U.S.-Latin America Aviation Summit
Fred P. Hochberg
Dec 04, 2012 – Miami, Florida
Jobs - that's what I want to talk about today - jobs that pay well - in our country and the countries we export to.
And in the developing world - especially in the formal economy - jobs that provide stability and expand the range of stakeholders in the wellbeing of their communities.
I know that expanding jobs depends on a lot of people with great ideas, strong skills and hard work - but also the financial capital it takes to get things moving.
And that's what I want to talk about today.
In late October, I was stranded here 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 CEO of LAN Cargo, at the Miami International Airport. We've financed LAN's purchase of over two dozen aircraft and spare engines - for both cargo and passenger equipment.
LAN has mastered the fine points of this business - achieving profits from creative uses of its passenger belly space on passenger planes - as well as dedicated cargo planes - to succeed in both sides of this competitive industry.
Fernando's company not only flies Ex-Im-financed Boeing planes - supporting tens of thousands of direct and indirect jobs in the U.S.LAN also employs about 1,400 U.S. workers for passenger and cargo operations here in Miami - part of its 51,000 employees worldwide.
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 products, they load the same planes with U.S. exports like electronics, medical equipment, farm machinery, spare parts and aircraft equipment - products needed immediately - and send them to points south.
It was a dazzling logistical operation carried out by U.S. and Latin American workers - making sure that not a minute was wasted.
In other words, Ex-Im Bank's financing for LAN Cargo sustains jobs both here and in Latin America - both in manufacturing and the service sector.
While large operations like these get the headlines, there are plenty of smaller aviation transactions by Ex-Im Bank that also 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 Delta CEO Richard Anderson as my guide.Ex-Im provided financing so that Delta can perform engine overhauls for Gol Airlines of Brazil and Aeromexico.
That not only provides more work for skilled machinists - an important U.S. export of services.It enables Delta to expand that important income stream - and it provides flawless care for the aircraft of those two Latin American airlines.
Few areas of the world have grown so rapidly and sustainably in the last few years than Latin America - and there's more to come.
In the next two decades, Latin America's middle class is expected to double - while it also becomes the world's second most urbanized region, led only by North America.
You heard that right - the world's second most urbanized region - with a middle class eager to travel for business and leisure.
class driving increased air traffic at a growth rate exceeded only by those in the Middle East - and 50 percent faster than the growth rate of the U.S.
The secret sauce?
An almost-unbroken chain of free trade agreements from the Northwest Passage down the Pacific coast to Cape Horn.Chile alone can claim 57 bilateral or regional trade agreements, including with the United States.
This virtual chain of trade resembles the physical Pan American Highway, first conceived in 1923, and described recently as, I quote, not so much a road as it is the idea of Pan-Americanism itself.
Incidentally, the Export-Import Bank financed much of the highway's early construction in 14 Latin American countries, in part to improve transportation of goods during World War II.
These infrastructure investments have paid off handsomely, and they still pay rich dividends today.
Liberalized trade policies have been an invaluable key to airline growth and formation at every level of size - from the largest ones like LATAM, COPA, Aeromexico and Avianca to the low-cost carriers like Gol and VivaAerobus.
This, in turn, has created tremendous demand for new, more efficient aircraft - demand that will triple the size of the Latin American installed fleet to nearly 3,500 aircraft in the next two decades - at a total value of nearly a quarter-trillion dollars.
That's the kind of arithmetic that attracts our attention, as you might imagine.
When you put aside wheat, soybeans and other commodities we sell overseas, aerospace products are America's leading export.
These products are 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 support millions of good jobs from coast to coast - almost 10 million Americans work in some aspect of the aviation 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.
We at the Ex-Im Bank are doing our part 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.
When lack of financing would stymie a good, solid export transaction - with hurdles brought on by the world financial crisis - we will work with you to overcome these hurdles.
I mentioned LAN Cargo earlier.
We provided needed financing for LAN cargo and passenger operations to buy Boeing 767s, 777s, and 787s - configured to their needs - such as guaranteed bonds funded by institutional investors at terms that simply weren't available to them otherwise - terms that help make their business plans hum.
Not only that, we have now financing options that include new capital market facilities to expand the sources of capital.
In fact, just last month we issued our 50th Ex-Im capital market transaction. These bonds now total over $8 billion in just three years.
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.
We've been carrying out that role since President Franklin Roosevelt and the New Deal 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 the world's economic needs.
And we just turned in our annual report for fiscal year 2012.
Loans guarantees and insurance topped $35.7 billion - supporting some 255,000 jobs - a full third of which were in the aeronautics industry.And the total numbers of jobs we supported across all industries came to 950,000 export-related U.S. jobs over the past four 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.
Ironically, we financed less than two percent of America's total of $2 trillion of exports this year - but it's a crucial two percent that includes a lot of commercial aircraft sales.
Of our 2012 aviation transactions, most went for new commercial aircraft, our traditional strength.But we also financed after-market support, engineering and related services, and airport facilities.
Eighty five percent of all Ex-Im transactions benefit U.S. small businesses - and potentially small businesses in Latin America.This small business effort is the centerpiece of President Obama's National Export Initiative - and he is leaning hard on all federal agencies to make this happen.
Frequently, small business exporters trade with other small businesses overseas reinforcing each other's strengths.
Let me give you an example.
We work with the Air Tractor Company in Olney, Texas - where its 270 workers own the company.They sell new specialty crop-dusters to farmers in Brazil and Argentina.
To date, they haven't found a bank to do that financing without our support.But together we make sure those sales close.
Besides helping an American exporter, Air Tractor's advanced equipment helps farmers in Latin America improve their productivity growth and create good jobs.
Then there's aviation infrastructure.
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, and safety and security improvements.We also financed cargo and baggage handling systems - and 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 screening 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.
I could go on and on, but I think you get the point.Aviation infrastructure is rich with potential, and I'm determined that U.S. exporters and their overseas partners take full advantage of that potential.
In every country I've visited in recent years, each major airport has been a major construction site - and there hasn't been nearly enough U.S. involvement.This is a historic opportunity I don't want us to miss.
In closing, I want to leave you with this challenge.
We want to you to do more with us in Latin America.The Export-Import Bank wants to work with you to create more jobs throughout the hemisphere.
I have to say that we're not doing enough.
Our rate of growth in both new approvals and total exposure in Latin America over the past few years has increased at only half our worldwide rate.
I know that we can do much better.
Let's get together and brainstorm new job-creating ideas for both of us.I know there's tremendous potential for future aviation business in our hemisphere.
The Export-Import Bank is ready to work with you to create these jobs and lift up communities in both our countries - and to build a resilient economic foundation for the rest of the 21st century.
Let's do our best to make this happen.