Export-Import Bank provides competitive tool for Wisconsin businesses
Opposition calls program ‘corporate welfare’

By Katherine Michalets - Freeman Staff

Sept. 30, 2015

SUSSEX - The larger companies like GE and Boeing may have been crying foul louder about the Export-Import Bank of the United States not getting reauthorized by the U.S. government, but it’s the small- to medium-sized companies like Prestwick Limited in Sussex that are most likely to use the financing options available through the government organization.

Prestwick Limited Executive Vice President Mike Fryatt said the Ex-Im Bank has been beneficial to his company, which makes tailored furnishings for the hospitality industry. He said Prestwick formed a relationship with the bank in 2007 and has used it to offer credit for several export deals to the United Arab Emirates, Spain and islands in the Caribbean.

“I would hope (Ex-Im Bank) gets reauthorized. It’s a great tool to have in the tool bag,” Fryatt said. “It has protected United States companies.”

On Monday, GE announced it will stop making small engines in Waukesha at its Power & Water Distributed Facility because the Ex-Im Bank had not been reauthorized this summer, and as a result the international company needed to look elsewhere for export financing.

On Tuesday, the Metropolitan Milwaukee Association of Commerce issued an alert supporting reauthorization of the Export-Import Bank and created a form letter that members could fill in and send to legislators.

According to the letter drafted by the MMAC, since 2007 the Export-Import Bank has supported more than $4 billion in export activity in Wisconsin benefiting 180 companies, the majority of which are small businesses.

“Last year alone, those activities supported over $600 million in economic activity in our state.  In addition, other smaller companies who were not direct recipients of Export Import Bank help but who supply goods and services to larger exporters also benefited from the bank’s activities,” according to the letter.

“The Export-Import Bank operates at no cost to the U.S. taxpayer. It charges fees for its services, follows rigorous accounting and risk-management standards and its loans are often backed by the collateral of the goods being exported. As a result, their default rate has consistently been less than 2 percent over the past eight decades, a default rate lower than most commercial banks.”

During a Tuesday morning event at La Casa de Esperanza in Waukesha, Gov. Scott Walker was asked about GE and the Export-Import Bank and how some of his friends and supporters are opposed to reauthorizing the bank, including U.S. Rep. Paul Ryan, R-Janesville. He was asked if he would lobby Ryan and U.S. Rep. Jim Sensenbrenner, R-Menomonee Falls, to reauthorize the bank.

“I think it’s unwise for any corporation to be making decisions about where they place work just based on one particular vote in the Congress,” Walker said. “So my vote would be that we can work with GE to make the case that the quality of the employees they have here in Waukesha and southeastern Wisconsin trumps anything else they’re going to get around the world and that it’s better off to stick with folks who are well-trained and well-prepared.”

His office did not return a call seeking additional comment Tuesday. The office of Lt. Gov. Rebecca Kleefisch, who just returned from a trade mission to Asia, declined to comment on GE’s announcement.

A statement from Ryan’s office Monday expressed his opposition to the reauthorization.

“He feels there are better ways Congress can promote economic growth; rather than continue with corporate welfare, we should be focused on fixing our tax code and reducing burdensome regulations, which are long-term solutions to our economic woes,” according to the statement.

Ursula Wegrzynowicz, principal at Trade Acceptance Group, LTD., is an Ex-Im broker and has extensive experience with the organization. She said the majority of companies who use Ex-Im’s financial services are small- and medium-sized exporters. They often utilize Ex-Im’s credit insurance which many private companies would not provide, especially for developing markets, due to the perceived risk for those deals. By having that credit insurance, Wegrzynowicz said, American companies can compete with German and Japanese companies and their 30-, 60- to 90-day finance terms.                          

“It’s a very useful tool for companies trying to go global,” she said. “We are struggling now for some of our customers in Wisconsin. Who do we go to?”

When the costs of insurance rise for American companies to export to other countries, they will likely pass those costs on to buyers overseas and then the American companies won’t be as competitive, Wegrzynowicz said.

Three months ago, Wegrzynowicz said, she would have thought the federal government may have let the reauthorization of the Export-Import Bank get down to the wire, so she is “flabbergasted” the government has allowed the country to go so long without it.

“It is going to be over the next few years probably before we see the real effects,” she said, explaining that the Ex-Im is still honoring existing policies but not allowed to make new ones. The authorization for Ex-Im has never lapsed since President Franklin D. Roosevelt created it, she said.

“This is unprecedented,” Wegrzynowicz said. “It’s just more uncertainty for businesses as if there isn’t enough uncertainty already.”

Fryatt said Prestwick Limited has already had one project where the lack of Ex-Im financing was a factor.

“We either need to take on risks by taking on credit or we need to find a private bank,” he said, adding he heard working with a private bank can be more costly and possibly cost-prohibitive.

The company has seen growth, which Fryatt attributed partly to being able to do exporting. He said Prestwick employed about 60 people in 2007 when it started to work with the Export-Import Bank and now has about 100 employees.

Email: kmichalets@conleynet.com