• Stickup: GE Demands These Taxpayer Subsidies Or Else

    In June, General Electric Chief Executive Officer Jeffrey Immelt threatened to send jobs overseas if Congress didn’t reauthorize the Export-Import Bank.

    “We’re not going to lose this business,” Immelt was quoted by Bloomberg in a speech to the Economic Club of Washington. “We’ll build these products in places where export credit financing is available.”

    But GE and 130 other companies that export products using Ex-Im bank loan guarantees have been eliminating or shipping thousands of jobs overseas while benefiting from the taxpayer-subsidized agency, a Watchdog.org investigation found.

    The Export-Import Bank Act of 1945, which set up the bank, specifically required it to guarantee loans that “contribute to the employment of United States workers.” But Watchdog’s analysis of Ex-Im and U.S. Department of Labor databases show companies benefiting from about 45 percent of all the bank’s guarantees since 2006 eliminated or exported at least some jobs to other countries.

    David Williams, president of the Taxpayers Protection Alliance which opposes Ex-Im re-authorization, said Watchdog.org’s analysis shows the flaws in the bank’s mission and policies.

    “It’s almost a cognitive dissonance,” 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, boasts that it “supported” 164,000 American jobs last year.

    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 DOL records Watchdog.org reviewed listed job-loss numbers. The remaining 131 records noted jobs were sent overseas but didn’t list the specific number of positions lost. DOL spokesman David Roberts did not return repeated calls and emails to explain why only some of the petitions detailing job losses are online.

    Watchdog.org learned that taxpayers were also on the hook for retraining many Americans who lost jobs at Ex-Im supported companies because of the federal Trade Adjustment Assistance program. In 2010, Congress appropriated nearly $1 billion for TAA, and the program is expected to cost an additional $2 billion through 2020.

    TAA provides retraining, job search and added unemployment payments to workers whose jobs were eliminated because of foreign competition or because their jobs were sent overseas.

    Bank spokesman Lawton King would not provide a bank official to discuss the issue, but he emailed a statement noting that Ex-Im 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.’”

    But a 2013 Inspector General report questioned how well the bank does in verifying that exporters sell U.S. products using Ex-Im guarantees.

    “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.

    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.

    Most of Watchdog.org’s calls and emails to U.S. lawmakers were not returned, but a spokeswoman for U.S. Rep. Ken Buck, R-Colo., provided a statement praising the expiration of Ex-Im Bank’s authorization.

    “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,” the statement said. “Ex-Im has become a breeding ground for corruption, cronyism, and fraud.”

    The reauthorization of the bank, which for decades was routine, was blocked when House Republicans broke with establishment lawmakers. 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 that then compete on a less-than-level 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 profit.

    That final point is controversial as Congressional Budget Office staff testified last year that the bank would cost taxpayers $2 billion between this year and 2024 if bank officials used a common accounting method.

    The Watchdog.org investigation also questions whether the bank does enough to encourage its beneficiaries to keep jobs in the United States.

    General Electric 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 DOL at least a dozen times of GE jobs moved to Mexico, China, Hungary and other countries, DOL records show.

    GE spokeswoman Meghan Thurlow declined to do an interview on the subject, providing an emailed statement she said “speaks for itself.”

    “GE is a major contributor to the U.S. economy, adding 16,000 U.S. jobs since 2009,” she wrote in an email exchange. “We employ more than 130,000 Americans, (and) generate billions in U.S. exports.”

    But GE’s corporate filings show since 2006 the company reduced its U.S. workforce by 19,000 employees while increasing overseas jobs by 5,000.

    A 2011 Huffington Post article noted that in 2000 GE had thousands more jobs in the U.S. than abroad but that flipped in the past decade. “Since Immelt took over in 2001, GE has shed 34,000 jobs in the U.S., according to its most recent annual filing with the Securities and Exchange Commission. But it’s added 25,000 jobs overseas,” story said.

    Thurlow said SEC employee disclosures include jobs at NBCUniversial that GE spun off in 2009 but she did not provide any additional details.

    Of the more than 20 DOL certifications of GE jobs losses since 2006, only three petitions that detail the number of jobs lost are online at the DOL website. Those clearly show jobs moved out of the United States.

    In 2013, an HR manager at the Ravenna, Ohio, plant notified DOL that 160 jobs would be lost. “Production is being moved to a foreign country (sic), Budapest,” the petition says.

    The same year, a union official reported between 500 and 1,500 GE jobs building locomotives and other vehicles at the Erie, Pa., plant will 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 uses foreign parts.

    A year later, union officials reported 200 jobs would be lost in the closing of New York plant and moving production to Florida. 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 (NY) capacitors, to a manufacturer in China,” it said.

    GE is not alone. Since 2006, Boeing has been the largest beneficiary of selling products under loan guarantees, totaling more than $57 billion, according to an Ex-Im Bank database on Data.gov. Since 2013, the company has moved more than 4,400 jobs offshore or eliminated them because of foreign competition, DOL 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 the third world, 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 2015 DOL filing reported as many as 3,500 jobs from Washington state will be moved overseas. “The Boeing Company has continued the strategy of outsourcing instituted in 2012,” the union official wrote. “The Company has outsourced manufacturing support to Australia, Canada, Mexico, Russia and India.”

    Union officials did not return Watchdog.org’s calls seeking comment and requesting interviews with displaced workers.

    Neale followed up with an email that contended that while some jobs moved overseas, the company has created tens of thousands of well-paying opportunities in the United States.

    “We have created more than 30,000 U.S. jobs in our commercial airplane business over the last 10 years, most of them in Washington state, and about 6,000 of them at our new manufacturing facility outside of Charleston, SC,” he wrote. “More than 90 percent of our direct employees company wide are here in the United States, and 80 percentof our commercial airplane suppliers are here in the U.S. as well. As mentioned when we talked, we are a global company in terms of customers, but in terms of jobs we are very much a U.S. company.”

    TPA’s Williams said Congress’s failure to re-authorize Ex-Im is a good test to see if the government can get rid of a program that is no longer needed and is not benefiting U.S. workers.

    “Let’s call a timeout now and see if there are any real economic consequences of eliminating Ex-Im,” he said. “If there are, they are going to be minimal.”

    This article courtesy of Arthur Kane at Watchdog.org

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