Bank’s closure could affect Capital Region jobs

The Capital Region could lose out on hundreds of jobs in the next few years if Congress fails to rea
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The Capital Region could lose out on hundreds of jobs in the next few years if Congress fails to reauthorize a bank that most people have never even heard of, local companies say.

That bank is the Export-Import Bank of the United States, the official export credit agency of the federal government since 1934. It helps finance the export of American goods and services by offering loans and guarantees to international buyers. In 2014, it supported $27.5 billion worth of U.S. exports — $10.7 billion of which came from small businesses.

Last year, a key group of Republicans came out against the bank, calling it corporate welfare that favors special interests and a prime example of the government interfering with the free market. Supporters of the bank counter that it levels the playing field for American businesses, which compete against businesses that are offered the same attractive financing from nearly 60 other export credit agencies around the world.

Jobs could move

At the end of June, with no fanfare, Congress let the bank’s charter expire. Now, big companies like General Electric are calling for its renewal and warning they’ll move jobs overseas if they don’t get it. Small companies, too, say they’ll be forced to cut jobs or go out of business without the bank’s help.

“I thought it was just politics being politics and that it would resolve itself because in my mind it was just such a no-brainer,” said Jeff Connelly, vice president of global supply chain for GE Power & Water. “This is not unique to the U.S. Every country — Russia, China — they all have export credit financing. But now that the bank has closed, we’ve become more and more concerned. We’re still hopeful common sense will prevail.”

GE is prepared to move manufacturing operations from its Power & Water headquarters in Schenectady to other countries with export credit agencies, like France, he said. It’s not a move the company wants to make, he said, but it’s the only move that would make economic sense.

GE never would have secured a recent contract to build a power plant in Vietnam if it couldn’t guarantee export financing, Connelly said. That project supports at least 100 jobs in Schenectady, he said. Schenectady employees have also done work on projects for Mexico, Saudi Arabia, Turkey and the United Arab Emirates because of Export-Import financing, the company said.

“I would have said before June 30 that it would have been reauthorized,” Connelly said. “But because it hasn’t, I’d say we’re certainly worried to the point where we’re looking at what alternative plans we would have to make to still be a viable option for our customers and that includes doing work in places that will offer the financing. Our preferred option is to do the work right here because our people are good at it and they’ve been doing it a long time, but we have viable options elsewhere. This is all about economics and we will exercise those options.”

GE suppliers and subcontractors would also be affected, including Gexpro of Albany; Met Weld International of Altamont; Ushers Machine & Tool of Round Lake; and Atlas Copco of Voorheesville.

David Dussault, president and CEO of Package One Industries in Schenectady, said about half of his company’s revenue comes from supplying parts and components to support GE’s turbine and generator operation, as well as its Oil & Gas division.

“The bulk of our parts go to the Schenectady plant,” he said. “So Ex-Im is very important to us. It probably won’t impact us in 2015 because this business is pretty long-cycle. But we would start feeling it in 2016 and beyond if they’re not winning deals that they can build in Schenectady. It could mean a 20 [percent] to 30 percent revenue drop for our company over the next few years.”

Suppliers throughout southern Saratoga County would also suffer, said Pete Bardunias, president and CEO of the Chamber of Southern Saratoga County.

“Historically, we have been the hub on the supply chain for as long as America’s been in business,” he said. “I would guess at least a dozen or more suppliers in our region would be hurt, and then there are the companies that would like to do business overseas that won’t be able to.”

There is an effort in Congress to reauthorize the bank as part of a highway funding bill it must pass by the end of the month. Local representatives have spoken out in favor of the bank. U.S. Sen. Chuck Schumer, D-New York, visited GE’s Schenectady campus last summer to raise awareness and support for the bank. U.S. Rep. Elise Stefanik, R-Willsboro, spoke on the House floor last week to express her support for reauthorizing the bank. And this morning, U.S. Rep. Paul Tonko, D- Amsterdam, will hold a news conference in Washington calling for its renewal, spokesman Sean Magers said.

U.S. Rep. Chris Gibson, R-Kinderhook, meanwhile, has called the bank critical for small businesses in upstate New York looking for access to foreign markets.

“I am also an advocate for fair trade policies that level the playing field for American farms and manufacturers, many of which compete against foreign businesses that have the backing of their own export credit agencies,” he said in a statement. “This agency also makes sense for taxpayers because it actually brings in revenues for the Treasury.”

Over the past two decades, the bank has generated nearly $7 billion more than the cost of its operations, it reports on its website. Last year, it generated a $675 million surplus.

Categories: Business, News, Schenectady County

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