(Reuters) - General Electric Co (GE.N) has struck a deal for up to $12 billion in financing from Britain’s export credit agency, possibly creating as many as 1,000 jobs in the country.
The deal, announced on Thursday, could be seen as the latest sign of U.S. exporters’ unhappiness at the winding down of the U.S. Export-Import Bank, which lent money to foreign customers of U.S. exporters. Its charter lapsed on June 30 after conservatives in the U.S. Congress cast it as a promoter of “crony capitalism.”
GE is already shifting jobs overseas because of the lack of U.S. export financing and plane-maker Boeing Co (BA.N), the largest U.S. exporter, is threatening to do the same.
Boeing chairman Jim McNerney said on Thursday it was “inevitable” that his company would move work offshore if Ex-Im is not allowed to lend. He said he believed the bank ultimately would be reauthorized.
It is unclear how much business the United States stands to lose with the closure of Ex-Im, or how many companies will follow GE’s lead.
Barry Bosworth, an economist at the Brookings Institution think-tank, said GE’s moves could be a “trial balloon” designed to test the response from Washington. “If the federal government doesn’t respond to this, it is going to be far more widespread,” he said.
GE’s deal with UK Export Finance, a department of the UK government, would support orders for oil and gas and other energy projects in Brazil, Ghana, India, Mozambique and other countries. The jobs are dependent on GE winning bids for the work.
Only last week, GE cited the absence of Ex-Im financing when it announced plans to shift up to 500 U.S. power-turbine manufacturing jobs to Europe and China. It also stopped considering U.S. locations for a new development center for turboprop engines, selecting Europe instead.
Regarding Thursday’s UK deal, a GE spokeswoman said it was unlikely that GE would have made the investments in the United States even if Ex-Im had been operating, but the agreement was representative of the type of opportunities GE can no longer pursue in the U.S. while the bank is closed.
GE Chief Executive Jeff Immelt, who has been campaigning for reauthorization of Ex-Im, in a statement praised Britain as “pro-export and pro-manufacturing,” saying that “in today’s competitive environment, countries that have a functional export credit agency will attract investment.”
U.S. House Financial Services Committee Chairman Jeb Hensarling, who has led conservative Republicans in halting Ex-Im, said on Thursday that Congress should focus on reforming taxes and regulations, which together “will do far more to help our exporters and grow our economy than Ex-Im’s taxpayer-provided subsidies ever could.”
Reporting Lewis Krauskopf in New York and Ankit Ajmera in Bengaluru; Editing by Ted Kerr and Bill Rigby