Export-Import Bank battle fallout

July 29, 2015 03:05 PM

Boeing Co Chairman Jim McNerney said on Wednesday the aircraft maker was actively considering moving "key pieces" of its operations to other countries given the uncertainty about the future of the Export-Import Bank, whose charter expired on June 30.

"We are now forced to think about this differently," McNerney said in an interview hosted by the Economic Club of Washington, noting that Boeing is looking at countries that offer export credits.

Boeing officials had no further details about which business operations could be affected or when the company had launched its review.

Boeing's engineering union, SPEEA, declined to comment on McNerney's remarks but said it had consistently supported Ex-Im reauthorization.

The Ex-Im Bank was created during the Great Depression to lend money to U.S. exporters and their foreign customers. Its charter lapsed after conservatives in the U.S. Congress cast it as a promoter of "crony capitalism" for multinationals such as Boeing and General Electric Co.

Hopes of reviving the trade bank were dashed on Tuesday as Congress moved toward a short-term extension of highway funding without a provision to renew its charter.

Uncertainty about the availability of export credits is already making companies skittish about buying a range of Boeing products, including commercial satellites, according to sources familiar with the situation who requested anonymity because of the sensitivity of the business negotiations.

McNerney's comments reflect growing frustration among U.S. businesses about deep partisan divides that have paralyzed Congress since the rise of the right-wing Tea Party in 2010. Congress has also failed to reverse mandatory spending cuts known as sequestration that have hit revenues at the defense division of Boeing and other arms makers.

McNerney, a former executive with General Electric Co, said GE's current CEO was engaged in similar reviews.

"I'm beginning to think that maybe I made the wrong decision" to maintain production and jobs in the United States given the debate over export financing, said McNerney, who retired as Boeing's CEO on July 1 after 10 years in the job. He said he was more worried than ever that Congress could fail to reauthorize the Ex-Im Bank.

McNerney said Boeing would continue to fight for reauthorization of the trade bank, but he noted it was "very, very frustrating" that U.S. lawmakers were unwilling to compromise because reviving the bank should be a self-evident move in support of U.S. jobs. Boeing employs 165,000.

"People just playing politics – they're not connected to the real world anymore," McNerney said at the event attended by the Russian, Dutch and Malaysian ambassadors.

"All the money's on the extremes in politics and all the debate is ... focused more on the money than it is on what’s good for the country," he said.

McNerney championed an effort to bring more manufacturing in-house after problems linked to its strategy of outsourcing work on the 787 Dreamliner passenger jet while keeping final assembly in the United States.

In recent years, the company has brought more manufacturing in-house, including the wings of its forthcoming 777X jetliner. Boeing recently signed a deal with major Japanese suppliers, for example, giving them 21% of the 777X content, down from 35% for the 787.

In recent years, Boeing's main rival, Europe's Airbus, has opened manufacturing facilities in China and the United States.

(Additional reporting by Alwyn Scott; Editing by Richard Chang)

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