencies around the world , and each and every one is working to expand their footprint and increase their activity. This is the world we live in. And we've got to compete in the world as it is, not as we'd like it to be.
However, some in Congress don't accept this. They want us to move in the opposite direction. And unless they act, our authorization expires on May 31.
Make no mistake. No matter what happens in Congress, current Ex-Im obligations will not be affected. Your loans, your guarantees and your insurance will still to be backed by the full faith and credit of the U.S. government. But if Congress fails to act, all new activity will grind to a halt.
And many American companies - large and small - will find themselves at a huge disadvantage. This administration is fighting hard for U.S. companies and their workers, and Ex-Im is critical to that fight.
But a vocal few oppose the bank. Some don't like our government financing U.S. exports to foreign buyers, others don't get why American companies that produce some of the best products in the world need any help at all.
Our role is simple. At Ex-Im we provide export finance for American companies in foreign markets where financing isn't readily available or affordable. We give U.S. companies the edge they need.
Last year alone we provided a record $33 billion in export finance to support over 3,600 companies, and nearly 90% of our transactions were for small businesses.
Look around this room. There are quite a few people here today—more than 1,000. That's how many jobs Ex-Im sustains every single working day; 290,000 of them last year alone - a record.
Ex-Im increases trade, creates jobs, pays for itself and earns money for American taxpayers. In fact, we delivered $1.9 billion to the U.S. treasury to reduce the deficit over the last five years. That's a pretty good track record.
But it's about more than just the numbers. Behind each number is a story about a business or an entrepreneur trying to sell more of what they make around the world.
I want to tell you about one of these companies, a company I visited back in December of 2009 during the first blizzard of that winter season, Orbital Sciences. They're a Virginia company out by Dulles.
Orbital makes satellites, like this one on stage with me. Now Imagine it 10 times larger and circling above the earth. This is the type of satellite that lets you use your mobile phone to make calls anywhere in the world and your TV as a ticket to every channel under the sun. Even though I can never find the TV channel I want - it's nice to know I have 500 to choose from.
In 2009, Avanti Communications, a British company, was in the market for a satellite. There were only two companies that made what they were looking for: Orbital, and a French company named Astrium, part of the aerospace giant EADS.
Orbital looked like it had a leg up, but it also had a problem that many U.S. exporters face: no private sector financing was available. Satellites are expensive, and they require more extended terms than many banks are willing to provide. So Orbital was in a tough spot.
They had a cutting-edge product at a great price and they had a foreign company ready to buy, but Astrium had something that Orbital didn't have—a financing package from COFACE, the French export credit agency—a package that was tipping the scales in their favor. That's when Ex-Im came into play.
Orbital put Avanti in touch with John Schuster and his team, a few of whom are pictured here . They rolled up their sleeves and found a way to provide a $215 million loan to Avanti. Orbital won the deal;
Today, three hundred Americans have jobs building that satellite, and Orbital is on schedule for a July launch from French Guiana. And Avanti has plans for additional satellites, hopefully from the U.S.
In fact, we are joined today by Orbital's CEO Dave Thompson, who is on our next panel, as well as the company's CFO Garrett Pierce, who serves on our Advisory Committee. They can tell you about the difference we made. What happened here is very simple. There were two companies competing for this deal, aAfter the French company got financing from its export credit agency, Ex-Im leveled the playing field.
Orbital and Astrium then went head-to-head on cost, on value, on schedule and on quality and reliability. And in the end, Orbital won, the workers at Orbital won, and America won because this single deal continues to spur growth throughout the U.S. satellite industry.
Last year alone, Ex-Im provided $1.3 billion to finance seven satellites and sustain over 4,000 U.S. jobs at Boeing, Orbital and Loral. These satellite deals have a multiplier effect both up and downstream. You've got suppliers selling parts to companies like Orbital, and you have other companies making launch vehicles and communications equipment. This is the type of work that Ex-Im supports day in and day out.
Now, I'd like to take a moment to ask all Ex-Im employees to stand up and be acknowledged for the great work you do. Let's give them a round of applause. Thank you.
You know how essential Ex-Im is to your business. You know that our financing is often the difference between winning and losing a deal. The business community understands this, so do most in Congress.
But we still hear criticisms of Ex-Im that frankly make no sense to me. They don't reflect who we are and what we do. Some critics don't think Ex-Im should exist at all. They think we are just engaged in crony capitalism, that we're just peddlers of corporate welfare.
Really? Corporate welfare? We don't spend taxpayer money, we don't provide subsidies or tax breaks, and our funding comes from our customers, who pay all our expenses.
The charge just doesn't add up. Corporate welfare costs taxpayer money. Ex-Im makes money for the taxpayers. That's not corporate welfare.
Others say Ex-Im distorts markets by picking winners and losers. This one is simple. We don't pick anybody. Orbital picked us. Our customers pick us.
When a customer approaches us, we begin with two fundamental questions. One, Will the loan be repaid? and two, Is our financing essential to make this sale happen? If the answer is yes, we are a go.
As my new favorite newspaper, the Washington Times said a few weeks back, Far from picking winners and losers, Ex-Im Bank loan guarantees simply ensure that the United States has a chance to have winners in the international marketplace.
That's all Ex-Im bank does. We give American companies a shot to compete on a level playing field. Whether or not they win is entirely up to them.
For all the controversy about Ex-Im, you might be surprised to learn that 98% of all U.S. exports are financed by the private sector. But the 2% that Ex-Im finances is still too much for some people. What our critics miss is that Ex-Im is essential in the markets where we operate.
We are essential in many emerging markets, where the number of promising projects outstrips the amount of available credit. Last year, we supported a third of all exports to Colombia, just under 10% to sub-Saharan Africa, and about 20% to India and Turkey.
We made a huge difference in these markets. Now some say that that the private sector could handle all of this, that lots of banks have a robust presence in areas where Ex-Im operates.
But this alone is not a presence. Just because there are ATM machines on street corners doesn't mean there's a lot of money in the banking system. There's no shortage of worthy infrastructure projects in places like Nigeria or Vietnam to name just two. But there is a shortage of good financing options, and we help fill that gap.
Ex-Im also fills the gap for very big and very small deals that just don't get enough attention from banks. We're essential in the types of multi-year, multi-million dollar projects that Orbital did.
Banks aren't knocking down the door to offer long-term $100 million financings for satellites, or locomotives, or airplanes or power plants for that matter. And we are essential to small businesses - which account for nearly 90% of our transactions.
Take Air Tractor, a small Texas company that sells crop dusters and firefighting airplanes primarily to small farmers worldwide. Air Tractor has orders to ship 176 crop dusters in 2012…a record. And about 40 of those planes are going to Latin America, most of them to Argentina and Brazil.
And Dave Ickert of Air Tractor will tell you how critical Ex-Im is to his business and to his workers. Here's a clip from Dave on CBS News.
In fact, Dave went on to tell me that banks aren't lining up five deep to finance Argentinian farmers, and that our loans are helping directly support 69 good jobs in Olney, Texas.
That's what it all comes back to manufacturing jobs, good jobs, middle class jobs. Ex-Im's work is good for Air Tractor and their workers. It's good for Olney, Texas, and it's good for the American taxpayer, because we haven't lost a single dime on our deals with Air Tractor—not a single dime since we started doing business with them in 1994…eighteen years ago.
And that's an important point - especially for the few who think that Ex-Im is the next Fannie or Freddie. Where do I start with this one? We don't operate in one country. We operate in over 170. We don't operate in one industry. We operate in dozens of industries. Ex-Im's historical loss rate is less than 1.5%; and Ex-Im makes money for U.S. taxpayers.
And here's the final kicker: we don't answer to Wall Street. We answer to U.S. taxpayers. Period. That's a pretty compelling case for what Ex-Im does, and perhaps more importantly, what we don't do.
But that's still not enough for some. They just don't like the idea of a government-backed export credit agency. It offends them philosophically. They say America should counter state-backed financing with tougher commercial diplomacy and more trade deals.
You know what? I agree. So does President Obama. That's why this administration has aggressively challenged countries that break trade rules at the WTO. That's why we developed tough new OECD rules to finance aircraft exports. But here's the problem. These things take time. WTO complaints are important. But they can take up to five years to complete.
That OECD aircraft agreement? We opened negotiations in 2009, inked the deal in 2011 and it won't take effect until 2013.
And then there are the trade deals. Agreements with South Korea, Colombia and Panama were all signed into law by President Obama last year - but they took years to negotiate. Negotiations on Panama and Colombia began in 2004. Let me put that in perspective for a moment.
My chief of staff Kevin Varney and his wife Betsey have a beautiful 13 year-old daughter, Julia. Here's what she looks like today . Everyone, meet Julia. And here's what she looked like when the Panama negotiations began.
In the time it took to get this deal done, Julia journeyed from childhood to adolescence. During that time, export financing exploded around the world.
Here's the take away: The rest of the world won't stand down while the United States builds a more perfect international trading system. They're not going to disarm. There are millions of people around the globe that need jobs. China alone is working to create 45 million jobs over the next 4 years. They won't be shy about using export finance to put these people to work.
You better believe they will use every tool at their disposal—as much as they can, for as long as they can.
And so will other countries around the world. This is no time for America to let ideology triumph over pragmatism. We need to keep fighting to ensure that American companies are competing on a level playing field. And that means we must keep Ex-Im open at the level that U.S. exporters require.
I've been in this job for three years now, and the bank has been doing its job for 78 years. And one thing is clear to me: America has to keep pushing harder and harder for our economic interests around the globe.
And let's not forget what America's interests are at this moment in time: jobs. Jobs at Orbital, jobs at Air Tractor, thousands of jobs all across this country. The type of jobs we need to rebuild the middle class in America. Last year alone, Ex-Im supported almost 290,000 of them.
As Congress ponders our fate in the weeks ahead, I hope they realize that some of these jobs are already under threat because of the uncertainty about Ex-Im's future.
Last month, Julie Martin, with Marsh & McLennan told CFO magazine, and I quote, Significant amounts of sales by US companies could be lost if the Ex-Im bank isn't reauthorized at all or isn't reauthorized at the appropriate dollar level.
I'm hearing the same thing from CEOs I speak with. Last week I spoke to one who met with my counterpart in Korea. Within two minutes, the Koreans said they'd approve a deal and that they could double the amount if needed.
This is serious business. Other countries will happily step in if we can't or won't finance a deal. That's why I hope Congress will ask the same question our friends across the pond are asking.
That's the question. Do we have the resolve to say NO, we won't be left behind in this race for exports. I often hear people in Congress talk with pride about the quality of American craftsmanship; the skills of our workers and the innovative spirit of our businesses.
I see it when I visit business after business from coast to coast, and I hear it when I travel abroad. Other countries want to do business with us. They want to buy what we make.
And Ex-Im makes it possible. We give U.S. workers a competitive edge, but if Congress does not act by May 31, our charter will expire.
There are times in life when one day at a time makes sense. This is not one of those times. If we want an economy built to last, we need an Export-Import bank authorized not just for a few months or for a year.
We need exactly what President Obama is asking for: a full four-year authorization with a $140 billion lending cap.
That's what we need to support hundreds of thousands of jobs in America. That's what our exporters need to help them compete all around the world.
This is no time to disarm. This is no time to stand down. We have to compete with everything we've got. American businesses and American workers deserve nothing less. Thank you.