Ex-Im Bank: Starting to Get Things Right, Slowly

From The Milwaukee Journal-Sentinel and reporter Rick Barrett, who have done an excellent job with this story, “Snail’s pace of Bucyrus loan worries officials“:

The U.S. Export-Import Bank on Wednesday took the first step toward reversing an earlier decision that had put up to 1,000 U.S. jobs and $600 million in Bucyrus International Inc. sales at risk. But the process is taking so long, Bucyrus’ chief executive is worried the contract still could disintegrate, sending the orders – and jobs – to China. 

The bank, which earlier had refused to finance the sale of Bucyrus coal-mining equipment for a power plant in India, on Wednesday voted 3-0 to put the sale back on track. Two more votes remain – one on the project’s financial aspects, and the other for final approval. There’s also a 35-day period during which the deal will be sent to Congress for comments. 

The delays are a concern, said Bucyrus CEO Tim Sullivan, who says the Indian power plant operator, Reliance Power Ltd., could grow frustrated and turn to China or another country for mining equipment since it needs the shovels, draglines, trucks and other gear in early 2011. South Milwaukee-based Bucyrus also needs to start making the equipment soon to meet Reliance’s timeline. 

The story quotes the NAM’s Pat Mears, recounting how the Ex-Im Bank is less aggressive than its foreign counterparts in promoting exports.

Here’s the Export Import Bank’s news release, “Ex-Im Bank Approves Preliminary Review of Export Financing Application for India’s Sasan Power Plant.” Unfortunately, the official statement shows the Bank to be still paying obeisance to the self-imposed environmental dictates that sidelined the project in the first place.

“We are pleased that Reliance is making this commitment to renewable energy, which allows us to sustain U.S. jobs and promote both conventional and renewable energy exports,” said Ex-Im Bank Chairman and President Fred P. Hochberg.

Chairman Hochberg also noted that, “this transaction was also made possible because of Anil Ambani’s leadership and vision in diversifying Reliance Power’s production portfolio of energy projects in India. Reliance Power’s efforts will benefit the people of India and Ex-Im’s efforts will benefit U.S. energy exporters.”

So Reliance Power in India is also doing just enough in the way of alternative energy projects to give the board cover for voting for this specific financing. But the loyalty to environmentalism remains, institutionally limiting the Export-Import Bank’s ability to carry outs basic mission — supporting U.S. exports.

How in the world could the Ex-Im Bank vote down financing for a solid project in the first place, costing a potential $600 million in sales and 1,000 job? Especially now, as the Milwaukee Business-Journal reports, “Milwaukee loses one-third of manufacturing jobs in 10 years: “The Milwaukee metropolitan area has lost 54,800 manufacturing jobs over the last 10 years, the 15th-biggest drop among the largest 100 metros in the country, according to a new Business First of Buffalo analysis.”

Join the discussion 2 Comments

  • Carter Wood says:

    It’s a fair question. It’s one of those cases where unilateral disarmament by the U.S. would surrender market share. As the Journal-Sentinel reports, citing NAM figures: The U.S. Export-Import Bank financed $21 billion in deals last year, Canada’s export bank financed $80 billion, and Japan’s counterpart did $140 billion.

    Policymakers have determined that U.S. backing through loan guarantees — these aren’t grants, mostly, and so involve minimal to modest risk — is an appropriate government function. It’s just a function we could do better at.

  • david foster says:

    The Ex-Im bank decision was obviously crazy, but I’m not grasping why this project couldn’t be financed through normal commercial channels.

    If the Ex-Im bank had never been established, would international trade not exist?

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