Back in October, Jim Harris was waiting for Congress to do what both political parties say is vital to the nation: create jobs.
Harris’ Ridgefield company, Burke Industrial Coatings, was ready to sell its antibacterial coatings to an eager customer in Saudi Arabia. It was a big order for a small seven-employee company: 40,000 gallons of Burke’s Silver Bullet coating for air ventilation equipment at a huge airplane maintenance facility in Saudi Arabia.
But Harris wasn’t sure he could close the deal without the security of insurance offered as one of many services of the federal Export-Import Bank, commonly known as the Ex-Im Bank. And the bank couldn’t take on any new business, because Congress had allowed its charter to expire in July.
The controversy over the bank was baffling to most: the bank makes enough money not only to pay its own way, but to return a profit to the U.S. Treasury. Some politicians in the Republican Party’s most conservative wing had attacked Ex-Im as a form of corporate welfare, citing the fact that Boeing was one of the bank’s largest users. Rarely mentioned in news coverage was the fact that the politically powerful Delta Air Lines for years campaigned against Ex-Im, arguing that Ex-Im Bank’s role in backing loans helped Delta’s foreign overseas competitors buy planes from Boeing.
The Columbian wrote about Harris’ dilemma in the fall, when bank supporters were mounting yet another effort to get the bank going. Finally, in December, the Senate attached a four-year reauthorization to a giant transportation funding bill. Harris is working on qualifying his customers in Saudi Arabia, Kuwait, and Peru for Ex-Im credit insurance for future sales.
So what happened to the order that Harris was eager to fill?
The airport facility is still in the design phase, and Harris is waiting to close that deal. And he’s wrapped up a much smaller sale of his company’s protective coatings for a hospital project in Kuwait without using Ex-Im Bank services.
Working with Umpqua Bank’s international division, Harris will be using a financial instrument called the Sight Letter of Credit, in which a bank serves as an intermediary between buyer and seller to make sure that conditions are met. Payment follows after the bank has processed the documents.
Harris’ success in closing the deal in Kuwait without Ex-Im assistance begs the question of whether the federally backed bank is really needed if the free market provides an effective tool for secure international trade. Harris and others say the answer is yes. Ex-Im Bank provides other services besides export credit needed for much larger international transactions, including direct loans and loan guarantees to foreign buyers of American products; working capital financing for exporting businesses, and the export credit insurance that Harris hopes to tap.
Looking back at the long squabble that was almost impossible for the average person to comprehend, it’s hard to understand what the fuss was all about. For most of us, the odd controversy faded away and was quickly forgotten. But for Harris and others still dealing with the fallout, the question remains fresh: why did this have to happen?