Marcia Mies is the president and owner of Manufacturing Development Inc., a 60-employee company in Cheney that makes parts for aircraft suppliers and manufacturers.
As the owner of the 35-year-old company, Mies said the most painful thing she has ever had to do is to lay off workers.
But Mies said that just might happen if Congress doesn’t reauthorize the Export-Import Bank within the next 60 days.
The 81-year-old institution’s charter is set to expire June 30, and Mies said that without the bank to support the sales that her customers make overseas, she could see her business affected – and that’s bad news for MDI and its employees.
“It’s not just about the big corporations,” Mies said. “It matters to us.”
The Export-Import Bank has become one of several government programs in Washington that has been targeted by conservative Republicans who say it unfairly aids some businesses at taxpayers’ expense.
The bank, which supports itself through interest and fees on its loans and services, returned $675 million in profit to the U.S. Treasury in fiscal year 2014. In fiscal year 2013, its profit was $1.1 billion.
The program, started in February 1934, helps U.S. companies that depend on exports by guaranteeing loans and providing credit insurance to overseas buyers of American products.
Robert Mies, director of finance at MDI, doesn’t understand why the bank’s reauthorization is so hard to achieve if it’s a self-supporting institution.
“I just don’t understand why we’re even talking about it,” he said.
Risk to taxpayers
But opponents counter that just because it’s turning a profit now doesn’t mean the bank couldn’t prove to be a drain later.
Conservative groups such as the Heritage Foundation say the bank is “a multibillion-dollar risk to taxpayers” and that it benefits mostly large companies, such as Boeing.
The bank was scheduled for a five-year reauthorization by Congress last year. Instead, it received a nine-month extension in September as part of a larger bill that temporarily funded the government.
U.S. Rep. Mike Pompeo, R-Wichita, sides with those who think the “the current version of the Export-Import Bank puts taxpayers at enormous financial risk.”
“When the loans go bad, that’s who pays for the default,” he said.
Pompeo said there are a number of proposals being worked on in Congress that would shift the liability for bad loans away from the federal government.
He also thinks the private sector would provide the financing that the Export-Import Bank provides if its reauthorization were to fail.
“I believe that the private credit markets will fill the void of what the Export-Import Bank has been doing,” Pompeo said.
Others aren’t so sure, and they point to similar financing entities in other countries that would be happy to increase their own exports by scooping up foreign customers now served by U.S. companies.
Last week, House Speaker John Boehner made clear his support for the bank. He asked Financial Services Committee Chairman Jeb Hensarling, R-Texas, to come up with a plan to overhaul the bank or wind down its operations – rather than abruptly stop funding.
“There are thousands of jobs on the line that would disappear pretty quickly if the Ex-Im Bank were to disappear,” said Boehner, R-Ohio. “So I told the chairman he needs to come up with a plan.
“Because the risk is that if he does nothing, the Senate is likely to act. And then what?”
Companies such as MDI don’t benefit directly from the bank’s services.
Rather, MDI supplies companies that make sales abroad, and those overseas customers can make use of the bank services to get a loan or a less-expensive loan.
But if the Export-Import Bank were to no longer exist, the supply line would be disrupted. Maybe MDI’s customers no longer could sell as much overseas, and that means MDI would sell fewer products to those aircraft suppliers and manufacturers who export.
“For us, we have around 60 employees here,” Mies said. Nearly “all of these people live and work in the community. If we have to downsize, those are homes, cars, trips to the grocery store that are affected.”
According to the Export-Import Bank, it has provided $2 billion in insured shipments, loan guarantees and direct loans to 59 Kansas companies since 2010.
Those companies include general aviation aircraft manufacturers – including Textron Aviation Cessna and Beechcraft – as well as manufacturers of agricultural equipment, chemicals and plastics and oil and gas extractors, according to the bank’s website.
In fiscal year 2014, the bank said, it approved $20.5 billion in total loans and guarantees, which it said supported an estimated $27.5 billion in U.S. export sales.
Karyn Page, president and CEO of Kansas Global Trade Services, said the bank’s reauthorization is important for Kansas exporters.
“If there were not an Export-Import Bank providing export financing … it would make it very difficult for exporters who need that type of service to compete,” she said.
Page said she thinks there are things that can be improved at the Export-Import Bank, including being more responsive and flexible in working with companies on export deals.
“I want the product to be better,” she said. “I don’t think it’s perfect. … But throwing out the baby with the bathwater is probably not the solution.”
She said Kansas companies are competing in a global marketplace with global competitors that have a “deep and broad supply chain” and that the Export-Import Bank is one of the “toolbox of services available to Kansas companies to help them export more.”
Without an Export-Import Bank, Page said, it will make exporting more difficult for Kansas companies wanting to do business overseas.
“Do we really want to hamstring ourselves further?” she asked.