General Electric Co is taking steps to shift some U.S. manufacturing work overseas now that the U.S. Export-Import Bank will be shuttered at least until September, the industrial giant's global operations boss told Reuters on Thursday.
GE Vice Chairman John Rice said the conglomerate is bidding on over $10 billion worth of projects that require support from an export credit agency (ECA) like Ex-Im.
With Ex-Im unable to extend new loans or guarantees thanks to an effort by congressional Republicans to shut it down, GE is arranging with ECAs in other countries to finance the deals involved, with much of the production going to GE plants in those foreign locations. The prospective government partners include Canada, the United Kingdom, France, Germany, China and Hungary, he said.
"We're submitting the tenders now. So we are identifying where we'll bid this and the ECA support that comes with it, and it's not in the United States," Rice told Reuters in a telephone interview from Atlanta
Ex-Im has been unable to consider any new financing requests since Congress allowed the bank's charter to expire on June 30.
Rice's comments come as the U.S. Congress starts a five-week summer recess with no clear path to revive Ex-Im in the months ahead. A group of conservative Republicans, who say the 81-year-old trade bank is a nest of "crony capitalism" that doles out government welfare to GE, Boeing Co and other wealthy corporations, want to keep it closed for good.
An effort to revive the bank as part of a multi-year transportation bill won strong support in the U.S. Senate, but stalled this week when the House of Representatives approved a short-term funding extension without the Ex-Im provision.
Boeing chairman Jim McNerney on Wednesday said the aircraft maker was actively looking at moving "key pieces" of its operations to other countries that could offer export credits.
Rice, who is based in Hong Kong, said GE is not moving to shift work and jobs overseas "just to make a point" to Congress, but to win contracts that require export credit agency support. "We're doing this because if we don't, we can't submit a valid tender," he said.
In one such power-sector bid, for example, GE would do final assembly work on its aero-derivative gas turbine power generation units at GE plants in Hungary or China instead of a factory in Houston. It already has capacity in place, and export credit agencies willing to support the work, he said.
"Next year, if we win this bid, work that would have been in Houston will be someplace else," Rice said.
GE also is seeking financing from another country's export credit agency to save a $350 million locomotive deal with Angola that has lost access to Ex-Im support, Rice said.
Ex-Im opponents say the private sector will innovate to fill any void left by Ex-Im. "The sky hasn't fallen" since Ex-Im halted lending, Ted Cruz, the Republican senator and presidential candidate, said earlier this month.
But Rice said more business will move overseas if Ex-Im stays dead.
"The people who are on the other side of this don't really understand how global business is conducted," he said. "They don't want to understand it."
(Reporting by David Lawder; Editing by Kevin Drawbaugh and Chizu Nomiyama)