General Electric (NYSE:GE) announced Sept. 15 that it is moving 500 U.S.-based production jobs connected with power projects overseas and blamed the move on the failure of Congress to re-authorize the Export-Import Bank.
GE is currently bidding on $11bn of projects that require export financing.
The U.S. remains the only major economy in the world without an Export Bank. Since the U.S. Export Import Bank (Ex-Im) authorization expired July 1, GE has commenced talks with several foreign export credit agencies (ECAs) to secure financing for its customers, GE said in a news release.
The Nuclear Energy Institute (NEI) and other organizations have urged Congress to reauthorize the Export-Import Bank.
“Our customers rely on export credit agencies, like U.S. Ex-Im, to finance their critical power projects,” said Jeff Connelly, Vice President, Supply Chain, GE Power & Water. “While our preference is to continue producing power generation equipment in our best U.S. factories, without customer access to the U.S. Ex-Im bank, we have no choice but to move our work to places that will offer export credit financing of these projects,” Connelly said.
GE has reached an agreement with the French export credit agency (COFACE) to provide a line of credit for global power projects. This line of credit will initially support potential orders in a number of international markets including Indonesia.
Also, to access the required export credit for its customers of its aeroderivatives turbines, GE will move its final assembly from the United States to Hungary and China.
As related projects are bid and won in these two product lines, GE will move approximately 500 jobs from Texas, South Carolina, Maine and New York to France, Hungary and China, GE said.
GE customers often require guaranteed financing from an ECA in order to submit a bid. With no U.S. export financing available, GE must pursue non-U.S. options. Many of these ECAs have requirements similar to the U.S. Ex-Im Bank’s that production and jobs must be invested in-country to qualify for financing. This will result in the loss of thousands of U.S. jobs – both at GE and at GE suppliers.
GE is expected to complete its purchase of much of the energy business of Alstom later this year.
“We call on Congress to promptly reauthorize Ex-Im,” said GE Vice Chairman John Rice. “The truth is that Ex-Im supports thousands of U.S. jobs and has returned $7 billion to the U.S. Treasury over the last 20 years – a rare government program that supports the economy while cutting the deficit. In a competitive world, we are left with no choice but to invest in non-U.S. manufacturing and move production to countries that support high-tech exporters.”
In addition, GE determined that it must move packaging for its 50 hertz aeroderivative gas turbine product line from the U.S. to Hungary and China, where functioning ECAs will support our customers with critical financing. The move is expected to impact 100 people who currently work in the company’s facility outside Houston, Texas, and transition will take place in 2016.
“We do not make today’s announcements lightly, and in fact, have done everything in our power to avoid making these moves at all, but Congress left us no choice when it failed to reauthorize the Ex-Im Bank this summer. We know this will have an impact not only on our employees but on the hundreds of U.S. suppliers we work with that cannot move their facilities, but we cannot walk away from our customers,” Rice said.
According to its website, the Export-Import Bank of the United States (EXIM) is the official export credit agency of the United States. EXIM is an independent, self-sustaining Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services.