By Alex Charlton
Congress could soon put thousands of Pennsylvania jobs in serious jeopardy. A little-known federal agency proven to fuel job creation throughout our state is about to close.
The Export-Import Bank provides loans to international customers looking to buy American-made products and services. And it provides insurance to small and midsized domestic firms to help them guard against the risks of selling in foreign markets. Rather than competing with commercial banks, the Export-Import Bank steps up when companies can't get credit in the private market.
It's now up to Pennsylvania lawmakers, including Republican U.S. Reps. Mike Fitzpatrick, of the Eighth District, and Keith Rothfus, of the 12th, and Republican U.S. Sen. Pat Toomey, to ensure that the bank continues to fill this important role by reauthorizing its charter before its expiration date at the end of this month.
The Ex-Im Bank has empowered Pennsylvania businesses to sell their products and services in dozens of foreign markets. Since 2007, the bank has fully supported $6 billion in transactions from more than 250 Pennsylvania firms. In turn, those purchases fuel local job creation. The bank directly supports 35,000 positions in Pennsylvania.
Many of the bank's local partners are small businesses. The agency's lending helps less-established companies without much existing international brand recognition attract foreign buyers.
The Ex-Im Bank has also done an incredible job of keeping its default rate lower than most commercial banks. Since the bank's creation in 1934, the average annual default rate among its borrowers is less than 2 percent. Last year, the rate was less than 1 percent.
As a result, the Ex-Im Bank is one of the few federal agencies that actually generates a profit. Last year, it paid $1 billion into the U.S. Treasury.
According to its charter, the Ex-Im Bank has to be reauthorized by Congress every few years, and its current charter expires this month. If Congress declines to renew it, that would have a negative impact on the Pennsylvania economy. Many local firms depend on the bank's lending to thrive in foreign markets.
Take the Turtle Creek-based manufacturer Holtec. It just used an Ex-Im loan to secure a contract to create parts for a fuel-storage facility in Ukraine. This deal is expected to create hundreds of new local jobs. As Pierre Paul Oneid, the head of Holtec, recently explained, the bank "is the only viable loan guarantor that can enable funding for this project."
There's also the Wayne-based wallpaper manufacturer Wallquest. Since receiving financing from the bank in 2008, Wallquest's exports have grown to 90 percent of its sales. And that growth has fueled the creation of 100 new positions for the firm.
The Export-Import Bank has also helped the Philadelphia-based Bassett Ice Cream Co. go global. This fifth-generation, family-owned business began exporting in 2008, thanks to bank-provided insurance. Today, fully 20 percent of Bassett's revenues come from selling to foreign hotel and buffet chains.
Without the Ex-Im Bank, many of these businesses would collapse. Pennsylvania would lose jobs.
The adverse effects would be felt nationally as well. The Ex-Im Bank currently supports about 205,000 jobs in this country. It facilitated the purchase of more than $37 billion worth of American-made goods last year. And about 90 percent of those transactions involved small businesses.
In the past, the Export-Import Bank has always been reauthorized with broad support. There's no reason to break that streak. It's time for Congress to act - Pennsylvania jobs are on the line.