With no U.S. trade loans, GE to build turboprop engines in Europe

Thu Sep 17, 2015 2:07pm EDT
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By David Lawder and Lewis Krauskopf

WASHINGTON/NEW YORK (Reuters) - Turning up the pressure on Congress to revive the U.S. Export-Import Bank, General Electric Co (GE.N: Quote) said on Thursday it would open a new development center for turboprop engines in Europe because it cannot access U.S. export financing.

The GE's move was the latest effort by a big company to raise the alarm in Washington about the shutdown of new financing by EXIM, so far with little evident impact on Congress.

GE said the $400-million turboprop project would create 500 to 1,000 jobs. It said it will develop, test and produce engines for larger aircraft, a new market for GE Aviation.

The largest U.S. industrial conglomerate also said it will invest $55 million in Celma, Brazil, to build a new engine testing facility, and will spend $23 million on expanding its engine testing capability in Winnipeg, Canada.

Several European locations are being considered for the turboprop center, including in the Czech Republic, where GE now builds turboprop engines for small aircraft, GE spokesman Rick Kennedy said. Talks are underway with export credit agencies in those countries for financing and loan guarantees.

GE stopped considering U.S. locations for the new facility after Congress allowed EXIM's charter to expire on June 30, the result of a campaign by conservative Republicans against the bank, which they say exemplifies "corporate welfare."

On Tuesday, GE announced plans to shift up to 500 U.S. power turbine manufacturing jobs to Europe and China because it can no longer access EXIM financing.

The warning shots, along with a visit by GE Chairman Jeff Immelt to Capitol Hill on Wednesday, thus far have not jolted Congress into action to revive EXIM. House Financial Services Chairman Jeb Hensarling and a vocal group of other conservative Republicans have blocked legislation to reauthorize the 81-year-old bank.   Continued...

The General Electric logo is seen in a Sears store in Schaumburg, Illinois, September 8, 2014. REUTERS/Jim Young