Local businesses challenge McCarthy on Ex-Im Bank

Sept. 06--Bakersfield-based Chemex is a small company with big dreams.

When the manufacturer of modular oil refineries inked a $22 million deal a few years ago to export its products to Indonesia, it was a major coup -- worth popping a few Champagne corks.

Now, says Chemex Chief Operations Officer Alan Robinson, the company's crucial export market has been placed at risk by, of all things, politics.

"We're very concerned," Robinson said.

The U.S. Export Import Bank, created by the federal government 80 years ago to help American businesses export their products and services all over the world, could lose its operating authority if Congress does not act by Sept. 30.

The institution, often called "Ex-Im" for short, has become a favorite target of Tea Party conservatives -- and a few liberals, too -- who label it "corporate welfare" and complain that it lets Washington pick winners and losers.

But Robinson and other local business people say that if the Ex-Im Bank dissappears, their export business could disappear with it.

"Without Ex-Im, we would not have gotten that job," Robinson said of the Indonesian contract.

House Majority Leader Kevin McCarthy, a Republican from Bakersfield, voted in 2012 to renew the bank's charter. It was a position that squared with traditional Republicans, the U.S. Chamber of Commerce and the National Association of Manufacturers.

But this summer, McCarthy reversed his position.

"The private sector can do it," McCarthy said in an interview on Fox News last June.

"One of the biggest problems with government is they go and take hard-earned money so others do things that the private sector can do," McCarthy said. "That's what the Ex-Im Bank does."

Rep. David Valadao, R-Hanford, whose district adjoins McCarthy's, disagrees with his colleague

"Since 2007, the Export Import Bank has financed $28 million in exports from small businesses in my congressional district..." Valadao said in a statement. "I believe it is important to ensure our small businesses have the tools and resources needed to be successful in our global economy."

According to Ex-Im's website, the bank's services have supported $211 million in exports from McCarthy's district and nearly $21 billion in exports statewide since 2007.

Ex-Im provides direct loans, loan guarantees and other forms of financing and insurance to help companies develop export markets around the world. But the bank has been criticized for dedicating too much of its support to Boeing, Caterpillar, GE and other massive corporations.

Many of its biggest loans do go to support mega-corporations. But the agency also helps thousands of small and medium-sized companies, including some 30 in McCarthy and Valadao's districts.

Don Nelson, president of ProGauge Technologies and Ramsgate Engineering, said he is leaving for Washington, D.C., on Monday in hopes of getting the word out and convincing Congress to save Ex-Im. But Nelson is clearly worried -- for his companies and close to 100 employees.

"I have many times, starting in June, asked for a meeting with Kevin," Nelson said of McCarthy. "All I got was an email from his staff saying they're looking into it."

Private banks simply don't do what Ex-Im does, Nelson said. ProGauge's bank requires the company to obtain an Ex-Im guarantee -- in addition to corporate and personal guarantees -- before it will issue a performance bond or letter of indemnity on ProGauge's behalf.

Chemex's Robinson said his company exports to developing nations like Indonesia, Nigeria and Bangladesh, whose banking systems simply are not stable enough to finance export deals.

It's not just Chemex's 25 employees who would be affected by the demise of Ex-Im, Robinson said. It's as many as 100 local suppliers and subcontractors who are hired to help complete a big project.

Nelson estimated at least half of his employees could be laid off if the company's exports are halted.

The California Chamber of Commerce warns the pain will be widespread.

"Failure to reauthorize the Ex-Im Bank would put at risk more than 200,000 U.S. jobs at 3,400 companies that depend on Ex-Im to compete in global markets," the Chamber stated in July.

"Not only does Ex-Im directly support U.S. jobs," the Chamber continued, "it has consistently reduced the federal deficit for more than eight decades. Ex-Im charges fees for its services that last year allowed it to return more than $1 billion to the U.S. treasury after covering all its expenses."

Critics of the agency dispute those claims. And like McCarthy, they suggest the private sector will eventually fill the gaps currently being served by Ex-Im Bank.

But Nelson and Robinson are not comforted by such predictions. They have businesses to run.

McCarthy, Nelson said, is appeasing the Tea Party by reversing his stance on Ex-Im.

"Kevin saw what happened to Cantor," Nelson said of former Majority Leader Eric Cantor, who lost to a Tea Party candidate in his district's primary election.

The surprise outcome, many analysts believe, sent a message to mainstream Republicans that the Tea Party is still very much alive.

But Nelson now questions whether McCarthy is still a traditional Chamber of Commerce Republican. And he's not afraid to be blunt about it.

"I was asked by the U.S. Chamber of Commerce not to challenge Kevin directly on this issue," Nelson said. "I said,'I appreciate your opinion, but ...'"

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