General Electric Co. may move about 500 American jobs overseas because Congress did not renew a government program that allows foreign companies to borrow money to buy U.S. products, the industrial conglomerate said Tuesday.
Authorization for the U.S. Export Import Bank was not approved by Congress, forcing it to stop lending July 1. Foreign companies use the agency to buy expensive U.S. products when bank loans are not possible.
As a result, GE says 100 jobs from a Houston plant that makes gas turbines will move to Hungary and China in 2016. The Fairfield, Connecticut, company says those countries have lending options in place for customers.
"We do not make today's announcements lightly and in fact, have done everything in our power to avoid making these moves at all, but Congress left us no choice when it failed to reauthorize the Ex-Im Bank this summer," said John Rice, GE's vice chairman.
Another 400 jobs could be created in France instead of factories in South Carolina, Maine and New York if the company wins projects it is bidding on. The projects require financing, and the export credit agency in France has agreed to provide it.
GE said it's bidding on projects valued at $11 billion that require export financing. It said it has reached agreement with the French export credit agency to provide a line of credit for global power projects. GE said the line of credit will initially support potential orders in international markets that include Indonesia.
To access the required export credit for its customers of its aeroderivatives turbines, GE will move its final assembly from the U.S. to Hungary and China. As related projects are bid and won in these two product lines, GE said it will move approximately 500 jobs from Texas, South Carolina, Maine and New York to France, Hungary and China.
The embattled and little-known banking agency has been at the center of a fight between tea party Republicans who say it's not needed and Democrats and some Republicans — backed by manufacturers and large businesses — who say it promotes trade and helps create jobs.
The Ex-Im Bank's principal role is to guarantee commercial bank loans to foreign businesses and governments to buy U.S. products. U.S. taxpayers would be responsible for a loan if a company operating overseas defaults on a bank loan used to buy a product made by a U.S. company.