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Introduction

For each Competitiveness Report, the Export-Import Bank of the United States conducts an annual survey of exporters, lenders, and project sponsors who used EXIM’s support during the prior calendar year, assessing the Bank’s competitiveness relative to other ECAs. This congressionally mandated survey provides a valuable opportunity for EXIM program users to identify which policies and programs are the most effective and flag those that impede the Bank’s competitiveness. These survey results, among other sources, inform the conclusions of this report.

Survey Methodology

The survey assesses EXIM’s competitiveness relative to other ECAs, including OECD and non-OECD ECAs. This survey is broken into sections by program areas and policies, as illustrated in Figure A. Survey participants are only asked to complete sections with which they had experience. The major MLT program section includes five program areas – MT non-aircraft, MT aircraft, LT project finance, LT aircraft, and LT other – in which cover policy and risk taking, interest rates, exposure fees, and services support are each evaluated on a program area level. A separate section of the survey covers additional policies, including foreign currency guarantees, co-financing, environmental policies, foreign content, local costs, MARAD PR-17, and economic impact. The final sections cover non-standard financing (i.e., market window programs, untied financing, and tied aid) and factors contributing to denied and deterred deals.

Figure A: Survey Sections and Summaries of Responses

  Number of Survey Respondents
Survey Section Exporters Lenders Project Sponsors Total
Total Respondents 19 18 3 40
Major MLT Program Areas – Total 16 14 4 34
Long-Term Aircraft 4 8 1 13
Long-Term Project Finance 6 7 4 17
Long-Term Other 4 6 0 10
Medium-Term Aircraft 2 4 1 7
Medium-Term Non-Aircraft 6 9 1 16
None in CY 2014 1 4 0 5
MLT Programs and Policies 8 10 1 19
Foreign Currency Guarantees 1 5 0 6
Co-Financing 5 4 0 9
Environmental Review 2 3 1 6
Environmentally Beneficial Exports 1 3 0 4
Foreign Content 13 10 2 25
Local Costs 8 7 2 17
MARAD PR-17 7 4 3 14
Economic Impact 6 4 0 10
Non-Standard Financing 3 6 0 9
Tied Aid 2 3 1 6
General Comments 7 10 0 17
Denied Deals 5 2 0 7
Deterred Deals 7 5 0 12

Figure B describes the survey choices in the Competitiveness Report survey of exporters, lenders, and project sponsors. This rating scale was designed with an even number of evaluative choices to discourage participants from simply selecting the middle option.

Figure B: Survey Choices

How does U.S. Ex-Im Bank Competitiveness Compare to Competitor ECAs?

Survey Choices
“Equal to most competitive”
“Equal to the average”
“A notch below”
“Far below”
“Don’t know”

Participant Pool and Response Rates

EXIM sent survey invitations to lenders, exporters, and project sponsors who directly used the EXIM’s medium- and long-term programs during CY 2014 for whom valid contact information could be obtained.

As shown in Figure C, in 2014, EXIM invited 36 exporters, 26 lenders, and eight project sponsors to participate in the survey. Compared to 2013, this resulted in a similar, albeit smaller pool of completed MLT surveys. 40 surveys were completed in 2014 compared to 59 the year before.

Figure C: Survey Response Rates, 2014 and 2013

  2014 2013
Invited Completed Response Rate Invited Completed Response Rate
MLT Exporters 36 19 53% 100 34 34%
MLT Lenders 26 18 69% 38 22 58%
Project Sponsors 8 3 38% 5 3 60%
 
MLT Participant Total 70 40 57% 143 59 41%

Even though EXIM invited fewer participants to complete the survey this year as compared to last, the overall response rate rose 16%. The improved response rate reflects stakeholders’ understanding of the importance of the survey.

The survey respondents represented 24% of the total MLT authorizations.

This year’s survey also asked exporter survey participants with MLT participation about the sub-suppliers they used for their export contracts. Figures D and E show the range of sub-suppliers and small business sub-suppliers that benefitted from survey respondents’ MLT export contracts in 2014. This data indicates that of the responding MLT exporters, all of them indicated that they worked with sub-suppliers. Of the 10, six exporters noted working with small business sub-suppliers. Although this sample is small, if it is representative of the U.S. exporter population using EXIM financing, the data would suggest that a significant number of direct exporters use the products and services of smaller sub-suppliers as well as indirect exporters. Thus, EXIM’s support of the exports extends beyond the exporter directly working with the Bank.

Figure D: Survey Results – How Many Sub-Suppliers Did Your Company Use for Performance of Export Contracts in CY 2014?

Number of Sub-Suppliers Number of Exporters
None 0
1 to 25 3
25 to 50 1
51 to 75 1
76 to 100 0
101 or More 5
Total Number of Exporters Reporting 10

Figure E: Survey Results – Of These Sub-Suppliers, How Many Had 500 or Fewer Employees in CY 2014?

Number of Small Business Sub-Suppliers Number of Exporters
None 0
1 to 25 2
25 to 50 0
51 to 75 0
76 to 100 0
101 or More 4
Total Number of Exporters Reporting 6

Exporter Respondent Profiles

Figure F shows the range of years that exporter respondents have been involved in exporting. Almost two thirds (64%) of the exporters responding had 25 or more years of experience with exporting, suggesting that many of EXIM’s customers are well-versed in the process of exporting.

Figure F: Survey Results – How Many Years Has Your Company Exported Products as of December 2014?

  ≤ 10 Years > 10 to 25 Years > 25 to 50 Years > 50 Years Average Years Total Exporters Reporting
Number of Exporters 2 3 3 6 49 14

Figure H conveys the percentage of export sales volume supported by EXIM for the exporter survey participants with EXIM experience. Long-term exporters tended to indicate that they were more reliant on EXIM support than medium-term lenders, with an average percentage of 50% of their total export sales volume benefitting from EXIM support compared to 22% for medium-term exporters.

Figure H: Survey Results – What Percentage of Your Company’s Total Medium- and Long-Term 2014 Export Sales Volume Were Supported by Ex-Im Bank?

Export Sales Volume Average Percentage Total Lenders Reporting
Medium-Term 22% 5
Long-Term 50% 7

Lender Respondent Profiles

Figure I suggests that more than three quarters (76%) of lender respondents have been providing export finance for 50 years or more, with an overall average of 121 years of export finance experience.

Figure I: Survey Results – How Many Years Has Your Company Provided Export Finance as of December 2014?

  ≤ 10 Years > 10 to 25 Years > 25 to 50 Years > 50 Years Average Years Total Lenders Reporting
Number of Lenders 0 4 0 13 121 17

Figure J shows the volume of export credits extended by surveyed lenders during 2014. This data shows that a little over half of the lender respondents extended less than $20 million for medium-term credit. Long-term credit was split with 42% of lenders extending less than $20 million in credit and 50% of lenders reporting books of $300 million or more.

Figure J: Survey Results – For Each of the Following Types of Credit, What was the Amount of Export Credit Your Company Extended in 2014?

  < $20 Million $20 million to < $75 million $75 million to < $150 million $150 million to < $300 million ≥ $300 million Total Lenders Reporting
Medium-Term Credit 8 2 1 1 2 14
Long-Term Credit 5 1 0 0 6 12

Figure K shows that more medium-term lenders were dependent upon EXIM financing than long-term lenders, with an average percentage of 68% of their total lending benefitting from EXIM support versus 31% for long-term lenders.

Figure K: Survey Results – What Percentage of Your Company’s Total Medium- and Long-Term 2014 Export Credit Extended was Supported by Ex-Im Bank?

Export Credit Average Percentage Total Lenders Reporting
Medium-Term 68% 9
Long-Term 31% 13

Non-Standard Financing Section Results

EXIM again inquired about exporters’ experiences with market windows and untied financing.  Figure L shows that while a large proportion of exporters and lenders did not know if they had encountered competition supported by market window or untied financing, 10% of MLT survey participants observed market window competition and 13% encountered untied financing competition.

Figure L: Survey Results – Did Your Company Encounter Competition Benefitting from Market Windows or Untied Financing Programs in 2014?

  Number of Exporter and Lender Survey Responses
Yes No Don’t Know
Market Windows 4 15 15
Untied Financing 5 15 14

Another question in this section asked all MLT respondents to indicate the kinds of non-OECD financing they competed against to their knowledge in CY 2014. Since 2013, respondents reported a greater number of cases in which ECAs offered competitive non-OECD financing in addition to similar patterns in the countries providing this financing. As seen in Figure M, China was indicated to be the most frequently encountered provider of concessional tied aid—with 47% of reported cases—and non-OECD lending—with 53% of total reported cases. Brazil was also reported to be active in non-OECD lending with seven respondents indicating that they had encountered competition backed by BNDES.

Figure M: Non-OECD ECA Competition Reported by Survey Respondents

Did the following ECAs offer OECD compliant financing, non-“OECD compliant” financing, or concessional tied aid in any transaction for which your company competed in 2014? (Check all that apply for each ECA.)

  Number of Exporter and Lender Survey Responses
ECA OECD Compliant Non-“OECD Compliant” Concessional Tied Aid
BNDES (Brazil) 2 7 3
China Development Bank 0 5 4
China Exim Bank 0 6 2
ECGC (India) 1 2 1
EXIAR (Russia) 1 2 1
Exim Bank of India 1 1 2
SBCE (Brazil) 1 3 1
Sinosure (China) 0 6 1
Total 6 32 15

This year, EXIM continued asking respondents to detail further information on the nature of the financing offered by non-OECD ECAs, including terms, timing of offers, and whether or not the foreign-financed firm won the contract. One exporter reported that the Chinese regularly offered 100% financing and terms of up to 20 years to buyers, offers that made it difficult for U.S. firms to compete. Figure N shows that an equal number of respondents reported losing transactions to competitors supported by non-OECD financing and that non-OECD financing had no observed impact.

Figure N: Impact of Non-OECD Financing Programs on Survey Respondents’ Ability to Compete

Program Lost Transaction Received Financing from Such Programs No Known Impact
Market Windows 2 1 2
Untied Financing 2 1 2
Total 4 2 4

Denied and Deterred Transactions

EXIM added this section of the survey in the 2012 report to better understand if policy or program considerations could prevent transactions from reaching approval for EXIM financing. Deterred transactions are cases that are not submitted to EXIM because of a perceived or real policy constraint. Deterred transactions can also include applications submitted but later withdrawn. Denied transactions are cases that were formally denied by EXIM.

As demonstrated in Figure O, survey results indicated that 20% of all reporting lender and exporter respondents had experience with EXIM denying an application in 2014. The lenders and exporters reported the outcomes of all nine reported denied cases. Of these, one was reported to be won without EXIM support, two were reported to be won by foreign competition, and six were postponed, cancelled, or had uncertain outcomes.

Figure O: Survey Results – Denied Transactions

  Survey Participants with Denied Deals Number of Cases Denied Denied Transaction Outcomes
Yes No Won without Ex-Im Non-U.S. Supplier without ECA Support Non-U.S. Supplier with ECA Support Exporter’s Foreign Subsidiary Won without ECA Support Exporter’s Foreign Subsidiary Won with ECA Support Postponed, In Progress, Cancelled, or Unknown
Exporter 5 12 4 1 0 0 1 0 3
Lender 2 16 5 0 0 1 0 0 3
Total 7 28 9 1 0 1 1 0 6

Figure P shows that 12 out of 39 lenders and exporters that answered the question identified themselves as having had transactions that were deterred or withdrawn.

Figure P: Lender and Exporter Survey Participants with Deterred Deals Experience

Exporters Lenders Total
Yes No Yes No Yes No
Survey Participants Deterred from Using Ex-Im Bank Programs 7 12 5 13 12 25

As shown in Figure Q, the most frequently cited reasons shared by each group as deterrents to using EXIM programs were EXIM’s cover policy, the availability of better priced exposure fees from foreign ECAs, the unpredictability of EXIM’s exposure fees, the burden of economic impact analyses, and the inability to meet EXIM’s content requirements. Exporters also highlighted risk-taking requirements for risk mitigation and related costs and the requirement to ship on a U.S. flagged vessel. In 2013, respondents cited similar deterrents, though in 2014 the list was more diffuse.

Figure Q: Survey Results – Reasons Lenders and Exporters Were Deterred from Using U.S. Ex-Im Bank Financing

  Number of Survey Respondents
Reasons for Deterred Transactions Total Lenders Exporters
Cover Policy—Off cover in requested market and/or specific tenor 6 2 4
Risk-Taking—Requirement for risk mitigation and related costs (legal, financial, etc.) 3 1 2
Interest Rates—Lender guarantee interest rate cost prohibitive 1 1 0
Interest Rates—Limited to no access to Ex-Im Bank direct loan 0 0 0
Exposure Fees—Better pricing from other ECA 4 1 3
Exposure Fees—Lack of predictability 4 2 2
Services—Stand-alone services not covered 1 0 1
Services—Associated services not covered 1 0 1
Economic Impact—Product(s) subject to specific trade measure 4 2 2
Economic Impact—Subject to detailed economic impact analysis 2 0 2
Foreign Currency Guarantee—Lack of availability from Ex-Im Bank 1 0 1
Foreign Currency Guarantee—Ex-Im Bank crystallization requirement 2 0 2
Foreign Content—Did not meet Ex-Im Bank content requirements 4 2 2
Environmental Policies—Requirement to publish ex-ante overly transparent for competitive reasons 1 0 1
Environmental Policies—Environmental review process 1 0 1
MARAD PR-17—Requirement to ship on U.S. flagged vessel 3 1 2
MARAD PR-17—Determination not made 1 0 1
MARAD PR-17—Processing time for determination 1 0 1
Co-Financing—Lack of availability and/or flexibility 1 0 1
Local Costs—Requirement to demonstrate foreign competition and/or local financing not available from commercial market (MT only) 0 0 0
Tied Aid—Transaction did not meet or not likely to meet Ex-Im Bank tied aid policy 1 0 1
Tied Aid—Processing Time 1 0 1
Market Windows—Request to matching financing not granted/Did not meet Ex-Im Bank requirement(s) to match 1 0 1
Untied Financing—Absence of untied financing program 1 0 1