New England firms fear loss of international sales
Congressional fight over Import-Export bank limits credit lines
Boyle Energy Services and Technology Inc. recently purchased a 70,000-square-foot building in Merrimack, N.H., anticipating an expansion that would create 50 jobs, largely based on the overseas sales of the firm’s services and energy technology products.
But Michael Boyle, president of the Manchester, N.H., company, said he is now uncertain how fast and how much he will be able to expand, given the recent demise — and increasingly unsure resurrection — of the US Export-Import Bank, which provides the insurance and lines of credit his firm needs to sell and compete in foreign markets.
“Anywhere from 80 to 90 percent of our business is overseas, and we’re severely challenged by this infighting over the Export-Import Bank,” said Boyle, noting he is finding it hard to line up larger overseas transactions. “It’s hard finding private-sector alternatives to what the Export-Import Bank offers. It’s going to hurt our plans for growth if something isn’t done.”
Boyle Energy is just one of thousands of businesses across New England and the country scrambling to find insurance, credit, and other financial services needed to export products. The reason: The Export-Import Bank, a federal agency that provides financial services to boost the sale of US goods in foreign markets, effectively went out of business on June 30, when Congress failed to act on reauthorizing the agency.
As a result, the Export-Import Bank can no longer conduct new business with companies like Boyle Energy. Instead, the agency is merely winding down past business transactions until, or if, Congress reauthorizes the agency. If Congress fails to act, the agency ultimately would shut down altogether.
The Export-Import Bank was founded in 1934 as a way to help businesses and boost the economy during the Great Depression. Last year, the agency handled 3,700 transactions valued at more than $27 billion — and returned $675 million to the US Treasury. Its loan delinquency rate is less than 1 percent, lower than at many private lenders.
For more than a year, the Export-Import Bank had been caught in the middle of a battle pitting conservative critics, who view the agency’s services as a form of “corporate welfare” and “crony capitalism,” against supporters of the bank, who see it as indispensable to helping US companies compete in the global economy.
The congressional haggling has left New England companies that export everything from lobsters to sophisticated technology products in limbo.
Normally, Cooley Group Holdings Inc., Rhode Island’s third-largest merchandise exporter, wouldn’t think of asking foreign buyers to pay up front for its rolls of polymer materials.
But the Pawtucket company, whose products are used in everything from roadside billboards to membrane liners of fuel tanks in Formula One race cars, can no longer get insurance from the Export-Import Bank that guarantees it will get reimbursed should an overseas customer fail to pay its bills. So now it’s asking foreign customers to pay some, or all, in advance.
Some customers are balking at the request — and company officials fear they may opt to do business elsewhere.
“It’s putting us at a competitive disadvantage against our rivals,” said Dan Dwight, chief executive of the company, which employs about 200. “We’ve had a slowdown in sales with our international customers. It’s slowing our business.”
As a privately held company, Cooley does not report specific sales figures.
In Lynn, workers at General Electric Aviation’s jet and helicopter engine factory are nervously eyeing events in Washington. Earlier this month, General Electric announced it would shift 500 jobs abroad due to the Export-Import Bank’s inability to help finance future international deals.
Rick Kennedy, a spokesman for GE Aviation, said the company’s move would not immediately affect operations in Lynn, where about 3,000 employees make aircraft engines sold around the world. But Kennedy said the Lynn plant could eventually lose some jobs, if the Export-Import Bank remains permanently shut and GE has trouble selling its engines overseas.
That prospect infuriates Ric Casilli, business agent at the IUE-CWA, Local 201, which represents more than 1,400 workers at GE Lynn. “This is just another dagger at the throat of the manufacturing industry,” Casilli said.
But critics of the Export-Import Bank say large multinationals like GE, which earned more than $15 billion in 2014 on nearly $150 billion in revenues, should not have a problem exporting. Dan Holler, a spokesman for Heritage Action of America, a conservative group in Washington, said companies can and should find private firms to provide export insurance and credit — and not rely on a government agency.
“Small companies across the country are able to export just fine without the Export-Import Bank,” Holler said. “The Export-Import Bank is just not needed.”
Al Giandomenico, president of the Export Insurance Agency in Walpole, said many firms do get by without the Export-Import Bank. But many other exporters rely on lines of credit provided by US banks to maintain cash flow while waiting for overseas payments — and those banks often require some sort of export insurance if firms do a lot of business overseas.
In particular, small companies have a difficult time finding adequate export insurance because they’re viewed as too risky by private insurers, said Giandomenico, whose firm brokers export insurance between firms and insurers, including the Export-Import Bank.
“It’s the small companies that are being left without choices,” said Giandomenico of the Export-Import Bank impasse. “They’re the ones getting hurt by this.”
Carly Seidewand Eppley, vice president of global sales at Resin Technology LLC in Groton, said her 12-employee firm could get hurt if the Export-Import Bank isn’t reauthorized. Her company sells polyvinyl chloride (PVC) resin used in construction products, from piping to vinyl sidings.
Until recently, her company paid the Export-Import Bank about $140,000 a year to guarantee a $14 million line of credit. Since the federal agency closed for new business in July, Resin Technology has only been able to obtain an $11 million credit line — a 21 percent cut in available credit that hurts her company’s ability to conduct larger transactions.
“That’s a huge deal,” she said. “Other countries have their own export-import banks and our foreign rivals can tap into that available credit. But we can’t. I’m no longer on the same level playing field with our overseas competitors.”