Ex-Im, Airbus, Boeing & the Democratic debate

Somewhat surprisingly, Airbus and Boeing got inserted into the US election debate yesterday during the Democratic nomination debate.

The manufacturers popped up after candidates Hillary Clinton and Bernie Sanders got into a back-and-forth about corporate America and bailouts, which led to Clinton saying Sanders was the only Democrat in the Senate not to support the US Export-Import Bank.

Sanders responded, “Do you know what the other name of the Export-Import Bank is, what it's called in Washington? It’s called the Bank of Boeing because Boeing itself gets 40% of the money discharged by the Export-Import Bank.”

To which Clinton replied that, as Secretary of State, she had traveled the world and seen how other countries support their manufacturing base and exports, seeing them as job creators. With regard to Ex-Im, she specifically pointed out that there were just two major airliner manufacturers, Airbus and Boeing, and Ex-Im helps Boeing secure foreign sales.

CNN moderator Anderson Cooper interjected the discussion at one point to explain what Ex-Im Bank does, noting that “non wonks” might never have heard of the government financing agency. In describing its work, he used the term “loans”, but actually the correct term is “loan guarantees” and there is an important difference. Ex-Im’s primary function is to provide loan guarantees that enable potential foreign buyers to secure financing for American products and services where they might otherwise not be able.

Ex-Im’s importance to Boeing is acknowledged by the manufacturer, and the agency was reauthorized through 2019 by US Congress late last year by an overwhelming majority vote.

Wherever you sit politically, the fact is that Ex-Im is not a bailer out of corporations, nor even a hand-me out for export sales. It’s a financing mechanism for commercial foreign sales (its loan guarantees cannot be applied to military equipment or services) that sits squarely with similar assistance that other countries provide to ensure their important manufacturing companies and capabilities have access to overseas deals. Even where Ex-Im is involved in a deal, the competition between Airbus and Boeing for each sale is cut-throat.

And if you want an example of what it’s like to lose your national airliner design, manufacturing and export base, look to the UK. Or, to a country that is now fighting to keep that capability – with its high-skilled jobs – Canada.