In June, General Electric Co. Chief Executive Officer Jeffrey Immelt threatened to move company jobs overseas if Congress didn’t reauthorize the Export-Import Bank.
“We’re not going to lose this business,” Mr. Immelt said in a June 17 speech to The Economic Club of Washington. “We’ll build these products in places where export credit financing is available, because we have to.”
But even with Ex-Im Bank loan and financing guarantees, GE and 130 other U.S. companies are still terminating or shipping thousands of jobs overseas, a Watchdog.org investigation found, indicating the elimination of the taxpayer-subsidized agency isn’t the be-all and end-all for corporations making offshore employment and investment decisions.
The Export-Import Bank Act of 1945, which established the bank, specifically required it to guarantee loans that “contribute to the employment of United States workers.” But Watchdog.org’s analysis of the Ex-Im Bank and U.S. Department of Labor databases show the companies who benefited from about 45 percent of all the bank’s guarantees since 2006 eliminated or exported at least some jobs to other countries.
The Ex-Im Bank lost its operational charter on July 1 after the Republican-dominated House of Representatives let it expire. Despite President Obama’s urging and strong backing from the U.S. Chamber of Commerce and other business lobbies, Congress has yet to reauthorize the bank and is currently wrangling over its future.
David Williams, president of the Taxpayers Protection Alliance, which opposes the bank’s reauthorization, said that Watchdog.org’s analysis shows the flaws in the bank’s mission and policies.
“It’s almost a cognitive dissonance,” Mr. Williams said. “You say you’re helping jobs, but you’re sending jobs overseas. The point of Ex-Im is to create jobs here and not elsewhere. They’re speaking out of both sides of their mouth.”
The bank, which guarantees loans to foreign businesses and governments to buy U.S. products and services, boasts on its website that it supported 164,000 American jobs last year. Supporters say the bank also is a net contributor to the federal treasury through the fees and profits it generates on its operations.
But bank and Department of Labor records show companies that shipped $69 billion of products using Ex-Im loan guarantees since 2006 also shipped at least 5,600 jobs overseas in that same time period, Watchdog.org found.
Actual job losses are likely to be four or five times higher for Ex-Im exporters, because only 34 of the Department of Labor petitions Watchdog.org reviewed listed specific job-loss numbers. The remaining 131 records noted jobs were sent overseas but didn’t list the specific number of positions lost.
In addition to sending some U.S. jobs overseas, the bank also left U.S. taxpayers on the hook for retraining many Americans who lost jobs at Ex-Im-supported companies, Watchdog.org reported. The federal Trade Adjustment Assistance (TAA) program provides retraining, job search and added unemployment payments to U.S. workers whose jobs were eliminated because of foreign competition or because their jobs were sent overseas.
The current proposal for TAA would cost around $1.8 billion through 2020, according to the Congressional Budget Office.
Ex-Im Bank spokesman Lawton King said in an emailed statement that the Washington-based bank only supports exports that are made or have nearly all their components made in the United States.
“EXIM Bank finances U.S. export-related transactions in order to support U.S. jobs,” the email statement said. “If a foreign company would like to finance a transaction with EXIM financing, the company must ‘buy American.’”
Arguing rivals such as China do far more to subsidize their export sectors, GE’s Mr. Immelt argued this summer, “If you had told me a decade ago that this would ever be something our country would eliminate, I would have said you’re crazy.”
Questioning content standards
But a 2013 investigation by the bank’s inspector general questioned how well the bank holds companies to its ‘buy American’ standards.
“Due to the lack of verification efforts and because we identified concerns regarding exporter certifications of content, we believe Ex-Im Bank has limited assurance that content requirements are met,” IG auditors wrote.
Department of Labor records also question the bank’s ability to encourage U.S. businesses to keep their employment in the country.
GE and its subsidiaries shipped nearly $5 billion in products with Ex-Im Bank guarantees since 2006, but the company, its subsidiaries and union officials notified the Department of Labor at least a dozen times of GE shifting jobs to Mexico, China, Hungary and other countries, DOL records show.
“GE is a major contributor to the U.S. economy, adding 16,000 U.S. jobs since 2009,” GE spokeswoman Meghan Thurlow said in an email. “We employ more than 130,000 Americans [and] generate billions in U.S. exports.”
But GE’s corporate filings show that, since 2006, the company reduced its U.S. workforce by 19,000 employees while increasing its overseas workforce by 5,000.
Ms. Thurlow said SEC employee disclosures included jobs at NBCUniversal, which GE spun off in 2009 but didn’t provide any additional details.
Department of Labor petitions of GE job losses since 2006 clearly show some of these U.S. jobs moved outside of the country.
In 2013 a human resources manager at a GE plant in Ravenna, Ohio, notified the government 160 jobs would be lost.
“Production is being moved to a foreign country (sic), Budapest,” the petition says.
The same year, a GE union official reported between 500 and 1,500 GE jobs building locomotives and other vehicles at the Erie, Pennsylvania, plant would be lost.
“(W)orker separations at the Erie Plant have occurred and are threatened as a result of the continuing and expanded shifting of production by the company to foreign countries,” the petition said. News stories noted 950 jobs were lost because the jobs were shifted to a lower-cost Texas plant, which the union petition said used foreign parts.
A year later, union officials reported 200 jobs would be lost in the closing of a New York plant. The petition notes shifting production overseas to France and China contributed to job losses.
“In the past three years, the company has outsourced the capacitors used in GE locomotives, one of the largest customers of Ft. Edwards [New York] capacitors, to a manufacturer in China,” it said.
GE is not alone.
Since 2006 Boeing has been the largest beneficiary of Ex-Im loan guarantees, totaling more than $57 billion, according to an Ex-Im Bank database on Data.gov.
And since 2013 the company has moved more than 4,400 jobs offshore or eliminated them because of foreign competition, Department of Labor filings show.
Boeing spokesman Tim Neale said without bank loan guarantees, which account for about 15 percent of Boeing’s sales — mostly to companies and governments in emerging markets — there is a good chance more jobs will move to other countries.
“We’re not going to sit back and lose major market share,” he said, adding that the European and Chinese airplane companies receive loan guarantees from their governments. “It would be a very slippery slope for us.”
A Department of Labor filing this year reported as many as 3,500 Boeing jobs from Washington will be moved overseas. Still, the company has created more than 30,000 U.S. jobs in its commercial airplane business over the last decade in both Washington and Charleston, South Carolina, Mr. Neale said.
“We are a global company in terms of customers, but in terms of jobs we are very much a U.S. company,” Mr. Neale said in an email.
Still, the company continues to outsource — with or without the subsidized loans.
Boeing “has continued the strategy of outsourcing instituted in 2012,” a union official wrote in a Department of Labor petition. “The company has outsourced manufacturing support to Australia, Canada, Mexico, Russia and India.”
Ex-Im’s Mr. King declined to comment on whether U.S. companies who send jobs overseas should be prevented from participating in Ex-Im Bank exports, saying Congress sets the bank’s rules.
And those in the House who oppose the bank’s reauthorization aren’t budging.
“As a prosecutor, I strongly oppose the Ex-Im Bank because this federal agency has a history of accepting bribes, steering funds to favored foreign companies, and chilling the market for our home-grown companies,” Rep. Ken Buck, Colorado Republican, said in a statement to Watchdog.org. “Ex-Im has become a breeding ground for corruption, cronyism, and fraud.”
Conservatives have charged the bank is a waste of taxpayer money, distorts markets by favoring some companies over others and provides cheap financing to foreign companies, which then compete on a tilted playing field with U.S. businesses.
Bank supporters point out that most developed countries have similar government guarantees. They say Ex-Im funding maintains U.S. jobs, and it doesn’t cost taxpayers anything because the bank operates at a net profit to the government from the fees and interest its loan guarantees generate.
The U.S. Chamber and the National Association of Manufacturers, among others, are lobbying hard to try to get the bank’s charter reauthorized.
Congressional inaction “is gambling jobs in the United States, ceding our mantle of economic leadership to foreign competitors and hurting small businesses and manufacturers,” NAM said after the House passed a three-month highway extension in July that didn’t include a provision for restarting the Export-Import Bank.
• Arthur Kane is a reporter for Watchdog.org, a national network of investigative reporters covering government waste, fraud and abuse. Josh Kaib, Grayson Quay, Steve Ambrose and Sarah Chavey contributed to this story.