Satellite 2013 Conference
remarks as prepared for delivery
Fred P. Hochberg, Chairman and President
Mar 18, 2013 – Washington, DC
Three weeks ago, a typically sunny, blue-sky day in El Segundo, perhaps a bit chilly for February, I toured the Boeing Satellite factory on Sepulveda Boulevard.
It's a factory with a rich history. It's where American Motors built the iconic Nash Rambler in the 1950s - one of the great innovative products of that decade - where Hughes Electronics produced its groundbreaking technology in the1990s - and where today where Boeing Space Systems is building world's most advance commercial satellites.
I liked walking on a factory floor where Nash Ramblers once rolled off the line 60 years ago - an innovative product of distinctly American origin - and where today Boeing manufactures its all-electric propulsion satellites - also a breakthrough innovation.
This is just one part of President Obama's National Export Initiative - our government-wide effort to double U.S. exports by the end of 2014 - and to build on the job growth of the last 36 months.
Three years after President Obama announced the NEI, we continue to make steady progress.
Satellites are an important component of that progress - especially given that worldwide demand for satellite-based telecommunications services is expanding at an ever increasing rate. And with it, the demand for U.S.-built satellites, with the “Made in the USA” name plate.
The satellite industry is the quintessential 21st century industry.
On every continent, it is liberating people from their remote circumstances - giving them the opportunity to work and share in the fruits of the global economy
Few satellite business ventures embody this reality better than our most recent transaction. That was for Asia Broadcast Satellite's purchase of three U.S.-built communications satellites and launch services.
The amount of our financing - $471 million - supported over 3,300 U.S. jobs.
That's really the business we are in. - the job creation business - sustaining and creating jobs.
Ex-Im supported over 255,000 jobs last year.
And exports are a proxy for strong job growth.
In turn, ABS plans to expand its market share as a fast-growing operator in emerging markets in Africa, Asia, the Middle East, and Russia.
Its competitive prices have already created a large and growing customer base - serving an expanding middle class population worldwide. That expanding middle class is what will power our economy and the global economy.
Ex-Im Bank wants to make the most out of that opportunity.
I‘d like to share some details about our work with ABS and Space Systems Loral (formerly Loral), and Boeing and SpaceX.
To begin, it's our first financing of an all-electric propulsion satellite.
In fact, it's the first commercial satellite anywhere to use all-electric propulsion.
This technology will increase payload and lower launch costs that can make future telecomm services - more competitive, more affordable - and thus more extensively used.
Second, this transaction is Ex-Im Bank's first financing in support of SpaceX exports.
It's an all-American export. Its equipment is manufactured in the U.S. Its supply chain is here. The launch takes place at Cape Canaveral.
And its introductory prices were half those charged by our French competitor, Arianespace - and future prices will be very competitive.
SpaceX is a true game-changer.
Last month was its 10th anniversary. Spacex has grown from 160 employees eight years ago to over 3,000 today.
It's a great American success story - and they are just getting started.
Let's give them a round of applause.
Third, the ABS story itself is remarkable - and the reason that Tom Choi is being honored at Wednesday's lunch as the Satellite Executive of the Year.
Tom richly deserves this honor.
His business achievements in six short years are remarkable. His service now extends to every continent in the Eastern Hemisphere.
And he did it with novel approaches, including buying and deploying used satellites - and by taking chances on innovative satellite equipment deployment.
In an industry populated by visionaries - he stands out.
We at Ex-Im Bank join you in congratulating Tom Choi.
We like doing business with Tom and his company - and we wish him many more satellites in his future. Tom, I trust that they will be American-built satellites!
Fourth and finally,
ABS was about to sign on with one our French competitors when SSL called us to get the U.S. back in the game. Ex-Im responded quickly and we all went to work to get the deal done.
As everyone who knows Tom will attest, once he starts thinking, things happen.
Rather than just working out a deal for one satellite, Tom began working towards more - acquiring more used satellites - obtaining additional equity.
And today I'm pleased to say that last Friday we closed on the deal.
I'm proud of the Ex-Im team that helped make this happen - with timely, appropriate financing - and solid, commercial commitments.
It's an 8-1/2 year term loan with all-in costs in the 2.5 percent range, including all fees.
That's just one of many stories about our support of the U.S. commercial satellite industry - and our strong interest in expanding your markets and our financing to make that happen.
Let me briefly tell you about two more.
Ex-Im financed the purchase by Hispasat of a telecom satellite built by Orbital for deployment next year over Brazil. Its purpose is to expand service to broadcast customers in South America.
But it's exciting in another way, too.
The new Orbital satellite will broadcast coverage of the 2014 World Cup and 2016 Olympic Games in Brazil to viewers throughout the world
These are more than sporting events. They showcase human achievements.
They bring us together as a world.
.We hold this Hispasat transaction in such high regard that last year we awarded it “Deal of the Year” at our Annual Conference.
Is Garrett Pierce from Orbital here?
Garrett is the Vice Chair of Orbital and a member of our advisory Committee. Your industry is well represented at Ex-Im.
And then there is our authorization in 2012 for the Jabiru satellite in Australia.
This transaction supports Lockheed as it migrates from primarily a government and military supplier to a more balanced business model. As federal budgets shrink, these sales will be critical for the satellite industry.
We're bullish on satellites and your ability to compete and win.
More important, we understand the pivotal role you play in growing jobs and sustaining our economy and our export growth.
Over half of all worldwide satellites sales, by value, were produced by US. manufacturers. We lead the world in advanced, high-value-added technology.
At Ex-Im Bank, we're determined to keep U.S. satellite manufacturers in that lead.
And we don't just talk about this, the numbers show our commitment.
Our annual authorizations for financing satellite exports in the last two years grew faster than in any other sector at Ex-Im.
Let me repeat that - a faster rate of growth than any other sector that we finance at Ex-Im Bank - faster than the rate of growth in aircraft - faster than power plants - faster than construction equipment - or any other single category.
Ex-Im financing authorizations for satellites went from an average of $50 million annually in the eight years before 2009 - to $1.3 billion in 2011 - and $1.4 billion in 2012.
You heard that right - from $50 million to over $1.4 billion a year.
When you add up all our business with the four major U.S. satellite manufacturers and newly emergent launch provider - Boeing, SSL, Lockheed, Orbital and SpaceX - we've completed a dozen major transactions in three years.
That total - almost $3-1/2 billion - supports roughly 21,000 high-tech U.S. jobs.
After three years and 12 transactions, we now have the battle-tested expertise and experience that you can rely on.
Some of our satellite structured finance team members are here - John Schuster, Jessica Bartos, Sam Carnegie, Michelle Miller, Lyman Armstrong, and Pam Ross.
They are doing a great job. Please give them a round of applause.
In short, we are closely aligned with your industry.
Ex-Im Bank has emerged as the leading financier of commercial satellite sales from the U.S. - providing long-term financing - at better terms than our competitors.
In fact, our financial commitments over each of the last two years accounted for about 60 percent of U.S. commercial satellite sales.
Our staff understands the real, not just perceived, risks - as well as the opportunities and the challenges - that this industry faces with federal budget cuts.
Particularly in light of federal budget cuts, we stand ready to support your expansion into commercial sales to counter declines in government and military sales.
The important point here is that Ex-Im Bank is determined to support our exporters against aggressive foreign competition and foreign financing. We can provide the financing to keep manufacturing humming and keep factories full.
That's why Ex-Im's annual authorizations bank-wide are up 2-1/2 times - from less than $15 billion in 2008 to $35.8 in 2012.
We are ready and experienced in both corporate and project financings. We're flexible, entrepreneurial, commercial in approach, and customer oriented. We don't want you to lose a sale due to a lack of financing.
You may lose it on price, on scheduling, or some other reason - but not financing.
We stand ready to provide long-term financing at competitive terms.
I appreciate the central role that satellites and other space efforts have played in the last half-century. The spin-offs from this industry have been far-reaching and perhaps not fully appreciated by most Americans.
For example, the solar technology that powers every satellite.
This has helped make US solar technology the most efficient produced on this planet.
In turn, that technology is helping us migrate to more renewable power for the world.
It's powering the exports of solar power to India, Latin America and other countries as they add renewable energy to their power portfolios.
We have some of the best technology in part due to your pioneering efforts.
From the first Dustbusters, yes, Dustbusters - and Speedo's LZR Racer swimsuit, the one Michael Phelps wore to win all those gold medals - to LED lights - freeze-dried food and water purification systems - the space and satellite industry has reached into and improved virtually every aspect of modern life.
At home I have the Dustbuster, not the Speedo.
Let me close with two final points.
First, I want to assure you we are open for business, despite this capricious, unnecessary budget sequestration, that Congress refuses to solve.
Ex-Im Bank is self-supporting. Our operating budget comes from the fees and interest we charge customers.
So our operations are not affected by sequestration. All 400 of us at Ex-Im come to work every day. We are fully open for business.
Second, the Ex-Im Bank Annual Conference is on April 4 and 5 at the Omni Shoreham.
We have a great lineup of speakers and break-out sessions. Nearly 1,000 people have registered, but there's still space left for procrastinators.
So log onto our website and register. But don't wait too long!
At this point, I want to tell you about three friends - Artie, Eugene and Fred - at a funeral. After the services, they asked each other what they wanted people to say at their funeral.
Artie said, “I would like it said that I was a wonderful husband and father and a great family man.”
Eugene said, “I would like them to say that I was a wonderful and man of the community who made a huge difference in people's lives.”
And Fred said, “I'd like them to say, ‘Look, he's moving!'”
So Ex-Im Bank is here to help your businesses be successful - to create more jobs for American workers - and to keep moving!
Thank you for being such an innovative, dynamic industry - and for asking me to join you today.
Now let's sell some more satellites!