Boeing will roll out the newest iteration of its 787 Dreamliner at its facility in North Charleston, South Carolina, this afternoon, but for the aerospace giant and a number of other U.S. manufacturers, the big reveal will come via the event's special guest. President Donald Trump is expected to make an announcement about the future of the Export-Import Bank, which has been operating with limited authority for more than 18 months.
Democrats expect Trump to come out in support of the U.S. federal export credit agency, which backstops loans made to foreign companies seeking to purchase U.S. export goods. Doing so would represent a reversal of views the president expressed on the campaign trail when the then-candidate said the United States could "do well without it." Embracing the Export-Import Bank now would also signal a warming of relations between the new president and major U.S. manufacturers, like Boeing and GE, both of which have drawn criticism from Trump over the high cost of U.S. government contracts and the outsourcing of jobs.
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The president could also choose to say nothing at all on the matter, a gesture that would be equally significant. A contingent of Congressional Republicans view Ex-Im (as the agency is often known) as a kind of "corporate welfare" in which the government assistance in helping U.S. companies secure business abroad disproportionately benefits just a handful of large corporations, Boeing among them.
However, North Dakota Democratic Sen. Heidi Heitkamp said last week following a lunch at the White House that President Trump told her he would soon nominate someone to Ex-Im's five-member bipartisan board to provide it with a quorum, breaking the logjam that has kept the agency operating with just two board members (and at a very limited capacity) since 2015.
Ex-Im guarantees billions of dollars of U.S. trade financing annually, supporting thousands of U.S. jobs. But in June 2015, Congressional Republicans allowed Ex-Im's authorization to expire, arguing that the agency disproportionately benefits a handful of companies like Boeing and GE that have a lot of political clout. Though Ex-Im was revived six months later, Republicans blocked nominations of new board members appointed by the Obama administration.
The credit agency's uncertain future
Ex-Im has been operating with just two board members ever since — one board member shy of the number required to approve transactions greater than $10 million in value. That has severely limited Ex-Im's ability to support the financing of major deals for U.S. companies and — according to the agency's former chairman — cost the U.S. a significant number of jobs.
In an interview with CNBC in December, Fred Hochberg — at the time Ex-Im's chairman and president — said the agency supported $20 billion in financing, which in turn supported some 165,000 jobs by the bank's estimates. In 2016, following the loss of its quorum the previous year, the bank supported just $5 billion and 52,000 jobs. (Ex-Im's two acting board members could not be reached for comment.)
Following last week's White House meeting, Sen. Heitkamp said Trump agreed to nominate someone to the board, providing it obtains the quorum it needs to go back to conducting business as usual. "It's great news he agreed and said he would nominate someone to serve on the Ex-Im Bank Board very soon so the agency, which has been stalled for a year, can fully function and keep supporting American workers and small businesses, including many in North Dakota, just as it has done for more than 80 years," she said.
There are additional reasons to believe the president will come out in favor of Ex-Im. For one, the president's various pledges to bolster U.S. manufacturing, support domestic job creation and boost the competitiveness of American exports could be difficult to reconcile with a decision to shutter Ex-Im entirely. The agency currently has a backlog of $30 billion in potential financing for U.S. export goods that it currently cannot approve without a third board member, a number that's difficult to ignore in terms of both revenue and jobs.
Proponents of the agency also note that roughly 100 countries around the world have export credit agencies helping their own domestic manufacturers secure financing for their exports. Shutting down Ex-Im would be equivalent to voluntarily eroding U.S. competitiveness abroad, they argue.
A corporate beneficiary
Trump may also have been swayed personally in meetings with Boeing CEO Dennis Muilenburg. As the largest beneficiary of Ex-Im-backed financing, the company has openly lobbied for the agency for years. Ex-Im has helped Boeing sell its 787 Dreamliners to airlines in countries such as Ethiopia, Poland and India in recent years. But a company spokesperson told Bloomberg earlier this week the current restrictions on Ex-Im have placed the company "at a significant disadvantage," and Muilenburg has personally called the lack of a board quorum "frustrating."
As such, the president likely couldn't ask for a more appropriate venue in which to come out in support of Ex-Im than this afternoon's 787-10 debut in North Charleston. Boeing has orders for 149 of the newest Dreamliner model — which are constructed exclusively at Boeing's South Carolina facility — from countries across the globe, making it a model for the kind of high-value, made-in-America exports at the heart of Trump's economic promises.
But while Sen. Heitkamp says the president will support Ex-Im, doing so would put Trump at odds with congressional members of his own party, some of whom have vowed to see the agency shuttered. The president has yet to publicly declare a position on Ex-Im since taking office.
Trump's comments will likely also be parsed in light of a vote on Wednesday at Boeing's North Charleston facility in which workers overwhelmingly chose not to unionize, marking what is perhaps the most significant test of union influence since last year's election.
— By Clay Dillow, special to CNBC.com
