We’ve talked about the recent resurgence of U.S.-based manufacturing a lot on this blog. With the steady increase of manufacturing jobs in the USA, there’s a lot to be optimistic about when it comes to the future of the manufacturing industry.
One major source of income for manufacturing companies is the export of their goods to other countries. However, not every company has the capital to handle the expense of exporting their goods. This is especially true of smaller manufacturers who happen to receive sudden, large orders for their products from an overseas client.
When small manufacturers need to secure loans so that they can cover export costs, they, much like private citizens looking for a home loan, turn to the bank. However, most private banks will not provide loans to companies to cover export costs without some kind of guarantee. That is where the U.S. Export-Import (Ex-Im) Bank comes in.
Chairman & President Fred Hochberg of Ex-Im Bank recently had an interview with CNBC where he specifically mentioned Marlin Steel. You can watch the video in this blog post or here on cnbc.com.
What Ex-Im Does
The Ex-Im bank helps to guarantee that manufacturers can successfully export their goods to foreign markets by providing financial support to companies that need it. The Ex-Im Bank also provides insurance for companies in the case of non-payment. It borrows money from the Treasury to cover these loans, and repays that money plus interest when loans are repaid.
By giving companies the support that they cannot get from private sector banks, the Ex-Im bank helps to ensure that American businesses can remain competitive with overseas manufacturers. Without the support of the Ex-Im bank, U.S. companies would have a much harder time securing the funds that they need to successfully export goods to other markets, leading to a loss of business… which would eventually mean lost jobs as these companies struggle to keep up with foreign businesses that enjoy the support of their own Ex-Im Bank equivalents.
According to an article featured on The Wall Street Journal’s website, the Ex-Im Bank provided $27.4 billion in loans in the 2013 fiscal year. These loans supported $37.4 billion in exports.
The Ex-Im Bank, which has been in operation since 1934, is faced with the very real possibility of extinction. Its current authorization to operate is set to expire at the end of September, and the current majority leader of the House, Rep. Kevin McCarthy, is dead set on opposing the reauthorization of the Ex-Im Bank.
As Jay Timmons, the President of the NAM (National Association of Manufacturers), said in a recent interview with Industry Week: “200,000 employees at 3,400 companies depend on Ex-Im Bank financing for their jobs” and that “allowing the Ex-Im Bank to shut its doors would be a gift to foreign producers and would result in the loss of exports.”
Opposition to the Ex-Im Bank is largely based on a series of myths about its operation. The U.S. Chamber of Commerce, an organization dedicated to supporting American businesses both large and small, has shared a number of these myths on their website so that people can see the truth about the Ex-Im Bank’s operations.
Thomas J. Donohue, the President and CEO of the U.S. Chamber of Commerce stated that:
With Americans overwhelmingly focused on the need to create jobs and grow our economy, business owners are understandably perplexed by the inside-the-Beltway campaign against the Ex-Im Bank. In particular, the thousands of small businesses that depend on the bank to be able to access foreign markets are stunned at the threat that Washington could let its charter lapse. However, we won’t let that happen.
Why is the President of the U.S. Chamber of Commerce so concerned about the potential lapse of the Ex-Im Bank charter?
Because without the aid of the Ex-Im Bank, small manufacturing businesses would have to try to compete with foreign companies that are partially or wholly subsidized by their governments. Naturally, this would put small American companies at an enormous disadvantage.
In fact, did you know that most developed countries have their own version of the Ex-Im Bank? How about how the Ex-Im Bank supports small businesses? If not, you might want to check out the Ex-Im 101 video on the NAM website. This video explains a lot about what the U.S. Export-Import Bank does and how it operates.
As an organization dedicated to the well-being of American businesses, the NAM is organizing its members to provide support for the reauthorization of the Ex-Im Bank. Hundreds of businesses are now a part of this organized effort to get the members of Congress to appreciate the value of this institution to the financial well-being of American businesses.
In addition to the National Association of Manufacturers, the U.S. Chamber of Commerce is urging anyone who has been part of a business that the Ex-Im Bank has helped to send letters to their Senators and Representatives requesting that Ex-Im Bank be reauthorized.
Here at Marlin Steel, we wholeheartedly support the reauthorization of the Ex-Im Bank. With so many other countries operating their own version of the Ex-Im Bank (many of which provide much more funding to companies affiliated with their individual governments than our own does), it is of paramount importance to make sure that this organization can continue to provide the support American companies need to have a level playing field.
Without support from the Ex-Im Bank, there are many companies that would not be able to complete the business deals they need to survive, let alone thrive and create more jobs for Americans.
If you want to support the Ex-Im Bank, contact NAM today to learn how you can help. With your support, the NAM and its members, such as Marlin Steel, can help ensure the continued growth of the manufacturing industry.