In other words, Ex-Im will be forced to close its doors if Congress doesn’t act. The result will be lost sales and lost jobs here at home.
What does that mean for Texas, the top exporting state for six years in a row? As Ex-Im’s website shows, the bank authorized $24 billion worth of export support for 1,344 Texas businesses from 2007 to 2014.
With so many jobs on the line, Governor Rick Perry has stepped in to fight for jobs in the Lone Star State. On June 25, he wrote a letter to congressional leaders, stating, “Failure to reauthorize [Ex-Im] could place Texas at a serious competitive disadvantage in the global marketplace. The Ex-Im Bank’s services are essential in helping small and medium-sized Texas businesses thrive.”
Ex-Im’s critics don’t seem to grasp that the bank’s support is indispensable to small businesses. Without Ex-Im guarantees, commercial banks won’t allow small businesses to use foreign receivables or inventory as collateral. Far from crowding out the private sector, Ex-Im guarantees let private banks extend loans and guarantees that they wouldn’t be able to make otherwise.
For example, Olney-based Air Tractor makes agricultural and firefighting airplanes. David Ickert, the company’s Vice President of Finance, says: “No U.S. bank would make a loan to our foreign customers for the purchase of our aircraft.” Because of that, Air Tractor had to turn to Ex-Im for credit insurance. Only then did private U.S. banks extend loans, and exports surged. Air Tractor added more than 100 jobs in the last few years just due to export growth. Ickert says that this job creation “is the direct result of being able to use Ex-Im’s medium-term credit insurance.”
Or consider Polyguard Products Inc., which first turned to Ex-Im in 2005. The firm is headquartered in Ennis and specializes in protective pipeline coatings. Like many small businesses, Polyguard was hesitant to export until it started using Ex-Im’s services. CEO John Muncaster says: “Ex-Im helps us to cover the credit risk and takes out one element of uncertainty from a business point of view.” Sales have since increased by more than 1000%, and Polyguard’s workforce has doubled to 120 people.
Based in Dallas, Texas, Unitron, LP uses Ex-Im credit insurance for sales of marine frequency converters to European customers. Bob Saxton, Controller for Unitron, describes why his company uses Ex-Im: “Credit insurance lets us extend the credit terms that our foreign customers want. Without credit insurance, we would lose deals to our European competitors.” Like many small exporters, Unitron has to compete against firms from other countries that are backed by generous support from their own Ex-Im Banks. For Saxton, “Ex-Im is a method for leveling the playing field for American companies.”
Fritz-Pak Corporation is another company in the Dallas area that has used Ex-Im insurance. During the recession, sales by this concrete admixture company fell by more than one-third, and company president Gabriel Ojeda was considering selling his company. Then, his son had an idea: Sell overseas. Ojeda said it seemed like a pipe dream. “How do you sell $50,000 worth of goods to customers half way around the world we’ve never met? How can we increase our payment cycle from 30 days to 60 days when we are struggling to make payroll every month?”
With Ex-Im credit insurance, Fritz-Pak was able to offer competitive terms to its customers abroad, it was full speed ahead. Fritz-Pak now does business in over 30 countries. International sales increased from 15% of revenue to 35%. And Ojeda gives credit where credit is due, “In an age where everything seems to be made some place else, we’re thriving here in the USA. And it is no small part due to the services provided by Ex-Im Bank.”
Governor Perry gets the last word — and Congress is the intended audience: “I strongly encourage you to reauthorize the Ex-Im Bank and continue supporting U.S. exports, market expansion and jobs. It is the right thing to do for our national economy, our companies and our workforce.”